How IP can make your profits fly

By Adam Blatchford, Associate, Equiteq.

Smart Scaling is all about growing revenues and profits while also building your equity value, as opposed to doing one at the expense of the other. Intellectual Property is central to that, it is a ‘win-win’ because buyers want it and it drives profitable growth in your firm.

Whether your firm generates revenues of $20m or $100m, IP differentiates you. It ensures clients buy your services, means you can deliver profitably, and makes investors love you. This blog will focus on how to achieve that in your firm.

What is IP?

In simple terms, intellectual property is any knowledge recorded and maintained as a usable business asset. In most consulting firms, this means ‘trade secrets’, such as process maps, methodologies, training systems and software tools, rather than just copyrights and trademarks.

There are three main types of IP:

  • IP to market the business
  • IP to deliver business
  • IP to run the business

All three are important, but in the context of Smart Scaling we will focus on delivery IP. See here for a deeper discussion of the three types.

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Principles of Maximizing Profitability

There may not be a more fundamentally important topic for consulting firms than improving profits.

Shareholders ultimately want a return on their investment and buyers are looking for evidence of healthy growth, while strong profitability is required to sustain growth and equity realization.

The levers that need to be pulled to improve margin – revenue and cost – might be well understood, but the combination of activities required are often more nuanced.

We’ve identified the top strategies firms can use to start improving profits now:

  1. The leadership team must make profitability an ongoing focus

Profitability has to become embedded in the leadership team’s mindset for sustainable margin improvement to be successful.

Achieving this requires strong communication around accountabilities, clear success measures being established and tactical activities – such as margin exception reporting, resource management, and utilization forecasting – becoming integrated into regular business updates.

Once a shared understanding of what success looks like is established within this team, firms can create strategic work streams – such as market expansion or IP development – and make people accountable.

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5 things every consulting firm must know to thrive in Asia-Pacific

Equiteq’s CEO, David Jorgenson, and Jean-Louis Michelet met with Professor Kevyn Yong (Dean of ESSEC Asia-Pacific and specialist of entrepreneurship) at ESSEC Business School in Singapore to discuss the opportunities and challenges impacting M&A activities in the Asia-Pacific region.

This is the third part of their discussion: What advice would you give to consulting firm owners in one of the Asia-Pacific countries?

The consultancy landscape in Asia-Pacific has changed in the last few years. There has been a strong development in the use of consultants as the regional economies have grown and become less dependent on the primary sector, and have seen a surge in secondary and services sectors activities.

A 2016 report from the United Nations Economic and Social Commission for Asia and the Pacific shows the increased activity in the services sector is partly down to its role in facilitating global value chains in the manufacturing sector. It also attributes this to the growth of digital-intensive services in sectors like financial services, telecommunications and digital media and marketing.

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Should I sell my consulting firm to an overseas buyer?

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By Gabriela Silvestris, Director, Equiteq

Overseas buyers can be an important target audience when looking to sell your consulting firm. Equiteq considers international acquirers for every M&A client and a large proportion of the businesses we have sold have been bought by overseas buyers.

Acquiring in desirable regions allows strategic buyers to gain quick access to lucrative markets, brands, intellectual property, local market knowledge, new clients and specific local expertise. As a result of this, overseas buyers may pay a premium to gain a market foothold.

To attract overseas buyers, it is important to demonstrate the attractiveness of local markets, market positioning and why the acquisition will be less risky and deliver a faster return than opening an office and recruiting local talent. To learn more about global buyer demands download our latest Buyers Research Report here.

M&A transactions need careful handling and cross-border M&A deals bring an array of additional challenges.

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Thinking about expanding internationally? Four common misconceptions every business owner should know the truth about

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By Adam Blatchford, Associate, Equiteq

For many business owners, establishing a strong local presence is only the first step on their road to success. Once they’ve achieved this, they want to continue growing the value of their firms, and many are tempted by the thought of expanding geographically beyond their home markets. It is a seductive idea littered with potential pitfalls that could not only jeopardize the business’s financial position but also significantly erode equity value.

In this blog, we look at how you, as a consulting firm owner, can make smart decisions around ‘if’ and ‘how’ to scale your business abroad, to ensure you are protecting and building your company’s value rather than hindering the attractiveness of the company to future buyers.

We’ve compiled some of the most common reasons business owners give for expanding internationally, and the potential risks that those reasons might be hiding.

1. We have exhausted our home market

There is a significant opportunity cost to international expansion; while it can provide opportunities to grow, it is usually far easier to grow in your current market where you already have relationships and credentials. So it should only be attempted if you have truly saturated your market:

  • Be absolutely certain that other factors are not hindering growth

i. Check that your proposition correctly resonates with your client’s issues
ii. Examine if you are competing with internal capacity
iii. Assess your account management to ensure you maximize your current clients
iv. Confirm that your sales focus is on the right type of client

If these issues are the true cause, rather than a saturated domestic market, then they will hinder your progress in the new market too.

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How to create marketing IP that generates consulting leads

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By Jason Parks, Director – Strategic Advisory Services, Equiteq.

We spend a lot of time talking about the three types of consulting intellectual property (IP) with our clients:

  • IP to run the business
  • IP to deliver and scale the work
  • IP to market and sell the business (often referred to as ‘content’)

Of the three, marketing IP is the forgotten child.

Consulting is a crowded and vague market. You’ve got to be heard above the noise and differentiate yourself. To do that and sell higher value work, your sales and marketing engine has to have content that opens and closes sales opportunities.

Specifically, marketing IP does this by:

  • Reducing the perceived risk in hiring you
  • Making you more “findable”
  • Demonstrating expertise
  • Enabling your inbound marketing to attract better qualified prospects
  • Making your outbound marketing campaigns more effective

Simply put, marketing IP is an umbrella term used to describe any type of information used in some way to acquire customers. This information can be in the form of blog posts, articles, eBooks, DIY or how-to guides, industry news, question-and-answer articles, case studies, whitepapers, videos, podcasts, slide presentations — the list goes on and on.

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Answering your questions on Intellectual Property (Part 1)

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We recently held a series of free 30-minute webinars to help attendees grow the equity value in their consultancy firms and prepare for a sale of their business. Attendees at each webinar submit questions, and we’ve been 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 well-managed intellectual property (IP) can enable your consultancy to scale and command a premium price at sale.

1. Can you explain further about the need to protect IP trade secrets and yet still provide the depth of information necessary to market the business?

It is important for consultancies to share high-quality articles, presentations, reports and materials with clients and prospects. Doing so will help consultancies demonstrate industry knowledge and domain expertise. A large percentage of your IP should be readily available to prospects and other stakeholders.

But how do you control access to trade secrets? The foremost priority for any consultancy in such a situation is to understand: (a) who needs to know (b) who needs to have access and in what format? (c) who controls the access to these trade secrets? While there isn’t a shortage of senior executives in charge of marketing, operations, etc., it surprises us how many consultancies fail to assign someone to manage IP. Therefore, appoint a senior member of management to control IP and make sure that they come up with a plan to address the considerations above.

To guard against the misuse of IP firms should make use of non-disclosure agreements and non-compete clauses in employment contracts for when employees leave the business. Internally, consultancies should make clear to staff what it considers IP and train them on how to use and store it safely. Then, the company should enforce this rigorously within the organization.

Why not click here to learn more about how to build intellectual property to drive equity value in your consulting firm.

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