

Ask YC: Leaving consulting to build a product. Is my consultancy worth anything? - tp

I launched a design/programming shop a few years ago that has been reasonably successful (4-6 employees, profits, local name recognition), and I'm itching to move on to a startup that builds a product or a service.<p>Is my consulting shop worth anything? Do people buy web design or contract development firms? I've always assumed that the answer is no, because our value is in our people (who may or may not stick around), but a friend recently suggested otherwise.
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goofygrin
I've worked for (subcontracting) through a couple firms that have sold. They
both sold at between a 3 and 4x multiple of their yearly revenue (one was $30m
and the other was $3m). Both of them were run by very well connected people.

The problem is finding the buyer, but if you're in a major metroplex there are
likely some middle sized companies that would buy you out. The larger shop I
worked with had bought 4-5 companies over the years in order to build up their
competency in other areas like app dev, system support and design rather than
try and recruit the people and the clients. Try pitching it that way :)

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KB
I'm fairly certain Tony Wright of RescueTime sold a design/programming
consultancy a few years back. If you can find a buyer, why not go for it. The
extra cash could provide capital to your new venture.

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solost
It is doubtful your consulting shop is worth much, you are correct that the
value is in the people who may or may not stay and also in the relatioships
you and your people have with your clients.

I think it would be tremendously difficult sell, unless you could sign all
your clients to new agreements with their understanding that you would be
leaving and there would be a transition. A very difficult thing to do in my
mind.

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aneesh
Well, your collection of customers is worth something if it's substantial.

