What Is My Consulting Firm Worth?

TLDR: Consulting firms typically sell for 2.5x to 3.5x EBITDA or 1.5x to 2.5x SDE. Your actual number depends heavily on how embedded you are in client relationships, how recurring your revenue is, and whether your team can deliver without you in the room.

Understanding SDE (Seller Discretionary Earnings)

If you've ever worked with a business broker or done any preliminary research on selling your firm, you've probably encountered SDE — Seller Discretionary Earnings. It's the starting point most sellers use, and for good reason: it reflects the full economic benefit you're taking home as an owner.

SDE starts with net profit, then adds back your salary, personal benefits run through the business, one-time expenses, depreciation, amortization, and any other non-recurring costs. The idea is to show a prospective buyer the total earning power of the business — what you, as the owner, are actually capturing each year.

For small consulting firms where the owner is central to delivery, client relationships, and business development, SDE gives buyers a practical lens on value. Brokers and marketplaces like BizBuySell commonly use SDE multiples to list and compare businesses in the sub-$5M revenue range.

That said, SDE is less standardized than other metrics. Two brokers can calculate it differently depending on what add-backs they include. It's a useful starting point — a bridge from what you know as an operator to what a buyer needs to evaluate — but sophisticated buyers and their lenders typically want to go deeper.

Understanding EBITDA

EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization — is the metric most serious buyers, private equity firms, and lenders use to evaluate acquisition targets. It's more conservative than SDE because it doesn't add back owner compensation. Instead, it assumes the business will need to pay someone to do your job after the deal closes.

Here's the practical difference: if you're paying yourself $200,000 a year and your SDE is $500,000, your EBITDA might be closer to $300,000 once a market-rate replacement salary is factored in. That gap matters enormously when you're calculating a purchase price.

EBITDA also standardizes comparisons across companies. A buyer evaluating five consulting firms needs an apples-to-apples view of what each business earns independent of its ownership structure. EBITDA provides that.

For consulting firms with multiple partners, a management layer, or revenues above $2M, EBITDA is almost always the primary valuation metric. It's what lenders underwrite SBA loans against, what private equity buyers model their returns on, and what will appear in any letter of intent you receive from a qualified buyer.

Direct Answer — Regalis Capital: The shift from SDE to EBITDA isn't about which number looks better. It's about what a buyer can actually finance and what their lender will approve. Understanding both numbers before you go to market puts you in a much stronger negotiating position.

Consulting Firm EBITDA Valuation Range

How to apply this: If your consulting firm generates $400,000 in EBITDA, you're likely looking at a valuation between $1,000,000 and $1,400,000 under current market conditions.

These multiples reflect what buyers are actually paying in the current market, not aspirational asking prices. Consulting firms, particularly those that sell time and expertise rather than products, are valued conservatively compared to SaaS or manufacturing businesses. Buyers understand that the firm's value can walk out the door if client relationships aren't transferable.

These ranges are based on publicly available market data and are not a formal appraisal. Actual valuations depend on financial performance, market conditions, deal structure, and buyer competition. This content is informational only and does not constitute financial or legal advice.

Consulting Firm SDE Valuation Range

For smaller owner-operated consulting practices — particularly those with one to three employees and revenues under $2M — SDE multiples are a common market reference:

• SDE multiple range: 1.5x to 2.5x
• Example: A firm generating $250,000 in SDE would likely be valued between $375,000 and $625,000

The lower end of this range reflects high owner dependency, non-recurring project work, or a thin client base. The upper end reflects a firm with retainer clients, some staff depth, and documented service delivery processes.

SDE multiples in consulting tend to be lower than in industries with physical assets or recurring subscription revenue. The reason is straightforward: buyers are paying primarily for relationships and reputation, which are harder to underwrite than equipment or long-term contracts.

Direct Answer: If you've been told your consulting firm is worth 4x or 5x SDE, get a second opinion. The market data for most consulting practices doesn't support those multiples unless the firm has highly recurring revenue, a strong brand, and minimal owner dependency.

What Drives Value Up or Down in a Consulting Firm

This is where consulting firm valuations get nuanced — and where sellers have the most control.

Factors that increase value: - Recurring revenue. Retainer agreements, managed service contracts, or subscription-based engagements are significantly more valuable than project-by-project work. Even converting 30–40% of revenue to retainers moves the needle. - Low owner dependency. If clients hire the firm — not just you — the business is more transferable. Buyers want to see that your team can deliver without you present. - Documented processes. Methodologies, playbooks, proposal templates, and onboarding protocols signal that the business runs on systems, not just individual expertise. - Client diversification. No single client representing more than 15–20% of revenue is a common buyer threshold. Heavy concentration is a significant risk discount. - Staff retention and depth. Senior consultants who own client relationships independently add measurable value. High turnover or total dependence on 1–2 people is a risk flag. - Transferable contracts. Change-of-control provisions in client agreements can block or complicate a sale. Clean, assignable contracts are worth money.

Factors that decrease value: - You are the primary client relationship holder for most engagements - Revenue is project-based with no retainer component - You have fewer than three years of clean financial records - One client makes up more than 25% of revenue - You haven't operated with a proper management structure

How Buyers Evaluate Consulting Firms

Understanding the buyer's perspective helps you anticipate due diligence — and prepare for it.

Revenue quality audit. Buyers will categorize every dollar of revenue: Is it recurring or one-time? Is it from one client or fifty? They'll pull two to three years of client-level revenue data and look for concentration, churn, and growth trends.

The owner transition question. This is the central concern for most consulting firm acquisitions. Buyers will want to understand: Can you stay for a transition period? Are clients loyal to the brand or to you personally? What happens to key client relationships after close?

Team assessment. In a consulting business, the team is the product. Buyers will look at tenure, compensation, non-compete agreements, and whether key people are aware of — and open to — a sale. They may want to meet senior staff before closing.

Margin analysis. Gross margins in consulting should be high (70%+), but buyers will scrutinize EBITDA margins carefully. If margins are thin, they want to understand why — high contractor costs, underpriced engagements, or bloated overhead all read differently.

Contracts and backlog. Signed engagements, proposal pipeline, and any contracted future revenue are real assets. Buyers want to see what's in the pipeline, not just what's been billed.

Direct Answer — Regalis Capital: Most consulting firm deals fall apart during due diligence because sellers underestimated how much of the business was tied to their personal relationships. The buyers who pay top multiples are the ones who leave due diligence confident that the revenue will survive the transition.

Disclaimer

These ranges are based on publicly available market data and are not a formal appraisal. Actual valuations depend on financial performance, market conditions, deal structure, and buyer competition. This content is informational only and does not constitute financial or legal advice.

Frequently Asked Questions

What EBITDA multiple do consulting firms sell for? Most consulting firms sell in the 2.5x to 3.5x EBITDA range. Where your firm lands within that range depends on revenue quality, owner dependency, client diversification, and whether you have recurring or retainer-based engagements.

Is my consulting firm worth more if I have retainer clients? Yes — significantly. Retainer revenue is more predictable and transferable than project-based revenue. Buyers view it as lower risk and will typically pay a higher multiple for firms where a meaningful portion of revenue is contracted or recurring.

How do I know whether to use SDE or EBITDA for my firm's valuation? If your firm is owner-operated with revenues under $2M, SDE is a common starting point that brokers and buyers will both recognize. If your firm has revenues above $2M, a management layer, or multiple partners, EBITDA is almost certainly the right metric — and the one any serious buyer will use.

Will my firm's value be impacted if I'm the primary client relationship holder? Yes. Owner dependency is the single biggest value discount in consulting firm sales. Buyers will either reduce their offer, require a longer earnout, or walk away entirely if there's no clear path to client relationship transfer.

How long does it take to sell a consulting firm? Most consulting firm transactions take six to twelve months from initial engagement to close. Smaller, simpler firms with clean financials can close faster. Firms with high owner dependency or complex client relationships often require longer transition planning and may involve earnout structures.

Get an Accurate Assessment of Your Consulting Firm's Value

Market multiples give you a range. Your firm's actual number depends on factors that a multiple can't capture — your client relationships, your team, your revenue mix, and how the business performs without you at the center of it.

Get a confidential valuation from Regalis Capital →

Related resources: - Sell a consulting firm: what the process looks like - Seller valuation calculator