How to sell a consultancy — when the business is you
Consultancies are the hardest small businesses to sell well — and the most transformable. The clients came for you; the buyer is paying for what happens after you leave. Close that gap and a consultancy sells like any professional-services firm; ignore it and the offers arrive low, structured, and heavy with conditions. Here is the buyer's-side truth about the whole exercise.
Why buyers are nervous — and what that does to price
A consultancy's assets walk out of the door every evening, and its biggest one — the founder's relationships and reputation — is precisely what the buyer can't keep. So buyers price two fears: client flight (will the top three accounts stay when you go?) and capability flight (can anyone else deliver what clients actually bought?). That is why founder-delivered project consultancies sit at the bottom of the professional-services multiple range — around 2–3× adjusted profit — while team-delivered firms with contracted, recurring revenue reach 4× and beyond. Same profit, very different cheque, and the difference is structural, not negotiable. Run your own numbers through the valuation calculator to see the range — then read on for what moves you up it.
The five things that genuinely move a consultancy's multiple
- Recurring beats project. Retainers, support agreements, framework places and multi-year engagements convert "we hope they come back" into revenue a buyer can bank on. Every project client converted to even a modest retainer is a direct multiple upgrade.
- Team delivery beats founder delivery. The single most valuable sentence in your sale: "the clients rarely deal with me now." Move delivery, then relationships, onto your people — deliberately, account by account.
- Method beats memory. A documented way of working — templates, playbooks, a named methodology — is transferable IP. Expertise that lives in your head is, from a buyer's chair, a liability with a salary.
- Contracts beat goodwill. Signed engagements with notice periods, IP terms and non-solicit provisions. Buyers read paper, not warmth.
- A niche beats generality. "The firm for X in Y sector" attracts strategic trade buyers who pay for position; "we do lots of things for whoever calls" attracts bargain hunters.
Who actually buys consultancies
Four buyers, in rough order of frequency: larger firms tucking in a capability or client list they want (usually the best payers — they're buying strategy, not just profit); your own senior people, in an MBO — quiet, culturally safe, and very financeable when structured with vendor terms; individuals buying themselves a firm and a living; and consolidators rolling up firms in specific verticals — real money, but read their earn-out terms twice. Discreet direct approaches to the obvious trade buyers cost nothing and, in consultancy, work unusually well — the buyers who want your niche already know your name.
The earn-out: near-universal, and negotiable
Almost every consultancy deal defers part of the price against what happens after completion — typically one to three years, tied to revenue or client retention. That is rational (the buyer is insuring against exactly the flight risks above), but the drafting decides whether it's fair. The buyer's-side advice, given honestly: cap the at-risk portion (a meaningful cash majority at completion; walk from 20%-down-80%-maybe deals); tie targets to things you can influence — revenue from named clients, not the buyer's group profit after their own cost allocations; define everything measurably in the agreement, including what happens if the buyer changes strategy, loses your key staff, or sells on; and match your handover commitment to the earn-out period, paid for your time. A well-drafted earn-out is deferred price; a badly drafted one is a donation.
The two-year preparation that changes everything
If you can start ahead of the sale: year one — move delivery to the team, convert your best project clients to retainers, write the methodology down, put every engagement on signed terms. Year two — step visibly back (the proof buyers want is a business that ran while you took six weeks off), fix the concentration if one client dominates, and get the accounts immaculate. Firms that do this genuinely double their outcome against firms that don't — not by negotiating harder, but by changing what is being sold. If you can't start two years out, start anyway: every month of it helps, and the general selling guide covers the process from there — including the asset-vs-share choice, which in consultancy usually favours a clean share sale if your history allows it.
Plan to stay six to eighteen months — and price it
Consultancy handovers are long because trust transfers slowly. Expect a consultancy-period commitment introducing your successor to every account, and treat it as part of the deal: defined hours, defined duration, paid. "I'll be available whenever" is how founders end up working a year for free inside a business they no longer own.
Thinking about it?
Start with the arithmetic — the calculator takes two minutes and uses the professional-services ranges above. And if you'd like the other thing this page can offer — an honest, fee-free conversation with an actual buyer about whether your firm is sellable, what it's worth today, and what would change that — write to peter@edwardsbros.co.uk. Worst case: a chartered accountant tells you the truth for nothing.
This page is general information, not financial, tax or legal advice — take professional advice on your specific sale before agreeing anything. Edwards Bros (Spaldwick) Ltd, registered in England & Wales no. 00598511.