Adopting the Buyer’s Lens to Improve Consultancy Performance

Having spent years working with consulting firm buyers, I’ve documented what I’ve learned to provide readers with an additional perspective—what I call ‘the buyer’s lens.’ This isn’t a framework or an exhaustive list, but rather a collection of my experiences and observations about what buyers value most when assessing consulting firms.

I want to share these insights to help consulting firm leaders look at their businesses from this perspective. By doing so, they can uncover opportunities to strengthen their firm’s performance, long-term resilience, and market value.

1. Foundational Financial Health: Reliable Profits and Financials

Understanding the P&L remains critical—yet many consulting firm leaders fail to engage with their financials truly.

In my experience, many owners and partners lack detailed insight into their financial metrics. For some, financial monitoring is limited to an annual review when the accountant closes the books, treating it as a compliance exercise rather than a management tool.

Even in firms with substantial revenue, I’ve observed leaders who don’t track gross margins weekly or lack a clear cash flow forecast. This disconnect often leads to missed opportunities and blind spots in operational efficiency.

What surprises me most is how often these firms—which pride themselves on advising others—overlook their financial mastery. Without deep understanding and regular monitoring of key metrics, leaders cannot steer their firms with the precision needed to thrive. This oversight weakens their ability to steer the business effectively and raises red flags for potential buyers.

If you’re not deeply familiar with your consultancy’s income statement, balance sheet, and cash flow, it’s time to prioritise financial literacy or get external coaching. Financial clarity is non-negotiable for running a successful consultancy.

The buyer’s lens reveals additional financial metrics that signal a consultancy’s stability and attractiveness:

• Consistent profit: Buyers look for steady earnings. Volatility in profitability is a red flag, whereas consistency signals strong financial management.
  
  
• Clean Financials: Well-documented and easy-to-understand financial records inspire confidence. Disorganised books or unclear documentation can deter buyers.
  
  
• Clear Cash Flow and Forecasting: Reliable cash flow projections for 26 to 52 weeks demonstrate control over financial operations and the ability to plan effectively.
  
  
• Project Gross Margins: Weekly follow-up on project gross margins ensures financial performance is monitored and optimised.
  
  
• Management Reporting: Weekly updates on key financial metrics indicate proactive leadership and operational transparency.

Firms with these practices stand out as financially resilient and well-prepared for future growth, making them more appealing to potential buyers.

Recommended reading: The One Boutique Consultancy Metric That Tells It All

2. Market Position and Growth Potential

Consulting proposition clarity and expertise reputation remain central, but the buyer’s lens expands on these concepts.

In my work with buyers, I’ve noticed their unwavering focus on identifying firms that stand out as market leaders. Buyers favour firms that are recognized as:

• Go-To Expertise Destination: Buyers prioritize firms seen as a “reference” in their market—trusted authorities known for solving specific, high-stakes problems. I’ve seen how firms with niche expertise and strong reputations can command premium valuations.
  
  
• Barriers to Entry: Signature methodologies, honed over the years, create competitive moats that are hard for competitors to replicate. Buyers often emphasize the importance of these unique approaches as key differentiators.
  
  
• Proven Scalability: Buyers scrutinize revenue-per-FTE metrics to assess scalability. In one recent deal, a buyer highlighted how a firm’s non-linear growth—achieving higher revenue without proportional headcount growth—was one of the decisive factors.
  
  
• Competitive Advantage: Proven client outcomes and measurable impact consistently rank high on buyers’ lists. Demonstrating a track record of delivering tangible results sets firms apart in competitive markets.

By focusing on these aspects, consultancy leaders can build firms that perform well today and have clear potential for sustainable growth.

3. Client Stability and Diversity

Clients are the lifeblood of any consultancy, and their profile significantly impacts a firm’s value. From my conversations with buyers, client-related metrics are often among the first areas they assess. The buyer’s lens emphasizes:

• Avoiding Client Concentration Risk: No single client should account for more than 20% of revenue. I’ve seen deals fall when this risk isn’t addressed, as buyers are wary of overdependency.
  
  
• Contracted, Reliable Revenue: Long-term client relationships with recurring revenue models ensure predictability and stability. Buyers I’ve worked with frequently mention how contracted revenue—retainers or multi-year agreements—provides confidence in the firm’s future earnings.

Consultancy owners should nurture a balanced client portfolio and build strong, ongoing relationships. Buyers consistently note that a diversified and loyal client base reduces risk and makes the firm more attractive.

4. Operational Independence: The Role of the Management Team

The ability of a consultancy to operate independently of its founders is a key factor in its long-term viability. In my work with buyers, this is often one of the first areas they evaluate. Buyers assess:

• Documented Processes and Methodologies: Clear, repeatable systems ensure consistency and scalability. I’ve observed buyers pay close attention to whether processes are institutionalized or reliant on key individuals.
  
  
• Accountability and Alignment: A management team with clearly defined roles and a unified growth agenda signals strong leadership. Buyers frequently highlight the importance of team cohesion and strategic clarity.

• Leadership Retention: Long-term commitment from key leaders demonstrates stability and reduces transition risks. I’ve seen buyers walk away from firms where leadership turnover raised concerns about continuity.
  
  
• Succession Planning: Clear plans for leadership succession ensure continuity. Buyers value firms with a visible path for the next generation of leaders, reducing reliance on current owners.
  
  
• Owner Independence: Firms not overly reliant on their founders are far more attractive to buyers. They represent sustainable, self-sufficient businesses. In my experience, buyers often emphasize this as a make-or-break factor in their decisions.

Building a robust management infrastructure is essential for consultancies aiming to thrive independently and attract interest from strategic buyers or investors.

Recommended reading: Without Internal Alignment, a Boutique Consultancy Is Doomed

Conclusion: A Holistic View Through the Buyer’s Lens

The buyer’s lens has often given me a transformative perspective for evaluating consulting firms.

Focusing on reliable financials, growth potential, client stability, operational independence, and how buyers evaluate their 'targets' can help consulting firms better understand improving consultancy performance.

For consultancy leaders, adopting this lens isn’t about preparing for a potential acquisition; it’s about building a resilient, competitive firm for long-term success.

It shifts the focus from short-term financial metrics to a holistic view of what makes a consulting business truly valuable—for buyers, clients, and the firm’s future.

So, why not start using 'the buyer’s lens' today?