Sovereign Capital plans professional services mega-merger
Sovereign Capital is set to merge seven of its regional professional services firm into one, according to reports.
The private equity firm is planning to combine the regional accountants under the name Affinia, The Sunday Times revealed.
Affinia is expected to make around £35m a year in sales cumulatively, and is aiming to double its size over the next five years by making acquisitions across the east and southeast.
In the last few months, a host of private equity firms have been piling into the professional services space, with the City overflowing with rumoured bids.
Just last week, British private equity firm Apax bought Evelyn Partners’ accounting arm for £700m
Apax was in a bidding war with private equity peer Bridgepoint to snap up the professional services unit, which includes the business formerly known as Smith & Williamson that Evelyn Partners merged with in 2020.
Darren Redmayne, brought in by Sovereign Capital to lead the push, told The Sunday Times that Affinia was looking to capitalise off the trend.
“I like building businesses in areas of financial services going through transformational change,” Redmayne said.
“And accounting services, with the support of private equity, is going through a period of quite transformational change.”
Regional law firms have also been upping their revenue over the last year, increasingly coming closer to the profitability of City firms.
Throughout 2024, headcount for fee earners in regional firms increased by nearly 10 per cent, compared to just one per cent for those in the City.
Redmayne said that the professional services firm was planning to cut costs by merging infrastructure like IT systems, arguing that private equity had the cash to help small accountancy firms invest in their technology.
“There’s around 40,000 accounting firms across the UK. And a number of the smaller firms are the local firms, they’re facing similar challenges,” he added.
Affinia is set to be one of the UK’s 40 largest accounting firms, combining firms from locations such as Colchester, Harlow, Ipswich, Stratford and Sutton.
Sovereign Capital has been contacted for comment.