Raising for a professional services firm: accountancy, legal, consultancy and agencies
Why services firms are undervalued by venture investors and overvalued by their founders, what recurring fees are worth, how to present a firm that depends on people, and the routes — platform, buy-out, growth capital — that actually work.
A services firm — an accountancy practice, a law firm, an agency, a consultancy — is a good business that venture investors mostly will not fund, because it does not scale without people and will not return a fund. Founders hear "no" and conclude they are unfundable. They are not; they are talking to the wrong money. Services firms raise all the time — for buy-outs, acquisitions, growth and succession — from investors who understand what recurring fees are worth.
What a services firm is worth
Recurring, contracted or habitual fees are the asset. Accountancy practices change hands at 1.0–1.6× gross recurring fees, depending on client quality, fee levels, technology and how much the founder is the business; law firms and agencies on a multiple of profit (3–6× EBITDA) because their revenue recurs less reliably. The valuation is not a growth multiple and should not be presented as one.
What the firm is raising for
- Acquisition. Buying another firm or fee block. The most fundable reason: the fees are real, the price is known, and the integration has a playbook. Investors fund the completion payment; deferred consideration is paid from the acquired fees.
- Buy-out. The next generation buying the founder out. See management buy-outs.
- Growth capital. Hiring ahead of demand, opening a second office, building a productised service. Fundable when the firm can show the demand exists and the new capacity converts.
- Technology. Building software from the firm's own process. This is the one route to venture-style returns, and it is a different business — usually a separate company — see the Chivvy model.
Presenting a business that depends on people
Investors' fear is that the founder is the firm and the clients leave when they do. Answer it directly: client concentration, how many clients each fee-earner owns, staff tenure and contracts, the second tier who could run it, and what the founder's role is in three years. A firm where the founder can take a month off and the fees keep arriving is worth far more than one where they cannot, and the listing should prove which you are.
Who invests
Not VCs. Family offices, angels who have owned services businesses, private equity for larger firms, sector platforms like Practice Group for accountancy, and — increasingly — secured lenders who will fund acquisitions against the fees. On Find, professional-services raises sit alongside the practice-acquisition vehicles, and the investors who look at one look at the other.
SEIS/EIS
Accountancy and legal services are excluded trades; most consultancy and agency work qualifies. Check before you promise it on the listing.
Questions founders ask
"Investors keep saying it's a lifestyle business."
Sometimes they are right and the answer is debt, not equity. If you are raising to buy fees or to build something that outlasts you, show the acquisition pipeline or the product and the label stops applying.
"Can I give investors a share of profits instead of equity?"
Loan notes with a coupon, or a revenue share, are common in services deals and often preferred by both sides. List them as the instrument.
"What multiple should I put on the listing?"
For an accountancy practice, 1.0–1.6× recurring fees with the reasoning; for others, a profit multiple with comparables. Services investors know the ranges and respect founders who use them.
More in By sector
- Raising for a software business: the metrics that decide the valuation
- Raising for a hospitality business: cafés, restaurants, bars and bakeries
- Raising for manufacturing and physical products: stock, machines and working capital
- Raising for a consumer brand: what investors need to see beyond the Instagram