Consulting Valuation Template

Work through the Revenue Multiple and SDE Multiple sheets, then complete the Client Concentration Analysis and Owner Dependency Scorecard. The client concentration section is where most consulting firms encounter an uncomfortable truth: a significant portion of their revenue is concentrated in two or three clients with whom the owner has a personal relationship, and that concentration directly compresses the SDE multiple a buyer will accept. Document each major client relationship honestly — whether the engagement is governed by a formal master service agreement with the firm entity, whether it's a personal relationship that would likely follow the owner if they went elsewhere, and the length of the relationship. These factors determine how a buyer structures the offer and whether they'll require an earnout. The Owner Dependency Scorecard scores the factors that a buyer or a business broker will walk through with you during diligence — understanding your score in advance lets you identify specific improvements before going to market.

The factors that move a consulting valuation toward the high end of the range are the same ones that reduce the owner's operational centrality. Recurring retainer revenue is the most important: clients on monthly or quarterly retainers who have contracted with the firm for ongoing advisory work represent revenue that a new owner can inherit with a reasonable expectation of continuity, particularly if the retainer covers strategy, compliance, or oversight functions that the client needs regardless of who specifically delivers the work. Employed consultants who carry their own client portfolios independently — not just support the owner on projects, but manage relationships and run engagements from kickoff to delivery without the owner's involvement — are the second most important factor. Proprietary methodologies, assessment tools, or training programs that clients pay for as products rather than as pure consulting hours create revenue that is genuinely IP-based and transfers cleanly with a sale. And a client base diversified across industries and geographies, without any single client representing more than 15–20% of total revenue, reduces the concentration risk that depresses multiples more than almost any other single factor.