FRC Key Facts 2026: Fewer Audit Firms, an Older Profession and What It Means for Succession

What the FRC report shows

The FRC’s Key Facts and Trends in the Accountancy Profession 2026 draws on data from the professional accountancy bodies. Among its findings:

• Audit firms. Firms registered for statutory audit work in the UK and Ireland fell 9%, from 3,760 in 2024 to 3,421 in 2025, following a 7% fall in 2024.
• New entrants. Applications to become a registered audit firm fell 33%, from 172 to 115.
• Firm size. 82% of audit firms have between one and three principals.
• Consolidation. One new firm with more than 50 principals registered in the year, which the FRC attributes to established firms consolidating.
• Age. Members aged 55 and over make up 29% of the worldwide membership, up from 27% in 2021.

Overall membership is still growing: members in the UK and Ireland rose 2.5% to 418,986 (full report). The pattern is of a profession that is growing in people but concentrating into fewer, larger firms, particularly in audit.

Why it matters for succession

Most audit firms are small, and a larger share of the profession is approaching retirement age. Owners of smaller practices face familiar choices: bring through a successor, merge with a neighbouring firm, sell to a larger practice or sell the client base. Fewer new firms registering for audit also means audit work is likely to keep moving towards firms with the scale to support it.

Each route has a funding need. A successor or management team buying out the founders can use succession finance or partner buy-in finance, and retiring partners can be paid out with partner buy-out finance.

What it means for buyers

For growing practices, more owners heading for the exit means more opportunities to buy. Fee block finance is commonly used to buy a client base, assessed on its recurring fee income, and goodwill finance and acquisition finance cover the purchase of a whole practice. Lenders will look at the quality and retention of the fees, the client mix and how the deal is structured.

Timing matters for both sides. A practice sold while the owner is still active, with time to introduce clients to the buyer, usually retains more of its fees than one sold in a hurry, and lenders tend to look more favourably on a planned handover. Buyers often agree deferred consideration linked to fee retention, which shares the risk and reduces the amount to fund on day one.

The changes under Making Tax Digital for Income Tax add to the case for scale, as practices invest in software and staff to support clients through quarterly reporting.

Practical steps for practice owners

• If you plan to retire within five years, decide on your preferred route now.
• Keep fee records, engagement letters and client retention figures in good order.
• If you are buying, model fee retention cautiously and allow for transition costs.
• Consider deferred consideration to share the risk of fee attrition.

Our guides to fee block finance and retirement and succession funding go further, and succession and exit brings the options together. We search the market across 300+ lenders for accountancy practices, and Instant Quotes shows your matches in minutes, with no credit check.

Common questions

Published 15 October 2026. Figures and dates are taken from the sources named and were correct on that date. This article is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.