B2B, Industrial & Distribution · Seller readiness
Selling a Professional Services business
Published · Reviewed by The Diligence Standard Team · Updated
Owners should reduce founder dependence, document recurring client relationships, utilization, backlog and team capability and normalize personal production before going to market.
How the business works
Client retention, founder dependence, utilization, realization, backlog and recurring vs. project revenue determine transferability.
Issues to resolve
- Founder production is not separated from enterprise profit
- Client contracts are informal
- Pipeline is treated as guaranteed revenue
- Team capability is underdocumented
- Customer concentration is not addressed
Evidence to request and reconcile
- Client-level revenue
- Contracts/retainers
- Employee utilization and payroll
- Pipeline/backlog
- Project profitability
- Founder involvement map
Decision questions
- How much revenue would leave with the founder?
- Which clients have contractual recurring work?
- What is normalized profitability after replacing founder delivery?
- How much backlog is signed vs. probable?
- Who can lead client relationships after closing?