Last updated: 02 May 2025 09:00 Posted in: AIA
Natalie Cramp explains why accountancy firms that invest in their data infrastructure could broaden their appeal to ‘buy and build’ investors.
Many accountants will be aware of the recent Dains Accountants private equity deal. Announced last December, the leading UK-based provider of accountancy and business advisory services for SMEs, which employs 765 people, has been bought by the European private equity firm IK Partners. It succeeds Horizon Capital as the majority stakeholder.
What may be less known, though, is the fact that the deal – arguably one of the biggest UK accountancy has seen in recent years – represents the first time a data specialist has been cited as an advisor on a major private equity exit in the UK.
Demonstrating the transformative power of data
Months before the sale, JMAN was appointed to develop a bespoke data platform that collected, analysed and presented information on every financial and commercial metric required by Dains, Horizon Capital and its other advisors.
The remit was to combine all the data and systems from previous acquisitions to create one unified view of Dains. Not only did this help to make the exit process to IK Partners more efficient, but it also enabled Horizon Capital to maximise the value of the sale by surfacing and articulating Dains’ high performance and future growth potential. Horizon Capital achieved eight times the invested capital and an internal rate of return of 107%.
Why is this important? Foremost, the deal is indicative of the increasingly critical role of data in enabling a successful buy-and-build strategy. But beyond that, it holds particular significance for the accountancy sector by validating the attractiveness of the mid-market as an investment opportunity.
Private equity firms have at times overlooked small accountancy firms due to the fact that they often operate on disparate or outdated systems, making it difficult to assess investment viability. This can also make post-acquisition integration.
more challenging and costly, thus reducing their attractiveness for buy-and-build strategies.
The Dains deal changes this hypothesis. It clearly demonstrates how a data-first approach supporting a well-run business can not only overcome the historical barriers posed by the fragmented accountancy landscape but can also strengthen the buy-and-build strategy, helping to establish rapid growth and enhance the value proposition for investors.
We are already noting the ripple effect as attention shifts to mid-market firms as valuable investment opportunities, particularly for private equity firms seeking high returns through consolidation and fast growth. This presents a significant opportunity for SMEs to broaden their appeal to private equity firms engaging in a buy-and-build or roll-up strategy, provided they modernise their operations.
Getting the data foundations in place
But how? A firm can go to the top of an acquisition or investment list if they can showcase the value they bring and their potential, as well as
how their business operations have the flexibility to work with a disparate set of systems across multiple entities. Data is, of course, at the heart of being able to tell this story.
There are those firms that decide they need to sort out their data and go for the seemingly safe fix of employing a large monolithic system-based solution. This software, although doing some things very well, often does not service all of an organisation’s requirements. They are generally inflexible, lock businesses into long-term contracts, and do not work well with other systems.
That is not to say that if a company has gone down this road it is going to be inherently unappealing to investors. Rather, it is to illustrate that too often businesses perceive these systems as an efficient way to solve all their data needs. For example, a business might spend a year or more on an enterprise resource planning (ERP) systems migration to consolidate all acquisitions onto the same ERP – without fully appreciating that, with more thorough research and a longer-term outlook, there may be more effective and appropriate solutions. These could include a centralised data platform which offers rapid insights and reduces the need to integrate technology.
A centralised data platform ensures that data remains the single source of truth across the organisation. By doing so, it not only streamlines operations but also enables informed, evidence-based decisions that can be scaled as the company grows. This capability is a critical factor for investors, who rely on robust data to understand a company’s current performance and future potential. Importantly, it also makes it far easier to run the business as it scales.
Crafting the equity narrative
Having the right technology in place is only one piece of the puzzle. When we talk about how well a company could integrate future acquisitions on a buy-and-build strategy, we don’t just mean technological compatibility. We really mean how all the information within the business and its processes could seamlessly merge with another company.
Technology can facilitate this, but any platform is only as good as the data that is collected and inputted, how it is analysed and how these insights are applied. This is where the concept of data as the foundation of strategic alignment becomes essential. Firms need to trust that their data is accurate and complete, creating a shared understanding across teams and stakeholders. Only then can they confidently align their operations and investments with long-term goals.
Every accountancy business needs to know that what they see is the complete data
picture, that its workers are enabled by the right procedures and training to obtain and leverage these insights, and that the right questions are being asked about their data. This can only be achieved by placing data strategy at the heart of your business.
When a private equity firm is assessing both the potential of a business and its compatibility, they too want the complete data picture. They may also want additional insights about a company than the ones it uses in its regular operations. Economic pressures and the increased datafication of private equity mean that investors seek much deeper analysis of a company’s performance and potential. It is critical for management teams to place greater emphasis on data and analytics to support their ‘equity story’.
Investors are even more concerned with evidencing the ‘how and why’ when it comes to performance and trends; just saying that we have grown profitably by X% year on year is now not enough – it needs to be evidenced by granular data and solid analytics.
By presenting a clear, evidence-based narrative backed by data, businesses can strengthen their equity story and provide the clarity that investors need to make decisions. This not only highlights past performance but also lays out a roadmap for future growth, ensuring alignment with investor expectations.
This also allows management to showcase opportunities for further future growth, with investors being able to leverage these data ‘assets’ to underpin their investment cases. Management teams are expected to be using these assets to run the operation and the platforms must be able to scale with future growth – especially if merger and acquisition is a strategy that an investor would like to pursue. An eye-popping number of investments have fallen over at the eleventh hour because management teams were not able to provide sufficient quality of data to satisfy the potential investors.
There’s no doubt that the Dains deal has highlighted the growing attractiveness of the mid-market, especially within the accountancy sector. For those aspiring to take stock of this opportunity, the reality is that if your firm has a sound, well thought out data strategy and associated infrastructure, it will be generally more attractive to private equity investors than a business that – although on paper it has greater value and potential – has an incoherent or incomplete data strategy. Consequently, one of the most important decisions a firm can make in terms of increasing its long-term value is how it invests in, and approaches, its data management. Don’t wait until exit; exit will be far less painful and more lucrative if you start now.
Author bio
Natalie Cramp is a Partner at JMAN Group, and is responsible for developing innovative solutions for clients to enable them to maximise the potential of data and AI.
