The equity value impact of associates versus employed consultants
Why read this article?
Consulting firm owners face the constant challenge of deploying the right blend of non-employed contractor resources (associates) with full time consultant employees. There are three factors driving this management challenge:
- De-risking the financial overheads in the business as a firm scales;
- Being flexible to meet the peaks and troughs of supply and demand;
- Paucity of skills of the right calibre available for hiring.
However, the question that is rarely addressed in forward planning of resources, but often asked when we engage with owners wanting to sell their firms and exit, is how the FTE consultant v Associate model impacts salability and equity value.
Therefore this article addresses that question in order to help you plan the organizational configuration of your firm.