BDO's "Project Velvet" and the Coming End of the Federated Accounting Firm

• BDO — the world's fifth-largest accounting network by revenue — is overhauling its 60-year-old federated structure, starting with regional cluster mergers and a UK/Ireland combination codenamed "Project Velvet."

• The push is driven by multinational client pressure for seamless cross-border service and the need to deploy AI tooling at scale — neither easy in a patchwork of 160-plus independent national partnerships.

• BDO has formally ruled out external PE investment for now, but internal disagreement is real: some partners argue the roll-up is simply unaffordable without outside capital.

  
  

What happened

As reported by the Financial Times, BDO — which generated $15bn in global revenue in FY2024 — has been quietly building consensus since at least January 2024 for a fundamental restructuring of its global network. The plan accelerated at an international partner meeting in October 2024. The immediate move is to cluster national firms into regional blocs, with the UK and Irish partnerships heading towards a partner vote on a full merger under "Project Velvet." Longer-term ambitions extend to a single global firm, though partners acknowledge the full process could take a decade or more and may settle at two or three large entities rather than one.

Context & data

• BDO's combined global revenues passed $15bn (€13.9bn) for FY2024, up 7% year-on-year in USD terms, with over 119,600 people across 166 countries

• In FY2025 (ending 30 September 2025), BDO's core network revenues reached $11bn, sustaining a five-year CAGR of 8%; including alliance firms, the figure exceeds $16bn. EMEA was the standout region, posting 7% growth

• BDO has committed $1bn in global digital and technology investment over several years, including a partnership with Microsoft to expand AI tools across its 40,000-plus audit and assurance professionals

• The average middle-market Business Services EV/EBITDA multiple reached 9.0x in 2024, up from 7.9x in 2023, per Capstone Partners — setting a high benchmark for any internal roll-up financing that avoids external equity

• Grant Thornton UK — BDO's closest UK mid-tier rival — was acquired by Cinven at a valuation of up to £1.5bn in a deal that closed in April 2025, with 250 partners averaging £682,000 in pay for the year. Net revenue reached £724m, up 11%

• PE firms have now bought stakes in 11 of the top 30 US accounting firms since 2021; one industry adviser estimates that by end-2025, more than half of the largest 30 US firms will have external ownership — up from zero in 2020

  
  

My take

From a PE lens, the logic of BDO's consolidation move is sound even if the execution is daunting. Professional services firms with a genuinely unified global platform should command a structurally better multiple than a loose network — think consistent quality standards, shared technology capex, cross-selling on multinational mandates, and a single AI deployment rather than 160 fragmented experiments. BDO's five-year revenue CAGR of 8% already shows the network model can grow, but the question is whether it can grow efficiently enough to self-fund a roll-up at current mid-market EBITDA multiples of ~9x. That's the crux of the internal friction: buying out smaller national partnerships at market rates is genuinely expensive, especially when partners in those firms can observe what Grant Thornton UK just achieved and set their price expectations accordingly.

What I find most interesting is the governance tension. In a traditional partnership, there's no natural principal willing to absorb dilution for long-term platform value — every partner has a relatively short time horizon tied to their own career. That's exactly why PE has swept through US and UK accounting so fast; it provides the balance sheet and the holding period to make the roll-up math work. BDO's stated preference for staying independent may hold if it can engineer creative deal structures — deferred consideration, earnouts, or internal leveraged finance — but with mid-market multiples elevated, I'd want to see a credible financing plan before treating the ambition as anything more than strategic intent. The fact that at least one senior partner publicly called it "a crazy, crazy strategy" without PE backing suggests the debate is far from settled.

Risks & watch-list

• Affordability without PE. At ~9x EV/EBITDA for mid-market services assets, buying out 160-plus national partnerships using internally generated cash or private credit alone looks very stretched. The $1bn tech commitment compounds the capital demand

• Partner attrition and cultural fracture. The history of professional services mergers is littered with talent walks. Smaller national firms that feel "absorbed" rather than valued risk losing the senior partners — and therefore the client relationships — that justified the deal

• Regulatory and auditor-independence scrutiny. The FRC reviewed the Grant Thornton/Cinven deal for auditor independence; any BDO move towards PE or a single-firm structure would invite similar scrutiny across multiple jurisdictions simultaneously, with FCA and PCAOB oversight all potentially in scope

• Competitive response. If BDO's cluster mergers take a decade, Grant Thornton UK (now Cinven-backed), Baker Tilly US (Hellman & Friedman), and others will have materially better-capitalised platforms competing for mid-market mandates in the interim. Time is not neutral here