Do you have enough deal support as you prepare for sale?


By David Jorgenson, CEO, Equiteq.

Preparing for sale and going through the sales process is time consuming and potentially a very distracting procedure. Interested buyers will demand huge amounts of information on an ongoing basis. And while you’re compiling this, you must also ensure that the day-to-day running of the business continues on its positive trajectory to retain value.

At the heart of the deal support is a finance director (FD) who is up to the task. The FD and finance department are of crucial importance as you will need someone who can stay on top of the hundreds of questions that will be asked during due diligence. If you don’t have someone like that on the team then hire in a contractor; treat selling the business like you would any other project and resource it appropriately.

As well as financial reporting, the FD will also need to keep a close eye on the visibility of booked work and the pipeline. If there are discrepancies between what is forecast and what work occurs, this raises concerns in the minds of investors. Is the consultancy disorganized? Is there internal confusion? Are different processes being used? The FD will need to be on top of the financials and forecast and be able to update the view of the future performance quickly, as this will be requested frequently when a company is being examined for acquisition.

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The year in review: Equiteq Edge’s most popular blogs of 2015

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As 2015 draws to a close we thought it worthwhile to take a look back at the most popular blogs of the year. If there’s a topic you’d like covered in 2016 we’re always interested in hearing from our community, so please contact us here.

We’ll be taking a break from our blogs now until the New Year, when we’ll be back on the 7th of January. Until then, have a great festive season and we look forward to welcoming you back to Equiteq Edge in 2016.

1. Profile of a healthy consulting business: We’ve analyzed thousands of consulting and professional services firms over the past decade and have a unique perspective on the financial metrics of consulting firms.

2. Why branding for professional services consultancies matters. Part one: The sales and marketing process is one of our 8 Levers of Equity Value and branding is a key component of this. Part two can be read here.

3. Why do consulting firms with capable leaders get stuck?: Growing a consultancy is not easy; there is a reason only 1% ever break the $20m barrier. As a rule there are three different mindsets which lead to consultancies failing to scale as they should.

4. How best to manage utilization in a professional services business: Utilization can have a big impact on the bottom line and should be monitored carefully as, in our experience, firms that measure utilization regularly end up outperforming those who do not.

5. Six key principles for a value-driving compensation structure: By structuring compensation in the right way, it’s possible to accelerate growth by having everyone pulling in the same direction. It will also help the business retain its best people and ultimately will make the company more attractive to acquirers because of the culture and drive within the business.

6. Buyers’ view: Hot sectors update March 2015: Our analysis found that the first quarter of 2015 saw big demand from buyers in IT consulting, engineering/environment/energy and the media/marketing sectors.

7. Consulting firm M&A intelligence on cloud-based consulting: Cloud computing has become one of the world’s leading transformational technologies and consultancies operating in this sector are in hot demand.

8. Consulting firm M&A market intelligence on cyber security: As we all become more reliant on technologies such as smartphones and social media, businesses must be very careful with data security.

9. What deters the buyers of consulting firms?: Our research has identified that there are three top factors which dissuade buyers when it comes to making an acquisition.

10. Why do human capital consultancies plateau? Part one: You’d think that HR consultancies, with their focus on people, would have superior leadership abilities. However, they often fall victim to the same ‘Do as I say, not as I do,” as other consultancies. Part two can be read 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.