Find the best buyer for your firm and employees

Hand holding businessman icon - HR concept

When selling your consulting firm you will reach the point where you go into exclusive negotiations with your preferred buyer. This is after maybe 30 to 60 have been approached, 10 to 20 have expressed interest and of those 3 or 5 want to do a deal. If price is everything to you, then any buyer will do and no doubt you’ve selected the highest bidder. However this is rarely the case, beyond price there are usually other important exit goals.

There are several factors you should consider before going to market to sell your firm and during the sifting process towards closing a deal with your ideal partner.

Life after the sale – is your objective to exit immediately, do your earn-out and leave, or extend your career? If the latter, then the new home must be a company you really want to be a part of, doing the kind of work that inspires you, and provides you with superior benefits to the freedom and entrepreneurial life you’ve experienced so far.

Brand continuation and independence – are you happy for your company to be subsumed, or is it important that your brand grows as a result of new investment and assets provided by your buyer? Different buyers, financial and strategic, will offer different models and achieving the latter objective is more likely with financial investors than trade buyers, the former is more likely with Big 4 type entities.

Staff protection – how important is their future to you? If the reason for the acquisition includes economies of scale, some will be retained and some will go, so who do you want to look after? Buyer selection is key to how their loyalty is repaid. If most of your consultants came out of the Big 4 or other multi-nationals, they may not want to go back. Whereas others may be keen to be a part of a new company with more interesting work, career path and foreign opportunities.

Cast the net wide – considering the above, it will help in categorizing and prioritizing buyer types that may fit. When you take your firm to market, consider all the categories of buyer that may want your firm for different reasons. The obvious candidates are not always the best. Casting the net wide finds the surprise outliers that may offer a compelling opportunity.

Culture compatibility – after you’ve been presented to potential buyers and interested parties are in play, look hard at their culture. You’re coming from an agile, flexible organization, however if the buyer is a bureaucratic monolith, how likely is it that you and your staff can handle the red tape? If not, then the merger is likely to fail, along with your earn-out and legacy.

Price versus deal structure – You may have some good offers from companies that fit your criteria above, but perhaps one is offering an outstanding price. However, the headline price is likely to only provide 50% cash up front; the rest will (hopefully) come in the earn-out over two or three years. If another offer represents slightly lower total price, but is otherwise a better home for the business, you might seriously consider taking what at first appear to be less generous terms. Here is your opportunity to trade headline price for a better deal structure and/or reduced earn-out risk. As well as the best home for your business, you also want the highest possible likelihood of securing the other 50% of the deal.

Make sure you consider all of these factors throughout the process, because you are more likely to achieve a successful sale that ticks all of your hard and soft exit objectives. You will be richer, happier and more fulfilled when you have looked after yourself, your staff and legacy.

If you want to discuss your exit objectives and need a sounding board, please contact us and we’d be happy to help.

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Case study: Strengthening and leading Blue Sky to a premium sale



Blue Sky Performance Improvement, a boutique performance improvement consultancy, create a different approach to training and developing people to improve business results. Blue Sky leadership engaged with Equiteq to help build value over several years with the aim of finding and securing a deal with an acquirer who would buy at a premium price.

We worked closely with Blue Sky to grow their equity value, improving and strengthening key areas of the business such as market propositions and intellectual property that proved vital in demonstrating their synergy to the eventual buyer. At the end of a three-year process, Capita approached Blue Sky. Equiteq led the sale of the firm to Capita, who offered £12m, equivalent to a revenue multiple of 1.7.

The client’s situation

Because Blue Sky had sound business propositions and a steady client base in the performance improvement area of consultancy, the ambitious management team wanted to sell to de-risk the value they had built and sell whilst the business was performing well. To begin with, we conducted an Equity Growth Accelerator, and a quarterly review of progress continued over 36 months.

Although Blue Sky later decided to switch to another advisor to try and clinch a sale deal, it fell through, and they found themselves back at square one. Once we were re-engaged, we set about building growth and securing a buyer prepared to pay a premium price for its assets in 2014.

Our approach

Over three years Blue Sky used Equiteq’s 8 lever ‘Equity Growth Wheel’ with on-going consulting support to set up a best practice operating model and grow revenue, profits, and equity value.

Selling a ‘people’ business, where your strongest assets and intellectual property could walk out of the door, requires a unique approach to sale.  We helped Blue Sky build stronger market propositions, put rigour and process around capturing their intellectual property and strengthen the management structure.

Three years into the process and with profits growing healthily, Capita approached Blue Sky. Capita had recently won a large government contract and Blue Sky were seen as a key part of the delivery solution. We managed the sale process throughout, and negotiated a premium price.

How did this deliver value to the client?

  • Using our Equity Growth Wheel, Blue Sky made fast progress over four years towards best practice in key areas
  • Equiteq helped grow Blue Sky’s sales from £4.2m to £7m
  • Blue Sky were offered £12m, negotiated up by Equiteq from an initial offer of £10m, with 60% payable cash up front
  • Earn out period was reduced from 33 to 27 months
  • Equity value increased from 5 x profit to multiple of 7.6 x profit
  • The revenue multiple increased to 1.7

Equiteq took Blue Sky from being an attractive sounding business and transformed them into a robust business asset that sold at a premium.

To read some of our other case studies, please click here.

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Case study: Focus on profit and leadership brought buyers to Easton

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Founded in 2000, Easton Associates provided product and business strategy consulting services to companies in the life science industries. In 2009 they approached us asking for a business valuation and market risk assessment and we valued them at $5m. By helping them restructure the leadership and to improve sales and marketing over the following two years we helped them grow their profit and the value of the business increased to between $12-$15m. In 2012 Easton sold to Navigant for $15m.

The client’s situation

Easton was a consultancy on the up, but it was struggling to convert sales into revenue and profit. The ambitious leadership team was keen to rectify this and turn the business into a thriving consultancy that had a true handle on its bottom line and was worth something on the M&A market. They asked Equiteq to help.

Our approach

When we first came on board, Easton had five partners. To improve decision making Equiteq helped the team re-structure and Easton appointed a chief executive officer. She was charged with, and given a bonus for, delivering a new profit target. Easton used Equiteq’s 8 lever Equity Growth Wheel to help them introduce best practice in driving sales and profit growth, improving intellectual property, and formalizing sales and marketing processes. Turning sales into revenue and profit was a key priority, and Easton needed to put consistency around their sales and business development processes and to make staff more accountable for delivering targets. Gross margin targets were set in line with capabilities and incentive bonuses offered on delivery. Elsewhere, building value into a ‘people’ business, where, in theory, your intellectual property is in people’s heads and on laptops, requires a unique approach. We helped Easton build detailed market propositions and put rigour and process around how they captured and recorded their valuable intellectual property.

How did this deliver value to the client?

Easton made rapid progress over a two year period using the Equity Growth Wheel, with a specific focus on sales and profit growth, market proposition, intellectual property and management quality

Equiteq supported Easton in:

  • re-structuring their leadership team to provide better clarity and focus
  • growing revenue by 37% – from $9.5m to $13m in two years
  • growing profits from $650k to $2.5m – an increase of 280%
  • Easton’s valuation grew by $10m in two years

The EBIT value of the firm started at four but reached a multiple of 7.5 at the end of the engagement

Why define your exit goals well ahead of a transaction?

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There are many ways you can end up selling 100% of your firm, or some of your stake in it, but will the end result fulfill the things most important to you and yours? If you haven’t identified your goals, then the shape of the deal you ultimately sign may cause great future regret. “If only I’d done this or that” will forever be a thought imprinted in your mind. So the purpose of this blog is to help you formulate your goals by identifying typical owner aspirations. If you do this, then the route-map to the transaction and the terms you sign are more likely to deliver the rewards you want. You only usually get one shot at building a business and selling it, with significant life changing outcomes, so the sooner you define your exit goals, even years ahead of a deal, the better.

Let’s start by categorizing typical aspirations. In the table below there is a simple model to assist in the initial formulation of your goals.


Your aspirations may be simple, for example:

Price is everything, I just want the highest price I can get as soon as possible.

Or it may be a blend:

We want the best deal, but immediate exit for majority shareholders is important, we would trade price for the right buyer and exit terms. The right buyer is important because after our exit we want our former colleagues to do very well.

In following blogs we will cover each of the goals and aspirations in more detail and identify the considerations for each in planning ahead for a sale. Individually and together they require different plans and approaches to achieve the outcomes you want, such as:

  • Designing the business to be attractive to the ideal new home
  • Optimizing the timing of a sale and process approach to maximize the price
  • Designing yourself out of the business at least a year ahead of a sale
  • Planning for an MBO rather than trade sale to enable legacy continuation
  • Planning for a sale to a financial buyer to enable a flexible deal that provides both cash and ownership continuation.

In summary, if you don’t plan ahead, your goals are unlikely to happen by accident and you will accept the first unsolicited buyer approach that comes your way, without knowing how good or bad a deal it is! If you do it by design, then you can control the results.

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Effective communication is the difference between making your staff allies or foes in an M&A deal

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Our recent Buyers Research Report revealed some sobering probabilities of success when it comes to securing a buyer for your consulting firm. Buyers said on average that 82% of potential deals do not progress to a signed Non-Disclosure agreement and only 9% of the remainder get as far as Letter of Intent.

To be one of the 200 consulting firms sold across the globe per month, it is essential to mitigate inherent risks to improve the chances of a sale. Consulting firms are built on the skills and talents of people, therefore, employees wield considerable influence over the value of your firm. A buyer will assess the cultural synergy of a firm through its people. It is important not to underestimate the impact of communicating a merger or acquisition to them, especially as a means of gaining good will and buy-in internally.

During the sales process, the performance of your firm cannot be compromised under the scrutiny of due diligence. If growth is compromised, a buyer could have second thoughts on a deal. This means you will rely on employees to deliver and even, at times, go above and beyond their duties. So how you communicate with them can be the difference between employees becoming valuable allies or costly foes.

No two consulting firms’ circumstances are the same. Assessing what information to provide is a balancing act. Strive to give enough information so people feel in the loop, but not too much that should things change, as often they do in M&A proceedings, you could not be accused of causing unnecessary disruption to your business.

You absolutely want to avoid creating a grapevine effect, where information is passed around informally. These Chinese whispers inevitably lead to the miscommunication of key facts triggering confusion and anxiety. And this can have a knock-on effect with productivity and engagement.

So your judgement is key. Strong leadership, especially in times of change is essential to keeping people onside.

Neil Taylor is managing partner at business language consultancy, The Writer, and author of Brilliant Business Writing. He would say ditch business jargon if you want to win hearts and minds. ‘Write and speak like a normal human being. Being honest and engaging is just as important as being businesslike. Think about your people: what do they care about? If you know they’ll think, ‘what does this change mean for my job?’, come straight out with that. The temptation is to communicate the whole rationale for change, but people are much more likely to take that in if you’ve already acknowledged how they might be feeling.’

Taylor always advises to keep an eye on length of communication, ‘Don’t feel you have to go on and on. It’s much more confident to say what you’ve got to say, and shut up. And think about where they’ll read or hear it. On their mobile? Better make it even shorter, then.’

Some points to consider:

  • Assess they types of people your staff are and put yourself in their shoes. What would a deal mean to them? Try and anticipate how they might react and what questions they may have
  • Think about how to paint the big picture and acknowledge the role they have in it. Don’t assume your vision is obvious, you need to articulate it clearly
  • A regular communication schedule can be helpful, even if it only involves a holding statement. Think about how communications should be delivered; is it best face to face or over email?

In conclusion, keeping your business growing through the M&A process is essential. Deals can take anywhere between four to 18 months. If financial performance suffers during the process, buyers may be deterred from completing a deal. It is therefore imperative that you keep focussed on running and growing the business through the sales process. Achieving this will be down to your consultants and staff, so handle them with care.

Consulting Sector M&A Deals for week beginning 11th August

businessman doing handstand on the beachRPS Group plc (UK) acquired CgMs Ltd. (UK)
Deal Size: $21.8 million Industry: Management consulting / Strategy Date: August 2014
RPS announces the acquisition of CgMs Holdings Limited and its subsidiary company CgMs Limited (together “CgMs”), a UK based consultancy providing planning and development services primarily to the residential, retail and commercial property development industries, for a maximum consideration of £13.0 million. Founded in 1997, CgMs has offices in London, Cheltenham, Newark, Manchester and Edinburgh. The companies, which employ 112 permanent staff, work primarily on projects associated with achieving planning consents for the UK property industry. They provide strategic and detailed urban planning advice, as well as advising on historic buildings and heritage assets. The RPS Board sees excellent opportunities in these markets as the planning and development sector emerges from the recession. lan Hearne, Chief Executive of RPS, commented: “CgMs has an excellent reputation and track record. Its skills will complement the services RPS currently provides to the property development sector. Following a period of integration we anticipate CgMs will make a significant contribution to our BNE: Europe business in 2015 and beyond.” RPS Group PLC provides advice for the exploration and production of oil and gas and other natural resources; and development and management of the built and natural environment. CgMs Holdings Limited, through its subsidiary CgMs Limited, provides consulting, planning, and development services to the residential, retail, and commercial property development industries.

TeleTech Holdings Inc. (USA) signed an agreement to acquire RogenSi Worldwide Pty Ltd. (Australia)
Deal Size: Unspecified Industry: HR Consulting Date: August 2014
TeleTech Holdings, Inc., a leading global provider of analytics-driven, technology-enabled customer engagement solutions, announced that it has signed an agreement to acquire substantially all operating assets of rogenSi Worldwide PTY, a global leadership and sales execution consulting firm headquartered in Australia, with operations in Asia-Pacific, Europe andNorth America. Under the terms of the agreement, rogenSi will become part of TeleTech’s Customer Strategy Services (CSS) segment. This transaction, which is scheduled to close in August 2014, is expected to be immediately accretive to earnings. “We are pleased to welcome the talented global consulting team from rogenSi to TeleTech,” commented Brian Shepherd, executive vice president, customer Strategy and Customer Technology Services. “With this acquisition we significantly enhance our global presence, client breadth, and ability to positively impact the successful execution of customer engagement strategies. By combining rogenSi’s leadership development and sales effectiveness methodologies with TeleTech’s customer experience strategy, learning innovation, multi-channel operations, and technology consulting, we are uniquely positioned to deliver greater client value on a global basis. With rogenSi, we positively impact the critical change management process necessary to go from strategy to outcome across leaders, managers, sales and contact center associates.” TeleTech Holdings, Inc., together with its subsidiaries, provides customer engagement management solutions in the United States and internationally. RogenSi Worldwide Pty Ltd. provides training and professional development services for leaders, managers, and business professionals.

Winxnet, Inc (USA) acquired KDSA Consulting, LLC (USA)
Deal Size: Unspecified Industry: IT Consulting Date: August 2014
Winxnet announced that its acquisition of KDSA Consulting LLC will allow the company to increase business throughout New England with the addition of 40 sales, service and consulting professionals, as well as new information technology services. John LoConte and Dawn Mortimer, who co-founded KDSA Consulting in 2004, will join Winxnet’s leadership team. LoConte, who has worked in the IT industry for nearly 30 years, previously served as the director of IT services for the Boston Technology Group of RSM McGladrey. Mortimer is a Microsoft-certified Dynamics SL consultant and has more than 25 years of experience in providing technology and business solutions. “Our core values of integrity, honesty and respect in dealing with clients and co-workers directly align with Winxnet’s way of doing business,” LoConte said in a prepared statement. “The integration of the two cultures will strengthen Winxnet’s ability to offer the best complete business technology solutions to organisations in need of IT support and guidance. We are thrilled to be joining the Winxnet team. It is exciting to be a part of a growing company with a strong reputation for service.” Winxnet, Inc. provides information technology (IT) outsourcing and consulting services. KDSA Consulting provides comprehensive business process reviews, accounting software solutions, enterprise network infrastructure assessments, custom programming, training, disaster recovery planning and ongoing end user support.

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