Partner profits at the UK’s mid-tier accounting firms have surged to record levels against the Big Four, underlining the pressure on the sector’s top players to retain senior professionals.
Profit per equity partner hit an average of £565,000 in 2024 across the five largest mid-tier firms that report comparable figures, according to an FT analysis of company reports.
The figure is almost two-thirds of the £857,000 average pay for UK partners at the Big Four — Deloitte, EY, KPMG and PwC — in 2024, up from 45 per cent in 2015.
Peter Gallanagh, UK chief executive of mid-tier firm Azets, said the narrowing gap in partner pay was because mid-sized firms had been winning higher-margin work previously captured by the Big Four, while consolidation had helped reduce their overheads.
Tighter regulation around advisory work for audit clients meant the larger firms had chosen not to take on some mandates, he said, driving more activity to mid-tier firms, which have grown and become capable of more “complex” work.
Profit per partner — a closely watched metric at professional services firms where earnings have traditionally been shared between the senior practitioners who own and run the business — rose 83 per cent across the five mid-tier firms between 2015 and 2024.
Pay for partners at the Big Four increased by less than 20 per cent over the same period. The analysis is based on each firm’s accounts for financial years ended in 2024, the most recent year for which all firms have reported, and includes BDO, Grant Thornton, Mazars, Moore and RSM.
Pay at mid-tier firm RSM rose to Big Four levels for the first time after it handed its equity partners an average of £821,000 in the year to March 2025, more than EY’s £787,000.
The increased partner profits at mid-tier firms come amid a wave of challenges for the Big Four, including the impact of AI and a slowdown in consultancy work. However, all four increased profits per partner in the most recent year for which they have published figures.
An executive at one mid-tier firm said that picking up work that used to be the preserve of the Big Four had become a “virtuous circle” for the second rung of firms, increasing their ability to invest and helping them move “up the food chain”.
Recent private equity investment in the sector had also helped drive a “professionalisation of leadership” at some firms and a “sharper focus on creating performance cultures” that had helped profits rise more quickly, the executive said.
A second mid-tier executive said the Big Four had been “much more exposed to the downturn in the transaction and consulting markets than the mid-tier”, which had helped narrow the remuneration gap.
One partner who left a Big Four firm last year for a smaller rival said there had been a lack of transparency in how pay was calculated at their former firm, while a “bloated” middle and back office had “suppressed pay”, adding that they had increased their earnings by moving to a smaller group with a “more entrepreneurial” mindset.
Changes to the accounting landscape, including private equity buyouts that have fuelled consolidation, have pushed some mid-tier firms to consider more ambitious expansion plans.
Grant Thornton, which is backed by private equity group Cinven, announced plans in November to recruit 160 new partners over the next two years in addition to its current stable of 280.
RSM partners voted in October for a tie-up of its UK, Ireland, Canadian and US firms to create a $5bn-revenue multinational partnership, while BDO is overhauling its global structure to operate as a more unified organisation.
The entry of deep-pocketed US advisory firms, which do not carry out regulated audit work, is also shaking up the battle for talent in the sector.
Boutiques such as Alvarez & Marsal and AlixPartners, which tie partners’ pay more closely to how much work they bring in — known in the sector as an “eat what you kill” mentality — have poached partners and entire teams from the Big Four on both sides of the Atlantic.
Partners at the UK-based branch of Alvarez & Marsal took home more than £1.4mn on average in 2024, according to accounts filed at Companies House, though those partners do not hold equity in the firm.
The best paid earned £12.5mn, according to the boutique firm’s most recent accounts, which cover some partners who operate in continental Europe. A&M declined to comment.
The narrowing pay gap between the Big Four and the mid-tier is fuelling a “retention challenge” for the top firms, said James O’Dowd, chief executive of recruiter Patrick Morgan. This was heightened by rivals using a “fundamentally different economic model” with lower overheads and more revenue flowing back to the partners.
But Laura Empson, a professor in the management of professional services firms at Bayes Business School, said being a partner in any big accounting firm was no longer “cushy”.
“The performance pressure is pretty relentless and the expectations of rewards are getting higher and higher,” she said.
Mazars’ UK chief executive James Gilbey said his firm was focused on “growing sustainably, reinvesting in our team and delivering quality”. The other Big Four and mid-tier firms declined to comment.