Private Equity & Venture Capital
Private Equity Is Changing the Rules of the Game in the Professional Services Market
7 min read
Private equity acts as an accelerator of structural change already underway in the audit and tax advisory market. In his insight, Maximilian Contzen, Associate Partner at Odgers, shares his perspective on how consolidation, platform models, and investments in AI are transforming not only business models, but also leadership, culture, and traditional partnership structures.
The market for audit and tax advisory services in Germany is undergoing profound transformation. By 2025 at the latest, it has become clear that private equity has not only discovered the sector as an investment opportunity, but as a platform for structural realignment. Numerous transactions have already been completed, with more to follow in 2026. Financial investors are bundling firms, establishing platform models, and professionalising management and governance structures.
What is often underestimated is that private equity does not merely change ownership structures and financing logic; it intervenes deeply in hierarchies, leadership models, and the cultural DNA of a sector that has traditionally been shaped by partnership principles. At the same time, technological change—particularly driven by artificial intelligence—is further accelerating this transformation.
Private equity acts as a catalyst in audit and tax advisory. Existing tensions around leadership, succession, and culture are not newly created, but they surface much faster and more visibly
Consolidation as a Structural Response
Over the past year, numerous market movements have shown that consolidation in audit and tax advisory is not a situational phenomenon, but a structural response to growing demands. The market remains highly fragmented: many firms are small to mid-sized, partner-centric, and locally rooted. At the same time, the pressure to adapt has increased noticeably. Succession issues have intensified further, the shortage of skilled professionals is becoming an ever greater constraint, and investments in IT, data, and AI infrastructures have shifted from optional modernisation measures to strategic prerequisites.
Against this backdrop, platform models and mergers continue to gain momentum. They enable economies of scale, pool investments, and create the foundation for more professional governance and management structures. The market is increasingly differentiating between organisations that actively shape this transformation and adapt their structures, and those that cling to legacy models. For the latter, strategic room for manoeuvre is becoming increasingly narrow.
This development is further facilitated by an unchanged regulatory framework. Politically debated restrictions on third-party ownership were once again not implemented last year. As a result, legal access for financial investors remains open—and responsibility increasingly shifts to the organisations themselves. Independence, quality, and integrity are less safeguarded through additional regulation than through effective governance, clear leadership structures, and robust internal control mechanisms. The viability of investment and platform models is therefore determined not at the regulatory level, but by their concrete design and implementation.
Artificial Intelligence Is Transforming Value Creation
At the same time, artificial intelligence is redefining performance standards. Routine tasks are being automated, audits are becoming data-driven and continuous. Value creation is increasingly no longer driven by individual expert contributions, but by powerful systems, consistent data, and standardised processes. This enables scalability, lowers marginal costs, and simultaneously raises client expectations regarding speed and transparency.
Here, AI and private equity reinforce each other. Consolidation creates the conditions for the economic deployment of AI, while AI increases the pressure to scale, as its impact remains limited without sufficient data volumes and harmonised processes.
Where the Market Is Heading
A return to small-scale, purely partnership-led structures is becoming increasingly unrealistic. Private equity investors focus on scale, standardised processes, and professional governance—requirements that traditional partnership models can only meet to a limited extent. Anyone seeking to invest, modernise technologically, and manage growth must adapt to new rules of the game.
The market is therefore increasingly splitting into two clearly recognisable segments:
- Large, well-capitalised platforms:
These consolidate holdings, realise economies of scale, and invest strategically in IT, data, and AI infrastructures. Efficiency, transparency, and standardised processes take centre stage. Private equity demands clear management, measurable outcomes, and professional leadership structures—without these prerequisites, growth is hardly manageable. - Small, highly specialised units:
These deliberately focus on niche expertise, depth of knowledge, and close client relationships. Their competitiveness is driven by expertise and proximity, not by size or capital strength. Private equity plays only a limited role here, as scalability is constrained.
The situation is particularly precarious for mid-sized organisations caught between these two poles. They lack both the scale and capital base for extensive investments, yet are too large for purely personal client service. Without a clear strategic direction and investor support, they risk falling behind in competition—for clients, talent, or technological modernisation.
For many mid-sized firms, private equity ruthlessly exposes the difference between growth and stagnation. Those who fail to position themselves lose strategic freedom—and ultimately market share.
Leadership: From the Partnership Model to Diverse Ownership and Career Paths
In addition, private equity challenges traditional ownership and career logics. The equity partnership model is increasingly viewed in a more differentiated way and is less frequently seen as the sole goal of professional development.
A key factor is the changing expectations of younger professionals. High capital contributions, long-term commitment, and entrepreneurial risk are weighed more critically today than by previous generations. At the same time, predictability, work-life balance, and alternative career paths are gaining importance. The classic principle whereby incoming partners acquire the shares of retiring partners is therefore increasingly reaching its limits in practice.
In response, new participation models are emerging: non-equity partnerships, “naked-in/naked-out” models, and performance-based compensation or participation elements without substantial capital investment. Private equity accelerates this development by creating additional exit options for outgoing equity partners while simultaneously offering lower-risk career paths for high-performing professionals.
Many high-performing professionals want to shape, lead, and take responsibility—but not necessarily under the traditional conditions of equity partnership.
This does not signal the end of partnership, but rather the end of its monopoly. Equity partnership remains attractive for entrepreneurial personalities, but becomes one option among several. Leadership, responsibility, and influence are no longer automatically tied to capital participation, but increasingly to role, performance, and impact within the organisation.
For advisory firms, this creates a strategic design challenge: ownership, leadership, and career models must be balanced in a way that addresses both entrepreneurial incentives and modern expectations.
Culture: The Underestimated Factor
The cultural dimension of private equity involvement is often underestimated. Partnership-based organisations are built on trust, personal responsibility, and long-established relationships. As scale, integration, and professionalisation increase, these foundations inevitably change.
Standardised processes, shared systems, and more binding governance structures make economic sense—but require careful explanation from a cultural perspective. Whether this change is perceived as professionalisation or alienation depends less on structures than on leadership.
Culture cannot be managed like a cost centre. It emerges from lived decisions—especially during phases of rapid growth.
Conclusion
In audit and tax advisory, private equity acts as an accelerator of developments that were already underway. New ownership and organisational models become sustainable where culture, leadership philosophy, and economic logic are considered together. In the long term, success is determined not by capital or technology alone, but by the ability to reconcile partnership-based values with new forms of collaboration and governance.