After reaching an all-time high of $13.60 in February, Kelly Partners Group Holdings Ltd (ASX: KPG) shares have slipped more than 30% at the time of writing.
It's a surprising decline for a small cap that continues to do what it always has: grow methodically, acquire carefully, and deliver results.
There has been no shock announcement or earnings miss, only a market that seems less willing to reward steady execution with a lofty multiple.
The question now is whether this signals a business in decline or a long-term opportunity hiding in plain sight.
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A global accounting network built on partnership
Kelly Partners is a network of chartered accounting firms that takes majority stakes in established practices, leaving partners with meaningful equity to drive long-term growth. Founded in 2006 by self-proclaimed Warren Buffett mega fan Brett Kelly, the company has steadily built a reputation for disciplined acquisitions, operational improvement, and cultural alignment — all within the resilient world of small-business accounting.
Over the years, the model has proven remarkably consistent: buy well-run firms, enhance efficiency and margins toward a 35% operating earnings (EBITDA) target, and reinvest profits into new partnerships.
Even now, Kelly Partners operates more like a "mini private equity firm for accountants" than a traditional practice.
FY25 results: Steady and solid
For FY25, Kelly Partners delivered another year of solid growth as it expanded both locally and overseas.
Revenue rose 24.5% to $134.6 million, driven by 20% acquisition-led and 4.5% organic growth. New partnerships added $16 million in fresh revenue, while prior-year acquisitions contributed another $5.6 million.
Underlying EBITDA increased 14.7% to $34.4 million, with Australian margins holding firm at 30.8%. Group margins eased to 25.6%, reflecting the early impact of newer operations in the US and Ireland.
Cash flow remained strong, up 23% to $24.9 million, although net debt rose to $58.4 million as the company funded acquisitions and fitouts. Management is comfortable with debt levels of 1.42x EBITDA, given recurring revenues and $19.8 million of debt repaid during the year.
While the results may lack fireworks, they demonstrate the business' consistency and its ability to maintain strong margins even as it expands abroad.
From Bowral to the USA
Kelly Partners continues to execute its "programmatic acquisition" strategy, with recent deals showing both geographic breadth and discipline.
In the past few months alone, it's added a Bowral-based firm in NSW, a US accounting business servicing McDonald's franchisees, and a Philippines-based outsourcing firm that supports bookkeepers and accountants. Each deal adds incremental revenue — not material on its own, but collectively building toward Brett Kelly's goal of creating a global Australian accounting network.
A larger base, lower growth rate?
Naturally, as Kelly Partners scales, it's harder to post the kind of double-digit compounding that defined its earlier years. The law of large numbers is at play, and investors may be adjusting their expectations accordingly.
That doesn't mean the business is maturing into stagnation. Instead, it's now deploying its proven model into much larger, addressable markets in the United States and the United Kingdom — both far bigger than Australia. The recent US acquisitions, for example, give Kelly Partners exposure to around 8% of all McDonald's franchise owners in the country.
Opportunity or warning sign?
The question for investors is whether the current share price reflects a growth story that's evolving or one that's slowing.
Kelly Partners' fundamentals remain robust: recurring revenue, growing international exposure, and a founder-led team with significant skin in the game. Yet valuation always matters.
At today's lower share price, long-term investors may see a chance to own a quality, capital-light compounder at a discount. Others might prefer to wait and see whether international expansion delivers the same margin discipline that made its Australian business such a standout.
Either way, the core story remains the same — a workmanlike business compounding steadily, brick by brick, toward a larger global future.
