Anyone bought an engineering consulting business?

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August 09, 2023

by a searcher from Ivey Business School at Western University in Toronto, ON, Canada

Hello! Does anyone have experience buying an engineering consulting business? I’ve worked for these types of companies but am not a P.Eng myself. My thesis is that there’s a ton of room to improve marketing and sales but I’m still worried about 2 things. Anyone have a perspective?


1. Sales relationships tied to the owner
2. Reliant on key engineers to sign off on work

Additional context: I’m looking at a company with $6m rev and <20 employees

thanks!

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commentor profile
Reply by a professional
from INSEAD in Singapore
Also working in this space. IMO specialisation of offering at the scale you're looking at (<20 employees) may help to mitigate somewhat against point #1. The more the offering is full stack (e.g., research + design + delivery, vertical integration, ...) the more insulated you are against an individual leaving and being able to replicate the same sales success outside the business you acquire.
The biggest operational challenge is managing utilisation/billability rather than marketing/sales per se, so I'd focus on the go to market, deal closing processes and scheduling rather than top of funnel. ^redacted‌ does that align with your experience?
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Reply by a searcher
from Washington University in St. Louis in Chicago, IL, USA
Hey- also, seek a legal advice or research before you pursue. Similar to CPOM for medical practices', most states require all businesses that depends on professional licenses to be owned by the person, or group holding the licenses. Usually, these entities are a set up as PLLC. Being said that, similar to PC-MSO structure becoming popular for medical practice transactions by PE firms to curtail that, you can set up another entity and ender into agreement with the PLLC. And just charge them a Management fees for taking over all business side of the operations and own all the assets of the PLLC.
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