How to value an agency or consulting firm
Value Up editorial team · · 4 min read
An agency or a consulting firm sells client relationships and people above all. So a buyer values not the equipment but the stability of income and who it rests on.
What raises the value
- regular contracts (retainers) instead of one-off projects;
- high client retention and revenue growth from existing clients;
- an even client mix with no single large client;
- a team that runs projects without the founder;
- written processes and templates that staff work by.
What lowers the value
- the founder sells and leads the key projects personally;
- clients are tied to the owner’s personal name, not to the company;
- unsteady revenue: a strong month, then an empty one;
- a few key specialists could leave with clients.
What a buyer checks
- revenue by client and by month for 2–3 years;
- contracts, their terms and termination conditions;
- who on the team owns the client relationships;
- margin by project and staff utilisation.
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For information only. This is not a licensed appraiser’s opinion and not legal or investment advice.