Demand for acquisitions set to grow in 2018

Our fourth annual global survey of buyers of consulting businesses delivers current, actionable intelligence in the five segments Equiteq specializes in: Management consulting, IT consulting, Media & Marketing, Engineering consulting and HR consulting. Findings, published today, reveal:

  • Buyers expect to initiate 50% more acquisitions year-on-year
  • Convergence continues to be a key trend as buyers look to diversify
  • 55% of buyers think targets could be better at communicating their market proposition
  • 94% of buyers say it is important to retain management teams post-acquisition
  • Over 70% of targets do not make their IP apparent to prospective buyers
  • Three quarters of buyers expect at least 40% of a target’s clients to be blue chip
  • Deal structures are improving for sellers

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Growing equity value webinar series: Market proposition

Close up of businessman holding graph in palms

Lately, we’ve been running 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’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 what you need to know to attract the right clients and buyers.

1. How would a specialized consultancy firm, such as a law firm, go about quantifying its unique value proposition (UVP)?

The UVP has to answer the question ‘why should I buy from you?’ so start thinking about ways you’re differentiated from your competitors along industry, geography and services lines. In terms of industry, perhaps you focus on one or two industries and are recognised experts in say, construction law, or oil & gas exploration. In terms of your geography perhaps you’re able to offer international clients representation in their major jurisdictions. And in the case of your services think about what might set you apart, perhaps you use technology to automate low value-add services so that your clients pay Lawyers for the work only they can do, or perhaps your firm offers a flexible fee structure, or ‘subscription pricing’ for a steady stream of work, or even fixed fees when you know you can leverage your own IP and juniors while still maintaining quality.

As to quantification, think about the way a prospect can relate to the benefits and therefore what kind of quantification is meaningful. What’s the pain point that gives rise to the need for your service, and how will that situation be improved by using your services? List out all the benefits, quantitative and qualitative then get some feedback from your current clients about the relative priorities. And on that point, the process for developing a UVP should start by looking at what you’ve successfully sold in the past, then inviting your clients to give you the unvarnished truth about why they chose you and the benefits they received. And if that conversation isn’t as comfortable as you’d like, well, all the more reason to do the exercise!

You can read more about the power of a UVP for consulting firms here.

2. When looking to attract new clients, is it better to emphasize the benefit of the services provided or demonstrate the firm’s technical competence?

While doing both is important in the sales process, it is important to prioritize the emphasis on the benefit of the services when speaking to prospects because you will have plenty of time to demonstrate your technical competence at a later stage in the process. When approaching potential clients, they are very interested in finding out the benefits of using your products and services as opposed to your competitors.

So, you must first outline the benefits of your services to clients, and then reassure them that you have the technical competence to deliver these outcomes.

3. Should we have a UVP for each service offering or just one for the whole company?

We advise you to do both. You need to have an overarching UVP for the company and then one for each service you offer. This is because there is a process of attracting, nurturing and converting prospects, which move from the broader lens of the firm, and zooms in on the individual services your firm provides.

For more information on why it is important to focus on clients with the specific needs your UVP addresses, read our blog on the importance of focus for consultancy success.

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 your market proposition in your consultancy:

Start: Explain in three jargon-free sentences what you do, and the benefits you deliver

Stop: Putting your technical expertise at the start of your sales messages

Continue: Creating content that showcases the benefits of your services (e.g. videos, articles, case studies)

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 prepare for sale and sell their business. Register here to gain full access.

Supporting client growth and new business through your market proposition

Sales ProspectionThere are a range of statistics around how important retaining clients is to a company’s bottom line. According to the Gartner Group, 80% of your future profits will come from just 20% of your existing customers. And Bain and Co say that a 5% increase in customer retention can increase a company’s profitability by 75%. So there is a clear case to be made for looking after your current clients and your market proposition plays an important role in this.

The best propositions enable your business to establish long-term relationships with your clients that deliver cumulative benefits to them and increasing revenue to you. By contrast, the weakest propositions only enable one-off engagements (sometimes known as “one and done”) with no opportunity for follow-on work.

The Holy Grail for long-term client relationships is to: analyze; change; operate. In other words, analyze a problem, change the environment, then operate the new process. Accenture are masters of this with their capability of managing entire functions for their clients in an outsourced model, often as a result of diagnosing the root causes of problems and improving the processes, systems and organization along the way.

When it comes to winning business from new clients, the best propositions enable your business to attract new clients based on a clear “right to win.” Consultancy cannot be easily tried before being bought, so the proposition must be true, relevant and provable so that clients have confidence in entering into an engagement with you. By contrast, the weakest propositions do not facilitate your ability to develop business with new clients.

Imagine selling $10 bills for $5 in the street. You wouldn’t have to be a world-class salesperson to attract many customers. Now imagine trying to sell $5 bills for $10 and see how good your sales skills have to be to sell just one. Your business proposition needs to be compelling and feel like the former to the client, so they feel they are getting real value.

Getting your market proposition right means that it will be appealing to clients you already have but also help you to continue to win new business. This should help your consultancy grow steadily and profitably, making it an attractive proposition to the right acquirer.

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.