Many of the themes we have seen play out over the past 12 months in professional services are likely to be repeated in 2025, albeit with a shift in emphasis and tone.

I’ve spoken before about the permanent shift in our business from a cash-light to a cash-heavy environment and that continues to drive strategic thinking. Firms need that cash investment for a variety of areas including expansion, technology and resolving legacy issues, like pensions.

At the same time, in such a febrile environment, many firms are displaying a fear of missing out. No-one wants to be left behind, which will no doubt lead to some big bold moves being announced in 2025. Whether they will all play out positively remains to be seen.

Last January I predicted significantly more private equity (PE) activity in the market. We will see that gathering even more pace next year. While we’ve not yet reached that point, we run the risk of a feeding frenzy, so standing back and reflecting on 2024 is not a bad way to end the year.

After all, PE won’t be the right solution for every accounting firm. And PE will want to back a winner, so they won’t be chasing every professional services firm out there.

And while headlines about partners receiving multimillion pound pay outs are good for the individuals concerned, firms will have to be attuned to how they incentivise staff lower down the food chain. Good firms are making sure that those who aspire to be leaders can see a future that is equally bright for them.

More consolidation across the sector is generally inevitable – clients want more depth and breadth domestically and globally. This could take many forms. Expect to see formal and informal mergers and alliances within networks or externally. A pooled balance sheet is another way to achieve that financial firepower.

But is betting on big always the right way? We think not – I’ve been spending much of this year thinking about our own global strategy in terms of ‘big dog, smaller dog’. Big dog moves are great if they are well planned and well executed, paying off massively. They catapult you forward and can generate great excitement while also being enormously disruptive.

Badly executed, a big move can have pain with less than enticing gain. It needs to be entered into with eyes wide open and with a clear future intent.

Picking the right partner is essential and many deals can take many months or even years to plan to ensure greater chance of success. Although less dramatic, smaller dog strategies (with consistent incremental change) can also lead to a strong end game. There is room for both strategies and for many it is the mix that brings the biggest overall win.

Multidisciplinary demands

Politically, globalisation may well be in retreat, but for our clients the reverse is true. They want one adviser who can span a border, a region or the globe.

As well as an adviser with significant heft, clients increasingly want support from a single source. We are seeing a shift back towards the predominance of multidisciplinary services, although the reality is it never really went away. Clients really value that holistic advice despite the potential regulatory pressures.

Geopolitical uncertainty and conflicts remain the number one concern for our international clients and sadly there is no sign of that diminishing in 2025. With that uncertainty the role of the senior trusted adviser really comes into play. Our profession remains as good as it ever has been in giving that detached and calm advice.

Although the worst excesses of the headline inflation figure we saw in 2023 have been dampened down for the moment, there are still rising costs everywhere, putting pressure on profit margins – both for accounting firms and their clients.

Notwithstanding those pressures I do predict that 2025 will be a year of action and opportunity for the sector as all those governments that were elected this year really get into gear and do ‘stuff’. This means change and plenty of it, be it tinkering with the tax systems, encouraging inward investment or passing new audit legislation.

Our profession has a strong track record of helping clients in turbulent times and so there is likely to be plenty of activity in 2025. We will also need to be awake to the potential of new governments bringing increased regulatory scrutiny.

There have been a lot of headlines this year about firms adjusting their resourcing to meet client demands. There was a post-Covid boom in advisory hiring that in hindsight was never going to be sustainable.

Lessons have been learnt but overall, the sector continues to grow and there remains strong demand for talent at the graduate and school leaver level. In areas like artificial intelligence (AI) and Environmental, social, and governance (ESG), specialist skills become ever more precious.

Shift in hybrid working

Finally, a topic that occupied many management discussions this year: I see a subtle shift on hybrid working taking place in 2025.

While few if any firms will be pushing for a mandatory five days a week in the office, given the obvious advantages of allowing some home working, I do think management are realising that without some face to face interaction there is a drop off in community and overall workplace culture is damaged.

That is more acute for younger staff and new joiners. But any initiatives must be introduced and monitored across the firm. It is poor leadership if senior staff are not in the office as much as their juniors and the attractiveness of flexible work remains a great talent attractor.

About the author

Francesca Lagerberg is CEO of Baker Tilly International