M&A Advisory for Professional Services Companies
Sica | Fletcher provides a sell-side M&A services for professional services companies, and has consistently been ranked #1 in its industry by S&P Global. Our approach to M&A prioritizes:
- Ensuring that we are the right match for your company
- Finding the ideal buyer for your business
- Using our deep knowledge of professional services M&A to secure the best possible deal
Because professional services company owners tend to be very involved in running their daily operations, they often make the mistake of believing they should represent themselves in an M&A process. However, the research clearly shows that companies who work with an M&A advisory firm achieve higher multiples and more favorable deal structures:
Average EBITDA multiple achieved through an M&A advisor
Average EBITDA multiple achieved through self representation
Service Company Valuation Statistics
The graphs below show EBITDA and revenue multiples for professional services companies in 2024. Each value includes a range indicating 1st (low) and 3rd (high) quartile multiples for that industry.
It should be noted that the lower end of the range of multiples often come from companies that sold their own business, typically as an add-on in a private equity deal, while companies who achieved above-average multiples negotiated through an experienced M&A advisory firm and were a strategically important investment for the acquirer.
The M&A Market for Professional Services Companies in 2024
Unlike more volatile industries (e g. SaaS) EBITDA and revenue multiples for professional services companies have remained relatively stable over the last 5 years. The typical challenges services businesses face, however, often result in lower multiples relative to all business types. For instance, many professional service businesses have high customer concentrations and heavy reliance on owners.
Professional services companies get the most out of an M&A advisory relationship when their advisor (a) knows their industry well enough to counter the typical challenges acquirers make in order to knock down valuation; and (b) has relationships with enough potential suitors to facilitate competitive pressures that drive valuation upward.