- Francesca Lagerberg is the CEO of Baker Tilly, one of the world’s 10 largest 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 smaller version of a Big Four firm, she told BI.
The Big Four professional services firms lead the accounting and consulting market globally. They have a combined 1.5 million employees, generate billions in annual revenue, and their easily recognizable names attract many eager young graduates every year.
But for all their status, the Big Four have seen a marked decline in their growth rate over the past few years and their consultants have left.
In this downward trend in the market is Baker Tilly, a medium-sized network with about 140 member firms.
The tax, advisory and legal services provider generated global revenue of over $5 billion for the year ending December 2023, an 11% increase from last year and a record high for the firm. It is now one of the top 10 accounting firms in the world.
For Baker Tilly, however, the goal isn’t growing to the point where the Big Four become the Big Five, CEO Francesca Lagerberg told Business Insider.
“Am I ambitious? Yes, very,” she told BI. “But am I ambitious to be a smaller version of something else?”
“Big Four Super Tank is an amazing organization, very successful and very good at what they do. We just operate in an environment where mid-sized firms excite us.”
Lagerberg said Baker Tilly’s success is due to its large proposition, strong member firms within the network and moves those firms have made into larger markets.
“It’s a very good time for us. We’ve been able to provide what the market needs. We’ve been in markets where growth has continued and the type of work we specialize in seems to have a more consistent level . . .
“At the mid-level, where we’re strongest, firms are looking for that kind of input and advice. So we’ve been able to provide the services they want, and there hasn’t been that kind of decline.”
Growing on a smaller scale has also meant the firm hasn’t suffered the effects of the overcrowding that has plagued bigger names.
On paper, all accounting firms like Baker Tilly appear to offer the same services, but Lagerberg, who has 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 providing them in a way that customers would want to provide them, she said.
“It’s fundamentally about the values and behaviors that we have. We have a very strong people-first approach and we really understand that,” she said.
There are no strict working hours at Baker Tilly that other firms are known for. Instead, the company offers its employees unlimited holidays and flexible working. It’s an organization whose staff actually gets along and attracts like-minded customers, Lagerberg said.
Being people that others like to do business with is a “very misunderstood part of how the world goes around,” she added.
The wave of private capital
The mid-tier sector of professional services firms has not avoided the slowdown that hit the Big Four.
Along with economic pressures and high interest rates, the strain is helping to fuel a new wave of private equity investment in mid-tier accounting firms.
Firms typically paid dividends to equity partners, who also get a vote on how the firms are run. External cash injections are removing the control historically promised to partners and shaking up the culture of firms.
Private equity houses have injected money into mid-tier accounting firms. Mike Kemp/Getty
In the US and UK, firms such as Grant Thornton, Cooper Parry and EisnerAmper have gone 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 ever made in this sector.
The EP has many advantages, but it is not a golden bullet, Lagerberg told BI. One benefit is that it is providing an influx of capital that is needed by firms as they evolve with technology and data.
“We’ve been a very light business. Now, we’re a very high-end environment, so it’s not surprising that PE is seeing growth,” said Baker Tilly CEO.
It’s also bringing a big change in culture that not all partners are happy about.
“A lot of partners they’ve been operating in an environment that’s been very similar throughout their careers, and suddenly an outside stakeholder comes along,” Lagerberg said. But they also bring a new rigor for firms.
“PE houses are very good at running organizations in an efficient way. I think you’ll see an even stronger emphasis on finance and look for a return.”
The reality for any business is that you can’t be sure of the future, Lagerberg said. In this age of volatility, that’s part of the reason companies continue to turn to Baker Tilly.
“You’re not going to make all the right decisions because nobody knows where anything is going to go. But you can be future-proof. How can you get yourself in a position where you’re going to spend most of her? Some things will be amazing opportunities. Are you ready to take them?”
Do you work in a consulting or accounting firm? Contact this reporter in confidence at pthompson@businessinsider.com to talk about your experience and the industry.