Episode summary
Kelly Partners (KPG): The Constellation Software of Accounting?
The Intrinsic Value Podcast
· · 1 hr 17 min · Hosts: Shawn O'Malley, Daniel Mahncke · Guests: Brett Kelly
Summary
Kelly Partners is presented as a young but fast-growing Australian accounting roll-up with a founder-led culture, a large M&A runway, and a stock that has fallen roughly 50% from early 2025 highs. The host argues that the business resembles the Constellation Software model, but in accounting and tax rather than software, and that its value comes from buying small firms cheaply, keeping the operating partners in place, and using centralized systems to lift margins and free up time for higher-value advisory work.
The episode emphasizes Brett Kelly’s unusually large ownership stake, close to 50%, and the company’s partner-owner-driver structure, where KPG typically buys 51% and leaves 49% with existing partners. The host argues that this incentive design, plus staged seller payments and debt kept at the operating-business level, helps preserve client relationships and reduce integration risk. Kelly Partners is said to target firms with around $2 million to $10 million in revenue and to buy at midsingle-digit earnings multiples.
AI is treated as both a threat and an opportunity. The bear case is that routine compliance work could be commoditized, compressing pricing and billable hours. The bull case is that tax complexity keeps rising, clients still want human advice and official sign-off, and AI may actually help firms expand by automating routine tasks while increasing time spent on advisory services. The host also highlights succession pressure in Australia, the UK, and the US as a major source of acquisition opportunities.
Key takeaways
- The host sees Kelly Partners as a Constellation Software-style acquirer in accounting and tax, with over 30% revenue CAGR since IPO and a roughly 50% drawdown from highs.
- Brett Kelly is described as owning close to 50% of KPG, which the host says aligns management with shareholders unusually well for a public company.
- KPG typically buys 51% of a firm, leaves 49% with partners, and uses a 9% combined fee structure plus centralized support to push subsidiary EBITDA margins toward 35%.
- The host says the main AI risk is commoditization of routine bookkeeping and tax prep, but the main opportunity is shifting accountants toward higher-margin advisory work.
- KPG’s acquisition pipeline is supported by demographic succession issues: the host cites about 20,000 Australian accounting businesses with pending retirements and nearly 90,000 across Australia, the US, and the UK.
Notable quotes
“there are two things that are certain, death and taxes”
How the episode opens
0:00In the last couple of weeks, I've been looking at companies that could be the next 10, 20, or even 50 beggger. Kelly Partners is a company that's early in 0:088 secondsits journey and for the first time in years, attractively valued. 0:1111 secondsIt's another serial acquirer, a business model that has been highly successful in the last few decades, but many of its most prominent representatives are in 0:2020 secondshuge draw downs right now, including Kelly Partners.
0:2424 secondsThe good news is that it's focused on text businesses, so no software involved. The bad news is that the market doesn't care. AI can also come 0:3131 secondsfor tax advisors.
However, I think Kelly Partners has a unique value proposition. 0:4343 secondsBy now, you might say that we have a new favorite category of stock to look at. 0:4848 secondsAnd today, we'll be looking at Kelly Partners Group.
another programmatic acquirer that is in the very early innings and thus promises to have a long 0:5656 secondsrunway of high return compounding in front of it hopefully. And so we have looked at programmatic acquirers in a few different sectors now. We covered 1:031 minute, 3 secondsTransdime in the aerospace industry and constellation software and chapters group which are both in the vertical market software space.
And so Kelly Partners does follow a similar playbook. 1:141 minute, 14 secondsHowever, it is more focused on acquiring accounting and tax businesses specifically. That's their niche.
And so I think it's a name that most people are 1:221 minute, 22 secondsprobably not familiar with. That's partly because it's an Australian company, but also I will say that people 1:291 minute, 29 secondswho are active in the small and midcap space may know the name. It was really popular on FinTit a few years ago.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- accounting firm growth
- acquisition criteria
- ai impact on accounting
- bull vs bear case
- sme client market
Companies and tickers mentioned
- Kelly Partners
- Constellation Software
Watch the episode
Watch “Kelly Partners (KPG): The Constellation Software of Accounting?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from The Intrinsic Value Podcast
-
Canadian Pacific Kansas City Limited (CP.TO): Irreplaceable Moat, Unproven Compounding -
Reddit (RDDT): Record Cash Flow, Collapsing Share Price -
McDonald's ($MCD): Generational Compounder in Historical Drawdown -
Mercado Libre ($MELI): We Doubled Down on Meli! -
Airbnb (ABNB) The Business Outgrew Its Peak, the Stock Hasn't -
GE Aerospace: The Ultimate Compounder?
The Intrinsic Value Podcast, this episode and its artwork belong to The Investor's Podcast Network. Octagon is not affiliated with the show; this page is an independent summary.
