For decades, the German tax advisory market was not simply fragmented. It was deliberately engineered to remain so. More than 100,000 licensed tax advisors operating across roughly 55,000 firms created a system that prioritized independence, continuity, and professional judgment over scale. Ownership was tightly restricted to qualified professionals, effectively excluding external capital and preventing the emergence of large consolidated players. This structure was not inefficient by accident. It was designed to protect trust, particularly in the Mittelstand, where long-term relationships matter more than brand scale or operational efficiency. (Bundessteuerberaterkammer – Berufsrecht und Struktur)
That stability, however, was built on an economic model that assumed costs would behave predictably. For years, firms operated under the belief that expenses scale with billable hours and headcount. That assumption has been breaking under the combined pressure of digitization and regulation. The introduction of real-time reporting requirements, increasing documentation standards, and the growing complexity of tax compliance have materially increased the non-linear cost base. At the same time, firms are forced to invest in IT systems, cybersecurity, and data infrastructure, costs that sit at firm level and do not flex with utilization. The result is a model that still appears profitable at engagement level, while structural pressure builds beneath it. (DATEV Digitalisierungsreport 2023)
This pressure is amplified by demographics. A significant portion of German tax advisors is approaching retirement age, while fewer younger professionals are willing to take over firms under the traditional partnership model, which combines financial risk with increasing operational complexity. Succession, once a predictable mechanism, has become uncertain. The system was built on continuity of ownership and knowledge. It is now facing discontinuity on both fronts. Into this environment enters Afileon, backed by Partners Group, not by breaking the system, but by operating in the space between what regulation defines as ownership and what the market increasingly treats as control. (Handelsblatt – Nachwuchsprobleme bei Steuerberatern)
The Constraint: Capital Is Not Allowed, But Control Is Not Defined
The German regulatory framework governing tax advisory firms is explicit in its intent and unusually strict in its design. Ownership of a Steuerberatungsgesellschaft must remain with licensed professionals, ensuring that those who make decisions are bound by professional standards and liability. External investors are effectively excluded from holding controlling stakes, a restriction that has historically prevented the type of consolidation seen in markets like the UK. On paper, this creates a closed system. Capital cannot enter, and scale cannot emerge in the way private equity typically requires. (Bundessteuerberaterkammer – Berufsrecht)
But regulation draws its boundary around ownership, not around the broader concept of control. That distinction becomes critical under pressure. While the licensed entity must remain partner-owned, there is far more flexibility around what sits outside of it. Service entities, holding structures, and shared capability layers can be established alongside the regulated firm without violating the letter of the law. These structures are not new in themselves. What is new is the degree to which they are used systematically to separate where work is performed from where value is captured. (Covington & Burling – Ownership restrictions in professional services firms)
This creates a structural asymmetry. The regulated firm remains the legal center of gravity, holding the client contract and the professional license. But the economic center of gravity begins to move. Functions that define how work is executed, including systems, data, processes, and increasingly talent allocation, can be placed outside the regulated entity. Once that happens, the firm no longer operates as a fully self-contained unit. It becomes dependent on structures that are not bound by the same ownership rules. Capital does not need to break the system. It only needs to build around the parts the system does not tightly define. And once that dependency is established, control follows it.
The Investor: Partners Group and the Discipline Behind the Move
The involvement of Partners Group is not incidental. Founded in 1996 and headquartered in Baar, Switzerland, the firm manages more than $140 billion in assets across private equity, infrastructure, real estate, and private debt. Unlike traditional buyout firms that focus on financial engineering and relatively short holding periods, Partners Group positions itself as a builder of platforms in structurally fragmented industries. Its strategy consistently targets sectors where scale is constrained not by demand, but by structure, including healthcare, education, business services, and increasingly regulated professional services. (Partners Group – Annual Report 2024)
That positioning matters. Partners Group has repeatedly demonstrated a preference for markets where regulation creates barriers to direct ownership but does not fully eliminate economic participation. In these environments, the firm does not attempt to dismantle constraints. It builds around them. The pattern is visible across multiple investments: identify fragmentation, introduce centralized capabilities, and shift value creation toward scalable layers that can be aggregated and eventually exited at higher multiples. What looks like a limitation from the outside becomes a design parameter inside the investment thesis.
Afileon fits this pattern with precision. The German tax advisory market offers all the elements that make such a strategy attractive: a highly fragmented supplier base, recurring revenue from SME clients, increasing regulatory complexity, and growing pressure on succession. What it does not offer is direct access through ownership. The solution is not to challenge that restriction, but to sidestep it. By building a platform that sits adjacent to the regulated firms, Partners Group can aggregate economics without aggregating ownership. The constraint remains formally intact. The investment case remains fully viable.
The Timeline: Assembly Before Visibility
When Afileon was publicly introduced in early 2025, it appeared as a new entrant into the German tax advisory market, presented with roughly €100 million in revenue, a network of around 19 firms, and close to 30 locations across the country. The narrative suggested momentum and rapid scaling. In reality, the announcement marked the point at which an already assembled structure became visible. By the time the platform was named and positioned, the underlying consolidation work, including acquisitions, alignments, and early integration of capabilities, had already been executed out of sight. What looked like entry was, in fact, reveal. (Afileon – About us)
This sequencing is not accidental. It reflects a standard private equity playbook, particularly in markets where visibility creates resistance. Building scale quietly allows the platform to reach a level of operational stability before attracting attention from regulators, competitors, and the broader market. It also allows early integration challenges to be resolved without external pressure. By the time Afileon presents itself as a coherent entity, the critical risks associated with fragmentation, including inconsistent systems, misaligned incentives, and uneven capability, have already been reduced to a level that makes the model defensible. (Bain & Company – Global Private Equity Report 2024)
More importantly, Afileon is not an isolated case. Parallel developments suggest that multiple investors have identified the same structural opening. EQT’s investment in WTS Group and Cinven’s involvement in Grant Thornton Germany point to a broader pattern of coordinated entry into regulated professional services markets. These are not opportunistic moves reacting to a single success. They are independent validations of the same thesis: that fragmentation, regulatory constraint, and economic pressure together create an environment where platform models can emerge beneath the surface. When multiple actors move at the same time, it is rarely coincidence. It is usually confirmation. (Reuters – EQT invests in WTS, Reuters – Grant Thornton Germany deal)
The Move: Separating Ownership from Control
What Afileon is doing is not consolidation in the traditional sense. It is re-engineering where the firm actually operates. The licensed tax advisory entities remain legally intact and partner-owned, because they have to under German professional law. They employ the professionals, hold the mandates, and sign off on the work, maintaining compliance with ownership restrictions for Steuerberatungsgesellschaften. That layer is deliberately left untouched, because altering it would violate regulatory requirements and trigger immediate resistance. The visible structure remains stable, not because nothing changes, but because it cannot change. (Bundessteuerberaterkammer – Berufsrecht)
The shift happens in everything that regulation does not tightly define. Afileon builds a parallel layer of centralized capabilities, including IT systems, data infrastructure, recruiting, and workflow standardization, which sit outside the regulated entity. This mirrors a broader trend in professional services where firms separate regulated activities from commercial and operational layers, allowing external capital to fund and scale the latter. Legal analysis of European professional services markets shows that while ownership restrictions remain, service entities and management structures can operate alongside regulated firms, creating precisely this separation. (Covington & Burling – Ownership restrictions in professional services firms)
Control follows this separation. Once critical capabilities sit outside the firm, decision-making moves with them. Which systems are used, how workflows are structured, how data is processed, and how resources are allocated are no longer local partner decisions. They are defined centrally. Firms adopting shared systems and centralized operating models consistently experience a reduction in local autonomy once those systems become embedded in daily operations. The firm retains the client relationship. The platform defines how that relationship is executed. Ownership remains local. Control becomes systemic. (McKinsey – The next normal in professional services)
The Mechanism: How the Economics Are Redirected
To understand the model, you have to follow the money. In a traditional partnership, revenue flows directly into the firm, costs are incurred locally, and profits are distributed to partners. This creates alignment between value creation and value capture. The firm is both the producer and the beneficiary of its own economics.
The platform model deliberately breaks that alignment. The firm continues to generate revenue, but it no longer performs all the activities required to deliver that revenue. It relies on services provided by the platform, including IT systems, standardized processes, centralized teams, and elements of delivery. These services are not neutral. They are priced, structured, and scaled. Over time, a portion of what would have been profit at firm level becomes cost. Analysis of private equity-backed professional services platforms shows that centralized service layers often evolve into independent profit centers, funded through internal charges to operating entities. (Financial Times – Private equity targets accounting firms)
This is how value is captured without owning the firm. The platform aggregates these internal revenue streams across multiple firms, creating more predictable and scalable cash flows than traditional partnership earnings. Evidence from private equity activity in the accounting and advisory sector shows that investors increasingly focus on these centralized layers as the primary source of value creation, rather than the underlying regulated firms themselves. What appears as a cost line for the firm becomes a revenue line for the platform. (Reuters – Private equity eyes accounting sector growth)
The Economic Reality: Why the Platform, Not the Firm, Is the Asset
Traditional tax advisory firms operate within structural valuation limits. Even well-performing firms typically achieve EBITDA multiples in the range of 6 to 8 times, reflecting their dependence on individual partners, limited scalability, and localized operations. Growth improves earnings, but it does not fundamentally change how the business is perceived or valued. Across fragmented professional services markets, this pattern is consistent. The constraint is not performance. It is structure.
Platform structures break that limitation. Once capabilities are centralized, revenue streams aggregated, and processes standardized, the business becomes legible as a scalable asset. That changes how it is valued. Market data from private equity transactions in business services and accounting platforms shows multiples frequently expanding into the range of 10 to 14 times EBITDA, reflecting improved scalability, integration, and reduced dependency on key individuals. (Bain & Company – Global Private Equity Report 2024)
The critical point is where that valuation applies. It applies to the platform layer, the entity that controls systems, aggregates economics, and can be sold as a coherent unit. The underlying firms remain where they are: regulated, partner-owned, and structurally constrained in how they are valued. Over time, more of the economically attractive components of the business migrate into the part that can be valued as a platform. What remains at firm level continues to exist, but it is no longer the primary carrier of value. This re-rating is not incidental. It reflects the fact that these structures are designed from the outset to be scalable and ultimately exitable, a dynamic that increasingly defines how value is created in professional services. (The Exit Problem: Private Equity Has Found Ways Into Professional Services. Getting Out Is Harder)
The Knowledge Shift: From Partner Expertise to System-Level Capability
In the traditional German tax advisory model, knowledge is inseparable from the individual. The partner is not just a relationship owner but the primary carrier of expertise, judgment, and delivery capability. Client situations are interpreted, not processed. This creates depth and trust, particularly in the Mittelstand, but it also creates a structural bottleneck. Growth requires replicating highly trained professionals, and quality depends on their individual capability. Industry data confirms that the sector remains heavily dependent on human capital, with limited standardization across firms and significant variation in delivery models. (Bundessteuerberaterkammer – Berufsbild Steuerberater)
Afileon begins to change that dependency by moving specific categories of work out of the partner layer and into systems. This does not happen at the level of complex advisory judgment, but in the layers surrounding it. Data intake, document handling, compliance workflows, and recurring reporting processes are standardized across the platform. These are not peripheral tasks. They represent a meaningful share of the effort required to deliver tax advisory services. Research on professional services digitization shows that a substantial portion of work in accounting and tax can be codified and supported by automation, particularly in compliance-heavy environments. (McKinsey – Automation and the future of work)
This creates a clear boundary. The partner retains responsibility for interpretation, judgment, and client interaction. But the system increasingly defines how work is prepared, processed, and delivered. Over time, this shifts the center of gravity. The partner no longer defines the operating model. The platform does. The implication is not that partners become irrelevant, but that their role becomes narrower. The more of the delivery process is embedded in systems, the less the firm depends on any individual to execute it. That is what makes the model scalable and investable. (Financial Times – AI and professional services)
The Structural Outcome: A System the Firm No Longer Fully Controls
What emerges from this model is not a larger firm, but a structurally different system. At the surface, the regulated entity remains intact. It holds the client contract, carries the professional liability, and satisfies regulatory requirements. But beneath that layer sits a platform that defines how the firm actually operates. Systems, workflows, data, and parts of delivery are no longer controlled locally. They are centralized, standardized, and governed at platform level. The legal structure remains unchanged. The operating model does not.
This structure is already visible in adjacent transactions. EQT’s investment in WTS Group explicitly focuses on scaling centralized capabilities while maintaining the regulated structure of the firm. Similarly, Cinven’s involvement in Grant Thornton Germany reflects a growing focus on building scalable operating layers around partnership-based entities rather than replacing them outright. These cases show that the separation of ownership and control is not theoretical. It is being implemented as a repeatable model across multiple firms and jurisdictions. (Reuters – EQT invests in WTS, Reuters – Grant Thornton Germany deal)
The implication is structural and difficult to reverse. The firm continues to exist, but it no longer operates as a fully autonomous unit. It becomes part of a system whose critical components sit outside its direct control. The partner retains ownership in a legal sense, but the ability to influence how work is delivered, how costs are structured, and how value is created is increasingly determined elsewhere. Over time, the part of the system that controls these elements becomes the part that defines the economics. And that part is not the firm.
Closing Thoughts
At the surface, the market remains unchanged. Clients continue to work with the same advisors. Firms retain their names. The regulatory framework remains intact. This continuity is not incidental. It is a requirement. Visible disruption would trigger resistance from regulators, partners, and clients, undermining the economics the platform is designed to capture. (Financial Times – Private equity targets accounting firms)
But beneath that surface, the system is being rebuilt. Each capability that moves into the platform, including IT, data, workflows, and talent, increases dependency. Each dependency reduces the ability of the firm to operate independently. Individually, these shifts appear manageable. Collectively, they redefine the operating model. By the time the change becomes visible, the firm is no longer structured to function without the system that now supports it. This shift is not hypothetical. It is already visible across multiple firms and markets and is likely to accelerate over the next decade as operating models continue to evolve under the combined pressure of technology, capital, and scale. (The Next Decade Twelve Predictions for the Big 10)
This is why Afileon matters. Not because it disrupts the profession overnight, but because it changes where the profession actually operates. Ownership remains where regulation requires it. Control moves to where the system is built. Value follows control. And once that sequence is in motion, it does not need to be announced to be effective.
What This Means for Boards
Boards will be tempted to view these developments primarily through the lens of consolidation, competition, or private-equity entry. That framing is incomplete. The deeper shift increasingly concerns who controls the infrastructure through which the firm creates value. If that infrastructure sits largely within the firm, strategic control remains comparatively intact. If critical operating infrastructure increasingly depends on external platforms, delivery systems, capital structures, or technology environments, influence may gradually begin shifting beyond the traditional partnership itself.
This distinction changes how strategy needs to be evaluated. Investment decisions, technology choices, delivery models, and operating structures are no longer purely internal matters once they become dependent on broader platform ecosystems. In markets where these models are already more advanced, firms sometimes discover only gradually how operational dependency can begin constraining strategic flexibility over time. What initially appears as operational efficiency may also create longer-term structural dependency. (EY – How private equity is transforming professional services)
Which leads to a more uncomfortable possibility. Formal ownership and regulatory structure may no longer fully determine where operational influence actually sits. As firms become increasingly dependent on shared platforms, centralized delivery environments, AI systems, external capital, and integrated operating infrastructure, the practical balance of influence inside the industry may gradually begin shifting underneath the visible legal structure itself.
Most firms will not make one explicit decision to adopt this model. They will move into it incrementally through a series of individually rational decisions around technology, hiring, delivery scale, operational efficiency, and investment. The question is therefore not simply whether external capital or platform economics will influence professional-services firms. In many parts of the industry, they increasingly already do.
I work with boards and executive teams on independent perspectives across professional-services transformation, operating models, governance, platform economics, and large technology programs. If your leadership team is working through similar questions around strategic dependency, AI platforms, delivery industrialization, or operating-model change, you can reach me here:
Sources
Primary Sources
- Bundessteuerberaterkammer – Berufsrecht der Steuerberater
- Afileon – Über uns / Unternehmensprofil
- Partners Group – Annual Report 2024 (Financial Reports)
- Handelsblatt – Steuerberater: Immer weniger Nachwuchs in Deutschland
Secondary Sources
- DATEV Digitalisierungsreport 2023
- Covington & Burling – Ownership Restrictions in Professional Services Firms
- McKinsey – The Next Normal in Professional Services
- McKinsey – Automation and the Future of Work
- Financial Times – Private equity targets accounting firms
- Reuters – EQT invests in German tax advisor WTS
- Reuters – Private equity eyes accounting sector growth
- Reuters – Grant Thornton Germany private equity deal
- Bain & Company – Global Private Equity Report 2024
- EY – How Private Equity Is Transforming Professional Services