7 drivers to get your firm into the premium value zone
Why read this article?
To the uninformed it seems implausible that a consulting firm could have hardly any value at all. After all, these are knowledge based ‘people businesses’ which in the main provide people reliant services, with booked revenues rarely extending beyond a few months. How does a buyer place a value on that?
“If I buy your firm today, then you and all your people leave tomorrow with all their knowledge and client relationships … what’s left other than the existing contracted revenues?”
The answer is ‘not much’. Unless you’ve de-risked the future, in which case, like so many of your peers who’ve gone on to sell their firms, you can command a valuation above the industry average of about 1 x Revenue and well into the premium value zone. To find out what distinguishes low risk, high value firms from the rest (yes, even pure play consulting firms with order books extending only 3 months) read on.