Industry Q&A: Marc Cooper & Jon Hemmert Discuss Why Dealmaking Remains Active in the Professional Services Sector

Solomon welcomed Jonathan Hemmert as a Partner this month to build a dedicated Professional Services practice. Jon and I spoke about what has been driving the large number of mergers & acquisitions in this sector and whether dealmaking activity will remain robust. He also shared insights on the trends impacting this sector, including Artificial Intelligence and generational transfers.

Jon, to start, can you tell me what areas of the Professional Services sectors you’ll be focusing on initially?

Thanks, Marc. Professional Services is a broad field. Our primary area of focus will be broker/dealers and other white-collar Professional Services firms, particularly those that have a significant element of human capital. The most active segments of that market are accounting firms, consulting firms, and the specialized advisory market.

The Professional Services sector has been witnessing a wave of consolidation. What are some factors fueling this M&A activity?

There are several factors at play here, Marc. For starters, the space is highly fragmented. The Big 4 – Deloitte, PwC, EY and KPMG – each have over $10 billion in revenue, followed by roughly 20 firms with revenues ranging from $500 million to $5 billion, which are attractive platforms for sizable private equity firms. There is, then, a very long tail of $50 million to $500 million platforms and roll-up opportunities to support significant inorganic growth.

What else makes Professional Services firms attractive acquisition targets?

Many of these firms have a recurring business model, with plenty of room for improvement in operational efficiency. That, combined with the opportunity for inorganic growth I mentioned earlier, allows financial sponsors to underwrite a strong financial return model over a three-to-five-year hold period. 

How is Artificial Intelligence driving M&A in the space?

AI is transforming many industries, and this one is no exception. For some investors, AI is the core thesis driving their interest.

We’ve seen venture firms looking to disrupt the space completely. While tech-focused sponsors believe they can add more value through technology, traditional financial services and human capital firms also see AI as a necessary investment to stay competitive.

From your vantage point, where do you expect to see the most activity within Professional Services subsectors?

The exciting part is that we expect to see activity across the landscape. The business model here involves acquiring a platform, enhancing it organically, and then growing inorganically. As targets become more crowded and expensive, the scope of M&A activity will naturally expand.

Do you think dealmaking is peaking, or will robust activity continue in the second half of 2025 and into 2026?

There is a lot of interest in white-collar Professional Services currently, but it is still early days. We expect several more platform transactions to happen in the coming year or two, and well-capitalized platforms will look to expand inorganically, building a highly sustainable M&A market for a significant period of time.

There’s also a lot of generational turnover happening in the sector. How is that impacting the market?

Many leaders who have founded or built these organizations for the past 20 to 30 years are nearing retirement, prompting succession planning and ownership transfer. These owners are deeply invested in their companies and people and want to partner with someone who will take their business to the next level while taking care of their employees. These partners are really looking for the right steward for their businesses for generations to come.

That’s where I feel a firm like Solomon stands out. Sure, there are a lot of smart bankers out there who can close a deal. But what led me to join Solomon is the bankers here care deeply about their clients — in much the same way the clients care about the people they serve.