How to Sell a Consulting Firm for the Best Price
If you are looking to sell your consulting company, finding the right buyer can be a challenge. Before finding someone to buy your consulting business, you should know what your consulting firm is worth. The good news is that Synergy Business Brokers has experience selling consulting companies and can provide you with a free, confidential consultation. We can walk you through the steps of getting the most value for the sale of your consulting company.
We have sold and look to sell many types of consulting businesses, including:
- Management Consulting Businesses
- Marketing Consulting Businesses
- IT Consulting Businesses
- Engineering Consulting Businesses
- Educational Consulting Businesses
- Expense Reduction Consultancies
- Procurement Solutions
- Mortgage Brokers and Lenders
We focus on selling consulting businesses with annual revenues of $700,000 to $70 million.
Steps to Selling a Consulting Business
From valuation to sale, the best procedure for selling your consulting business is a multi-step process. Proper preparation and planning are essential to maximize your firm's value, mitigate risks and ensure the entire process goes smoothly.
1. Market Risk Assessment and Initial Valuation
First, we find out some general information, such as who your customers are, your area of expertise in consulting services, and your employees' skills. Then, we will review your financial information to determine what your overall company worth is. During this step, we may analyze your firm's:
- Growth trends
- Market position
- Drivers of new sales
- Reliance on the owner
- Channels that attract new customers
- Processes and systems that run the business
Identify any potential problems that could impact your sale and put yourself in a strong position to negotiate with buyers by understanding return on investment (ROI), current market activity, buyer risks, and your ability to positively affect a buyer's business.
2. Determine Your Asking Price
Next, we can provide you with a recommendation on a potential asking price for your consulting business. We'll take into account the unique aspects of your business as well as what other similar consulting companies have sold for. If you decide to move forward, we will have you sign our listing agreement.
Before signing, we'll let you know if this is something we feel comfortable selling. We only get a fee if we sell your consulting firm, so we want to make sure we are on the same page regarding the valuation of your consulting business.
3. Build Your Buyer List
While you continue business as usual, we will help you create a list of potential buyers who may be interested in your consulting firm. Put the buyers into groups according to their potential synergy with your company, as synergy factors can influence the price significantly. Your buyer list may include first-time buyers, competitors, entrepreneurs, and private equity companies. At Synergy Business Brokers, we have a huge database of buyers we can use to help you build your list.
4. Market Your Business
Once we have the listing agreement in place, we will write up a summary about your business that provides enough information to get buyers interested but not so much that it gives the identity of your business away. We will use this write-up for marketing your business in several ways. We will advertise your business on many companies for sale websites, some of which have over 10 million page views monthly. Additionally, we will contact the potential buyer database that we have cultivated for over 15 years.
Also, we will reach out to other consulting firms both in your industry and in other sectors. Our merger and acquisition experience allows us to sell your business and potentially merge it with another consulting firm. We have expertise in business broker consulting to provide you with the best options.
5. Engage Your Buyer List
The next step is to reach out to the potential buyers on your list to assess their interest and pre-qualify them. An interested buyer signs a non-disclosure agreement (NDA) that prevents them from revealing information to third parties and reduces the risk of a buyer poaching your staff if they do not or cannot purchase your consulting firm. The potential buyer will also receive a copy of the information memorandum (IM), so they know the benefits of making the purchase.
6. Sign the Sale and Purchase Agreement
Finally, you'll consider your offers and choose a buyer. Then you'll request a Letter of Intent or terms document that describes the offer and due diligence. In the period that follows, you cannot move toward a sale with a different third party. Due diligence may include an assessment of financial and legal concerns and client relationships. You will then sign a sale and purchase agreement.
How to Value a Consulting Business for Sale
Valuation of a company can be a difficult process that involves a careful review of your operations and financials, then putting those numbers into different equations. Additional factors like market comparison and conditions may also be considered. At Synergy Business Brokers, we may use any of the following factors to estimate your consulting business's value:
- Net profit
- Market position
- Customer funnel
- Debts and liabilities
- Unique selling points
- Annual average growth
- Internal systems and operations
- Operational or physical locations
- Assets like proprietary software, websites, and social media channels
Understanding your company's value is essential to the sales process, as potential buyers want to know they can expect a great ROI. The valuation of your business will reflect both the company's actual value and the buyer's ability to recoup their investment.
Your employees will also factor into your company's value. We will consider the revenue each employee generates. If you are the sole consultant, the firm's value may be based on your assets and client base alone, along with a handover strategy. At Synergy Business Brokers, we can help you with your company valuation.
How to Increase the Value of Your Consulting Firm
To get the best asking price for your consulting firm, you may want to take steps to increase its value. First, review your financial statements and budgets to ensure they're in order. The state of your finances will be a key factor in finding and securing a buyer.
Pay off any liabilities you can and focus on increasing profits, as potential buyers want a healthy company with the potential for growth and reliable income. If you don't already have a growth plan or consistent earnings, now is the time to resolve these issues.
Next, identify your firm's unique selling points and hone them. If needed, improve customer relationships and increase repeat customers. Resolve any pending legal issues before moving forward in the sales process. You'll also want to trademark and copyright any assets and ensure your business processes are seamless.
Partner With a Business Broker Consultant to Sell Your Consulting Business
We understand that selling your consulting firm can come with a lot of emotion wrapped up in the sales process. When you're a business owner, it's completely natural to feel some stress about the long-term success of your business.
However, our business brokerage has the experience in handling the complicated procedure of finding the right buyer and going through due diligence, all the way to a successful closing of your consulting business. We have several buyers and sellers for consulting companies. Whether you want to sell a management consulting company, operations consulting or any other type of consulting firm, please contact us about our business broker consulting services.
Potential Buyers for Your Consulting Firm
Depending on the size and type of your consulting business, the best buyer could be one of several possibilities, including another consulting firm, a wealthy entrepreneur, a private equity group, or another company that wants to add your consulting services to its repertoire of offerings. The ideal buyer is someone who can leverage what you have to take it to the next level.
In most cases, you would stay on after the sale to help make sure there is a smooth transition with the employees, customers, and business processes. Along with getting the best price, you also want to make sure that the buyer is someone you feel comfortable working with. We will screen the buyers before introducing them to you. If your business is profitable and has annual revenues of $700,000 to $70 million, Synergy Business Brokers has many potential buyers who would be interested in the sale of your consulting firm.
Turn to Synergy Business Brokers to Sell Your Firm
At Synergy Business Brokers, we sell consulting firms for the best possible price. With our database of more than 30,000 buyers, we're confident we can help you find a buyer for your company. Thanks to our successful track record of selling companies, the Chamber of Commerce has named us one of the U.S.'s top five business brokers. Whether you are just beginning to consider selling your firm or you're ready to sell today, you can trust us to guide you through each step of the process.
We have top business brokers in New Jersey, New York, Connecticut, Pennsylvania, Massachusetts, Illinois, Texas, and Louisiana who can meet with you for a free consultation to determine whether now is the right time for you to sell your consulting company. We sell consulting businesses throughout the U.S. You can contact Synergy Business Brokers at [email protected] or fill out our contact form, and we’ll reach out to schedule your private consultation.