• Francesca Lagerberg is CEO of Baker Tilly, one of the world's 10 biggest accounting firms.
• In an interview with BI, Lagerberg explained why her firm has managed to buck the downward trend in the sector.
• Lagerberg doesn't want to turn Baker Tilly into a lesser version of a Big Four firm, she told BI.

The Big Four professional services firms lead the accounting and advisory market globally. They have a combined 1.5 million employees, generate billions in annual revenue, and their easily recognizable names draw in scores of eager young graduates annually.

But for all their status, the Big Four have seen a marked drop in growth rate over recent years, and their consultants have been leaving.

Bucking that downward trend in the market is Baker Tilly, a midsize network of around 140 member firms.

Its offering of tax, advisory, and legal services generated global revenue of over $5 billion for the year ending December 2023, an 11% increase from the previous year and a record high for the firm. It's now one of the top 10 accounting firms in the world.

For Baker Tilly, though, the goal isn't growing to the point where the Big Four becomes the Big Five, its CEO Francesca Lagerberg told Business Insider.

"Am I ambitious? Yeah, very," she told BI. "But am I ambitious to be a lesser version of something else?"

"The Big Four Super Tank is an amazing organization, very successful and really good at what they do. We just operate in an environment where midsize firms excite us."

Lagerberg said Baker Tilly's success is due to its great proposition, strong member firms within the network, and the moves those firms have made into bigger markets.

"It's a very good time for us. We've been able to offer what the market needed. We've been in markets where growth has continued and the kind of work that we specialize in seems to have a bit more of an ongoing level."

"In the mid-tier, where we are strongest, firms are looking for that kind of input and advice. So we've been able to offer the services they want, and there hasn't been that drop-off."

Smaller-scale growth has also meant the firm didn't follow the overstaffing fallout that has afflicted bigger names.

On paper, all accounting firms like Baker Tilly appear to offer the same services, but Lagerberg, who's spent her career in professional services, says it's the culture that helps differentiate the firm. It's not just about the services you provide, but offering them in a way that clients would like to have them delivered, she said.

"It is fundamentally about the values and behaviors that we have. We have a very strong people-first approach, and we genuinely mean it," she said.

There are no strict work hours at Baker Tilly that other firms are renowned for. Instead, the company offers its employees unlimited holidays and flexible working. It's an organization whose staff actually get on with each other and that attracts like-minded clients, Lagerberg said.

Being people that others like to do business with is a "much-misunderstood part of how the world goes around," she added.

The private equity wave

The mid-tier sector of professional services firms hasn't avoided the slowdown hitting the Big Four.

Together with economic pressures and high interest rates, the strain is helping drive a new wave of private capital investment in mid-tier accounting firms.

Firms have typically paid out profits to equity partners, who also get a vote on how the firms are run. External cash injections are divesting the control historically promised to partners and shaking up the culture at firms.

In the US and UK, firms like Grant Thornton, Cooper Parry, and EisnerAmper have gone down the private equity route. In 2024, Baker Tilly US did the same, selling a majority stake to private investment groups Hellman & Friedman and Valeas. It was the second-largest deal to be done in the sector.

PE has lots of advantages, but it isn't a golden bullet, Lagerberg told BI. One benefit is that it's providing an influx of capital that's necessary for firms as they evolve with technology and data.

"We used to be a really cap-light business. Now, we're a cap-heavy environment, so it's not surprising that PE is seeing growth," the Baker Tilly CEO said.

It's also bringing about a huge change in the culture that not all partners are happy about.

"A lot of partners they've operated in an environment that's been very similar all their careers, and suddenly in comes an external stakeholder," Lagerberg said. But they also bring a new rigor to firms.

"PE houses are very good at running organizations in an efficient way. I think you'll see an even stronger emphasis on the financials and looking for a return."

The reality for any business is that you can't be future-proof, Lagerberg said. In this era of instability, this is part of the reason companies keep turning to Baker Tilly.

"You will not make all the right decisions because no one quite knows where something is going to go. But you can be future fit. How can you get yourself to a position where you're going to ride out most of it? Some things are going to be amazing opportunities. Are you ready to take them?"

Do you work at a consulting or accounting firm? Contact this reporter in confidence at [email protected] to talk about your experience and the industry.