Selling your consulting or staffing firm to private equity

Where private equity stands in consulting and staffing (2026)

Consulting and staffing firms are both bought by private equity, and they are often discussed together, but they sell on very different logic and it is worth separating them from the start. A staffing firm places workers, whether in permanent roles or on a temporary and contract basis, and earns a spread between what it bills and what it pays those workers. A consulting firm sells the expertise and advice of its people. The buyers overlap, a fragmented mix of private equity platforms and strategic consolidators, but what they are buying, and what they are worried about, is not the same.

For an owner, this matters because the advice that raises the price of one can be beside the point for the other, and because the single largest tax break in a business sale treats the two as opposites. This page covers both, but it keeps them apart wherever the answer differs: what drives your price, how the deal is put together, what you keep after tax, and what changes once you sell. If your business is closer to one of the other fields this site covers, the industries hub points to the right page.

What is my consulting or staffing firm worth?

Value starts from earnings, adjusted for owner pay and one-time costs, and a buyer applies a multiple. Here honesty requires a caveat: a reliable 2026 market multiple range was not available for either consulting or staffing, so this page will not hand you a range to anchor on, and you should be wary of any single number a buyer presents as a market rate. As a loose pattern, staffing firms have generally traded in mid-single-digit EBITDA territory, while consulting values vary widely depending on key-person risk. What you are actually quoted will depend on the factors below far more than on any published figure.

For a staffing firm, the drivers are about the durability of the earnings.

• Gross-margin durability, the stability of your spread between bill rate and pay rate, because a spread that holds through economic cycles is worth more than one that compresses when demand softens.
• The mix of permanent placement versus temporary and contract staffing, since permanent placement is one-off revenue while temporary and contract work recurs and is more predictable.
• Client and industry concentration, because a book spread across many clients and sectors is steadier than one leaning on a few accounts.

For a consulting firm, the drivers are about how much of the value belongs to the business rather than to individuals.

• Key-person risk, meaning how much of the revenue and the client relationships depend on a few senior people who could leave. This is the central question for a consulting firm.
• Client concentration and the recurring or repeat share of the work, since repeatable engagements are worth more than one-off projects won on a founder's reputation.
• The depth of the team and documented methods, which show the firm can deliver without any one person.

For both, clean books, meaning reviewed financials, clear contracts, and separated personal expenses, are the baseline. The valuation page covers how earnings are adjusted and how the working capital peg works, and the calculator turns a headline number into an after-tax figure.

How the deal is usually structured

The headline price is enterprise value, not your check. A typical deal pays around 60 to 70 percent in cash at close, takes a rollover stake in the buyer's holding company rather than cash, holds 5 to 10 percent in escrow against problems found after closing, and sets a working capital peg requiring you to leave a set level of working capital in the business.

The feature to watch in both consulting and staffing is the earnout. Because so much of the value in these firms can depend on people and clients staying, buyers frequently pay part of the price only if the business hits agreed targets after closing, and the more your firm depends on a few key people or clients, the larger that earnout tends to be. Consulting firms in particular often carry long retention and non-compete commitments for the senior people, because losing them would undo the deal. Read the earnout and retention terms as carefully as the headline number, because they decide how much of your price is real and how much is at risk. The deal terms glossary defines each term, and rollover equity covers the piece that stays at risk.

How you will be taxed

Most of your price is goodwill, taxed as long-term capital gain at 20 percent federal plus your state's rate. Both consulting and staffing firms carry little depreciated equipment, so the depreciation recapture that hits trades sellers is a small issue for you. That makes the purchase price allocation between goodwill and the non-compete the main tax question. A covenant not to compete is ordinary income to you at up to 37 percent, and consulting or transition pay is ordinary income plus payroll tax. Any earnout carries its own tax in the year you receive it. Because the buyer is often indifferent to how much of the price is called a non-compete while it costs you real money, the allocation deserves attention. The full mechanics are on the how a sale is taxed page.

QSBS is where consulting and staffing part company, and the difference is not subtle. Consulting is a named excluded field under Section 1202, so stock in a consulting firm is not Qualified Small Business Stock, full stop, no matter how it is organized. Do not plan around it. Staffing is different: labor-provision and staffing businesses that do not depend on unique individual expertise have qualified in IRS guidance, so a staffing firm is not automatically excluded and can qualify if it was a C corporation. The C-corporation requirement is the practical catch, because most staffing firms are S corporations or LLCs that hold no QSBS at all, and eligibility is fact-specific and needs a written CPA opinion. So if you run a consulting firm, set QSBS aside entirely; if you run a staffing firm, it is worth a real conversation with your CPA. The QSBS page walks through both.

What changes after you sell

After closing, you hold a cash check and you no longer own your firm, but you are likely to stay involved longer than owners in most other industries, because your continued commitment is often exactly what the buyer is protecting against key-person risk. Earnouts and retention terms tie your pay to results for several years, and systems, billing, and back office standardize onto the buyer's model. For a founder whose firm is built on personal relationships and reputation, the shift from owner to a committed operator inside a larger organization is usually the hardest adjustment, and it is the part sellers most often underestimate.

Your income changes too. The distributions the firm paid you stop, replaced by a salary and earnout that may be smaller, and by whatever the rollover pays someday. The rollover is a minority stake in a private, leveraged company you no longer control, and it may be worth more at the next sale or nothing at all. Plan your household around the cash you kept and treat any rollover or earnout payout as a bonus. The after-sale plan and managing rollover equity pages cover the money side.

Who should not sell right now

Selling is not right for every owner, and an offer can make the choice feel already decided.

• If your firm runs on you and a few senior people, so the revenue would follow them out the door, building a business where the work and clients belong to the firm can raise your value far more than the offer in front of you, and can turn earnout dollars into cash at close.
• If you run a staffing firm and your spread has been compressing, stabilizing your gross margin first protects the number a buyer will pay a multiple on.
• If one client or industry is a large share of your revenue, diversifying before a sale protects both your price and your cash at close.
• If you cannot picture yourself committed to targets inside someone else's firm for several years, be honest that the deal likely depends on exactly that, so the cash may not be worth the working conditions.

What to do next

1. Reduce key-person dependence first

   For both kinds of firm, but consulting especially, building a business where the clients and the work belong to the firm rather than to a few people is the change that raises value most and shrinks the earnout, and it takes time you only have before you go to market.

2. Strengthen the specific driver for your firm

   If you run a staffing firm, stabilize your spread and grow the recurring temporary and contract share; if you run a consulting firm, build repeatable engagements and a deeper bench. Then clean up the financials.

3. Split the QSBS question by firm type

   Consulting owners should set QSBS aside as excluded. Staffing owners should ask their CPA, in writing, whether the firm is or ever was a C corporation and whether it depends on unique individual expertise. See QSBS.

4. Plan the money before the check lands

   Decide how the cash will replace your income and how you will treat the rollover and any earnout, using the after-sale plan. When you want a second opinion, the contact page explains how a first conversation works, including when we will tell you that you do not need us.