KPMG Private Enterprise Barometer 2025

We sometimes hear professional, and business services talked about as a bellwether for the health of wider industry – and if that’s the case, the outlook is encouraging. Our survey found that most PBS executives have their eyes set on growth, with an intention to expand through new products, services and markets, and an openness to acquisitions and M&A. Balance sheets are strong, with around half of PBS respondents saying they expect to fund expansion through their own internally generated funds. Private equity is the second most widely cited funding partner or route, and this chimes with what we have been seeing in the market – PE houses recognise the resilience and potential of the PBS sector and have shown a high willingness to back good businesses in the space.

The PBS sector can also provide a bright spot in supporting economic productivity and growth even when conditions are on a downward trend – including through a growing international reach on the back of the UK PBS sector’s reputation for quality and excellence, especially in areas such as legal and consultancy services.

The importance of the PBS sector to the national economy was recognised by the UK government, including Professional services as one of the eight sectors in its Modern Industrial Strategy. The sector is not only significant in its own right – it also has a role in multiplying growth across the wider economy.

One area where PBS stands out in our Barometer is investment in technology including AI. Over two-thirds (67%) of accountancy, banking and finance respondents, for example, say that technology investment is a strategic priority. AI is a prime focus within this, with seven in ten or more respondents across accountancy, banking and finance, and business consulting and management, targeting further investment. Without doubt, AI holds enormous potential across PBS to create process and operational efficiencies, generate actionable insights from data that help them meet clients’ needs, and enable talented staff to become even more productive. You can see just how topical this sentiment is in the KPMG AI finance report which shares ways on how to transform your finance function.

It is for this reason that we at KPMG UK, responding to the government’s Industrial Strategy consultation, called for the creation of an Early Adopter Scheme that rewards the adoption of new technologies such as AI in the PBS sector in the form of tax incentives (like other R&D). KPMG’s response outlines a five-point plan to underpin the government’s Industrial Strategy in relation to the professional services sector and enable it to drive economic growth.

Whilst resilient, inevitably there are challenges that PBS businesses face. Workforce issues are a prime example, and we see this in the Barometer results. A higher-than-average proportion of PBS businesses say they are having to change or rethink their Employee Value Propositions to recruit and retain talent. Competition for the best talent is intense and, once recruited, holding onto them can be difficult given the ambitious nature of professionals willing to consider a move elsewhere to advance their careers.

Another area that we see taking up a lot of leadership attention is regulatory compliance. Our survey shows an emphasis on investing to improve efficiency in reporting and compliance (a priority for 77% of business consulting and management businesses). Regulation is moving quickly with significant changes in differing ways across the diverse PBS landscape. It’s something we know about at first hand at KPMG given the reforms underway to the accountancy profession – but the principle holds across PBS: invest in your regulatory and compliance departments and processes, because the statutory demands are only set to grow.

Like other sectors, PBS businesses will be affected by measures in the government’s Budget delivered at the end of October 2024 – with an increase in employers’ National Insurance a notable impact and changes to inheritance tax rules are a major potential issue for family-owned businesses in the sector.

However, the mood is generally confident and robust. 2025 looks set to be a year where the best businesses in the PBS sector continue to evolve, adapt and thrive.

Want to find out more about what’s top of mind for privately owned business leaders? Read our KPE Barometer 2025 report here.