Training isn’t just for athletes

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This week we have a guest blog from Patrick Chapman, Business Development Partner at Elevation Learning.

Everyone agrees that most of the value of a professional consulting firm comes from the people within the organization. In fact, staff in a consulting business are so important that ‘consultant loyalty’ is one of Equiteq’s 8 levers of equity value. So if you want to grow your firm with a view to selling it one day, then nurturing and developing your staff has to be one of your priorities. Unfortunately, when looking to improve financials prior to sale, training is one of the first budgets to be cut. However, this strategy is undertaken at your peril and will end up doing more harm than good.

To build value, your staff team needs to have a shared language and consistent ways of working. This will allow different groups of consultants to come together quickly to form a cohesive unit for each client engagement, meaning truly chargeable work starts more quickly. This ultimately protects your margins and when the value of the whole exceeds the sum of its parts, your bottom line performance will benefit, meaning you’ll be more appealing to buyers.

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Growing equity value webinar series: Consultant loyalty

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Lately we’ve been running a series of free 30-minute webinars to help attendees grow the equity value in their consultancy firms. Attendees at each webinar submit questions, and we’re going to be sharing and answering these questions in a series of blog posts. This week we’re looking at the questions asked during the webinar on how to create the right organizational culture that embeds consultant loyalty and attracts the right buyers.

  1. How would a potential buyer evaluate our culture?

There are a number of ways a firm projects its culture externally. Think about the company’s public face, its mission statement, its website, company values, written content (i.e. blogs, articles, whitepapers), awards the firm and its people have been recognized for. These all provide an external party with a window into the culture of the business.

A really good example of this is how your firm recruits new employees. The manner with which you describe the profile of your ideal candidate, where you recruit and the language used are all indicators of the culture within the organization. These are just some of the things a potential buyer would research before approaching your firm.

Once a potential buyer engages in due diligence there is an even greater focus on culture from this initial ‘outside in’ look, because a buyer is looking for areas of compatibility and areas that will prove challenging to a smooth integration after sale.

You can read more about what deters buyers of consulting firms here.

  1. Would buyers replace your consultants with their own after sale?

Buyers are always keen to protect a company’s assets. Assets are more than just a firm’s intellectual property, but the client relationships, future sales pipeline and staff competence. These are all crucial to a buyer.

Research has shown that less than 50% of mergers realize their intended value and synergy. So there is an acute need, on the buyer side, to make sure the integration between the companies delivers the intended strategic extension to their existing offering. Getting rid of staff will likely hinder this objective.

Click here for more information on what to expect from consulting buyers following an acquisition.

Finally, as with all of our webinars in this series, our key takeout is presented in our Start, Stop and Continue strategies. To immediately improve consultant loyalty in your consultancy:

Start:           Thinking of culture as an intangible asset which should be actively managed

Stop:            The traditional carrot and stick approach to performance management

Continue:     To create a culture which attracts, motivates and develops by offering autonomy, meaning and purpose.

To sign up to listen to a recording of this webinar, please click here. To view other webinars in the series, please click here.

Are you a member of Equiteq Edge? It’s full of content to help consulting firm owners grow and realize equity value in their business. Register here to gain full access.