Professional Services Report 1H 2026

• There’s been a lot of speculation over the impact AI will have on the professional services industry. While technology may take over some routine tasks, that will simply free up professionals to focus on tasks that require human judgment and nuanced understanding. 1

• Private equity investment continues to stalk value in the highly fractured professional services sector in a quest for expertise and innovation with services that exceed algorithmic solutions with intelligent, forward-looking solutions.

The evolution of artificial intelligence, AI, capabilities is both challenging the role of professional service providers and enhancing it. In the context of mergers and acquisitions, the key for companies looking to transact is proving their ability to harness the power of advanced computing while demonstrating the expertise their enterprise brings to the table that AI can’t replace. While the profile of professional service firms continues to evolve, private equity remains an active player across the sector. Over the past three years a third of the biggest U.S. accounting firms were either acquired by private equity or accepted private equity investment. 2

If AI’s emergence isn’t an “extinction event” for professional services – as has been suggested – it will likely be because of the human advantages consulting and servicing firms can offer such as experience and complex reasoning. But it also appears that successful adoption will include the incorporation of some AI capabilities to increase productivity, streamline research, and create client-facing summaries of detailed findings. It’s been estimated the increase in AI-related productivity in professional services could create up to $32 billion in annual positive impact in the U.S. legal and tax and accounting fields. Another AI-related bright spot is in services that teach clients how to incorporate and customize AI capabilities in their own technology. In 2024, it was reported Boston Consulting Group was generating 20% of its revenue from helping businesses incorporate AI-related services. As the Harvard Business Review reports, “Consulting isn’t disappearing; it’s being fundamentally reshaped.” Senior accounting professionals are finding AI can help with, and fast-track, routine work, but it can’t (yet) replace an experienced pro’s contextual understanding and judgment. 3,4,5,6,7

Value is key. What have you done for us lately and how are you keeping pace are the questions. For example, academic learning tool provider Chegg – launched 20 years ago as a textbook rental company before morphing into homework help and tutoring – struggled through 2025 battered by AI learning platforms, hemorrhaging subscribers, and slashing about half its workforce. The company announced plans to remake itself as a business-to-business skills course and workplace readiness platform. In 2025, Chegg sued Google claiming its browser-integrated AI is stealing Chegg’s clients with “AI Overviews” for students. It’s telling that Google responded to the suit by arguing Chegg’s own failure to advance is what’s holding back the company writing, “Instead of competing more effectively, (Chegg) seeks to blame Google for its business decline.” Chegg’s situation illustrates today’s professional services environment in the age of AI: be better than AI or be gone. 8

Professional service firms, from law firms to accountants to consultants, know their clients turn to them for their expertise and judgment. At the moment, no AI program can match that. Where AI programs can be trained is to compile numbers, rapidly scan reams of discovery documents for key words, or search for patterns. AI can help sift trends from mountains of input, but it can’t replace a human team’s understanding of client goals, desired outcomes, and solutions that fit into a greater strategic vision. AI may correctly summarize a piece of potential legislation, but it won’t meet with political officials to help shape it. AI may provide shipping route optimization plans based on data and efficiencies, but it can’t understand future potential supply chain disruptions based on geopolitical tensions and world events. At least not yet. 9,10,11,12

For the providers of professional services, such as consulting firms, their role may be evolving with AI, not competing against it. If AI can crunch the numbers and produce the PowerPoint, we’re watching for professionals who evolve with the tech, becoming more like a client partner rather than a service provider or external advisor. Creativity and vision are replacing fact-gathering. A well-trained AI program may arrange data under one, programed, understanding of a law, but a professional accounting firm will parse the meaning of the law, dig into the intent, exploit ambiguities, and incorporate a client’s desired outcomes and goals. Successful service providers incorporate the latest AI technology and develop expertise even as the platforms evolve, speeding the data crunch and leaving more time to present clients with creative solutions that solve problems and achieve goals. 13,14,15

For potential buyers, as important as a professional service firm’s tech integration, client relationships, and financial performance is the firm’s established, specific, and irreplaceable expertise. Accountants serve clients who have to deal with taxes. It’s probably safe to guess there will always be taxes, and tax laws are always subject to change and interpretation. But other areas may not be as dependable. In Marketing, traditional ad agencies (think “Mad Men”) have seen their role diminished by the tech giants such as Amazon and Google. For years, search engine optimization (SEO) was the all the rage. Today, observers are watching how AI placement is replacing SEO. Success metrics such as “clicks” are replaced by the more squishy AI “reference rates,” digging into how well a product or service is included in an AI summary or answer to a question. Next, AI searches may lead to automated purchases, replacing the human buyer with an AI analysis of needs, an assessment of value, and an automated order. The customer becomes a bot, the customer journey becomes a digital calculation based on input. For a professional services provider, navigating changing consumer bases, adjusting to needs, and demonstrating current, integrated technology will be a crucial value proposal when investors come looking. 16

Successful, profitable providers of services across the sector demonstrate valued capabilities beyond what AI models can do. AI programs digest and analyze massive amounts of data and recognize patterns. It depends on inputs. All of those inputs are things that happened in the past. AI doesn’t create data (except maybe for AI hallucinations, which is another story), it organizes what has already happened. Skilled professionals, humans, understand the intangibles, disruptions, potential outcomes, goals, desired results, and creative solutions that haven’t yet happened, but could. AI runs on memory of the past, experienced, valued pros offer vision. 17,18

That human ability to build and understand relationships, to process behaviors, is a real asset successful providers demonstrate and document. Nuanced judgment is not in AI’s toolbox. In complex M&A negotiations, for example, AI can absorb and process available financial data. It can’t understand what a business founder wants, create trust with management teams, or establish relationships with buyers. It won’t understand what a buyer sees as a potential fit with other component parts of the deal. In litigation, AI may process the law and analyze discovery documents and depositions, but it can’t feel where a jury is leaning. AI recruiting platforms may sift through mountains of resumes, which is fine for high-volume, ground floor work, but for high-level, critical positions it can’t make a perfect cultural fit. In 2025, an Australian government agency hired a major consulting firm to analyze its programs for inefficiencies. The AI program the company used produced a report that cited nonexistent academic papers and a fake “hallucinated” legal citation. An experienced agency researcher spotted the fabrications immediately, and the firm refunded the six-figure fee. 17,19

We believe there will always be a demand for skilled professionals that serve business needs. While there are plenty of AI tools for contract review and redlining, it still takes people to negotiate a solution and come to an agreement. As a result, there’s an ongoing uptick in businesses seeking professionally outsourced services. The business process outsourcing industry continues to grow across accounting, finance management, and fractional chief financial officer roles as small and midsize businesses seek expertise in financial planning and financial risk management. The key isn’t avoiding AI, it’s about knowing where tools can help and incorporating them, and where clients need a provider’s expertise, creativity, clarity, and solutions that meet their needs and expectations. 20,21

• To start the year, in January of 2025, private equity titan Blackstone sprung a $2 billion deal to acquire the U.S. accounting firm Citrin Cooperman, one of the 20 largest accounting firms in the country. The move demonstrated private equity’s continued appetite for accounting firms and was estimated to come in at 15x EBITDA. It’s also interesting because Citrin had been acquired just four years earlier by another PE firm, New Mountain Capital, for about $500 million. New Mountain earned a substantial return in a deal that is reportedly the first time a large accounting firm was acquired twice in succession by private equity investors. Under New Market’s ownership, Citrin bolted on a series of regional accounting firms that came in as part of Blackstone’s acquisition. 22

• Chicago based management and tech consulting firm West Monroe in September acquired 2050 Partners, a 10-year-old San Francisco area consultancy that advises clients on energy efficiency and clean energy initiatives and on meeting sustainability goals. The move was initiated by West Monroe’s drive to support utilities clients who are coping with growing grid demands driven by the boom in AI-related data centers, increased EV usage, and home electrification. As power demand rises, West Monroe reported nearly 80% of utility providers are being pressured by states to decarbonize and less than 20% feel they are ready to meet those mandates. Terms of the deal were not disclosed. West Monroe, with more than 2,200 staffers in the U.S., Costa Rica, and the United Kingdon in 2024 acquired Boston-area commercial strategy consultant firm Inspired Health. 23,24

• In December, North Carolina private equity firm Broadtree Partners LLC acquired the Denver-based firm The CFO Project. The company provides a membership-based mentorship program that helps accountants, bookkeepers, CPAs, and finance professionals advance from traditional accounting services to strategic CFO advisory work through structured lessons and experienced mentorship to help professionals advance their skills and acquire and retain high-value CFO advisory clients. SDR Ventures was the exclusive sell-side advisor to The CFO Project. 25

• Global HR services provider HR Path was active in acquiring human resources and capital management providers. In December, the international company acquired outsource enterprise resource planning provider Blueprint Technologies, based in India and serving the Middle East and India. Earlier in the year, HR Path acquired U.S. based Next Generation Inc., marking its third U.S. acquisition of the year. Next Generation has offices in Chicago, New York, and Washington, D.C., serving clients in the public and commercial sectors with human capital management. HR Path works closely with other HR capital management services including SAP, Workday, and ADP. Next Generation will continue to work under its current name and leadership team under the HR Path umbrella. HR Path in 2025 also acquired PredictiveHR, ClearCourse Consulting, and Smahrt Consulting. Terms of each deal were undisclosed. 26,27

For simple interactions, machines appear to be fine. The first vending machines for soda were installed in 1893, and not a lot needs to be changed even now. Money in, soda out. But for the complex problems clients present (or don’t even know they have) and the creative and dependable outcomes clients need, professional service providers deliver a valuable human element that machines still can’t match. For those service providers, we believe it’s more important than ever to demonstrate and document that value. 28

Investors continue to seek firms with strong reputations and repeatable, profitable business. And while many professional service sectors, including accounting and consulting, have already seen an infusion of private equity money, a new horizon for the PE investment field may be in the future: Law. State bar associations are leaning into allowing law firm investment or ownership by non-lawyers, a dramatic switch. If private equity or consolidators can get into the highly fragmented legal sector, it could open an entirely new market for investors and capital infusion for growing firms. In England, where private equity has already reached into law, firms backed by PE in 2025 were increasing revenue at twice the rate of independent, traditional firms. In the U.S., the barriers against non-lawyer ownership are cracking and already investments are pouring in. It’s not nationwide, yet, but the signs are there both for growing small and midsize firms and for investors. This is something to watch. In 2025, LegalZoom, which offers a number of self-service legal forms as well as its own law firm, acquired Formation Nation Professionals, a business formation and compliance company, for $85 million. 2,29,30,31,32

In the vast field of professional services, AI and other tools may be a disruptor, but they won’t be an extinction level event as long as customers seek professional guidance and nuanced, individualized solutions. While the industry umbrella covers an array of services, we believe the bedrock strategies of maximizing efficiencies, demonstrating value, building relationships, documenting consistent growth, and managing a dependable, repeatable model will remain attractive to buyers.