Selling an IT Consulting Business

An IT consulting firm is usually valued as a multiple of annual profit, and the multiple moves with delivery quality and recurring revenue quality. Clear managed services scope and low founder escalation dependence tend to lift pricing, while mixed financials and “unlimited” support tend to drag it down. To sanity-check your range, use Rejigg’s free valuation calculator, then validate the inputs by separating services profit from resale, licensing, and cloud pass-through.

Buyers can pay strong prices for project-led firms when projects repeat for a real operational reason, like ongoing application support, compliance work that shows up every year, or embedded teams clients keep renewing. They still pressure-test utilization, estimating accuracy, and whether you actually bill for scope change. The proof that lands is a small sample of recent projects showing planned versus actual hours, plus the change orders you billed and collected.

Start with clean financials and a simple contract register. For IT consulting, buyers also ask for a tool stack list with admin ownership, ticket and project reporting snapshots, a coverage map for top accounts, and a plain-English summary of what access you have in client environments. Rejigg’s prepare-to-sell guide pairs with a built-in data room, so you can organize this without sending sensitive files over email.

Yes, many IT services deals can be financed with an SBA 7(a) loan when cash flow is consistent and the business can run without the seller doing daily delivery. Lenders look for clean tax returns, stable margins, customer concentration, and whether the firm relies on one engineer or one client relationship. You can model payments and down payment scenarios with Rejigg’s SBA loan calculator before you negotiate terms.

Many IT consulting sales take a few months end to end, but timelines stretch when contracts are inconsistent, pass-through revenue is mixed into services, or buyers can’t get comfortable with the delivery handoff. Faster deals usually have a tight data room, clear managed services scope, and a practical transition plan with named owners for key accounts. To map your steps, start with Rejigg’s due diligence and closing checklist.

No. Brokers typically charge 5–10% of the sale price for a process you can run yourself with the right structure and tools. Rejigg gives you vetted buyer access, digital NDAs, direct messaging, scheduling, a secure data room, and offer tracking, so you can stay in control and sell broker-free. Start with the find buyers guide.

Confidentiality matters in IT services because clients can churn when they hear rumors, and good engineers get recruited fast. A clean process uses staged disclosure: light information up front, then deeper access only after a buyer is vetted and has signed an NDA. Rejigg handles buyer vetting and digital NDAs and lets you control exactly what each buyer can see in the data room.

A common transition is 30–90 days for a structured handoff, and it can run longer if the seller has been the main escalation point or the main rainmaker. Buyers typically want introductions to key clients, clarity on who owns renewals and change orders, and a simple decision-making map for delivery. You can set expectations early using Rejigg’s transitioning guide.

Customer concentration lowers value when one cancellation can wipe out a big chunk of profit. In IT consulting, the risk gets worse when that big client also depends on a single engineer or a single relationship holder. You can reduce the perceived risk by showing multiple relationships at the client, clean documentation of the environment, and contract terms that require notice to terminate. Buyers may still proceed, but often with a lower price or protective terms.

A working capital adjustment is a closing true-up that makes sure the buyer receives a normal level of day-to-day cash flow items like accounts receivable and accounts payable. IT consultancies get tripped up by unbilled work in progress and timing gaps between time tracking and invoicing. Buyers do not want to fund a hole that was created before closing. Rejigg’s negotiation guide walks through how this gets negotiated in real deals.

Earnouts are common when the buyer worries revenue won’t repeat after the founder steps back, or when the pipeline is real but not contracted yet. In IT consulting, earnouts also come up when a few renewals or one partner channel are doing a lot of the work in the story. If you accept an earnout, push for clear targets, clear reporting, and rules that let you verify results from the PSA (Professional Services Automation), invoicing, or financial system.

Beyond price, focus on how and when you actually get paid and what risks you keep. In IT services, the big ones are cash at close versus later payments, transition expectations, seller financing, working capital terms, and what happens if a key client terminates right after closing. Rejigg’s negotiate-a-deal guide lays out these trade-offs in plain English with examples.

Most buyers won’t pay a high services multiple on low-margin resale, even when it makes up a big chunk of revenue. They usually value it on the profit it produces and the cash strain it can create, especially if you float big vendor bills. Sellers do best when they separate resale from services and show margin by category with clean bookkeeping. That separation often speeds diligence because buyers stop guessing.

If contracts require client consent to transfer, some customers use a sale to renegotiate or exit, especially when the termination notice is short. Buyers want to know which clients could walk right after closing and how much revenue is exposed. Prepare a contract summary and a simple client communication plan so this doesn’t pop up late. Keep contracts in a controlled-access data room the way Rejigg’s due diligence checklist outlines.

Buyers want to see that your tools match how work actually gets delivered and that the company, not an individual, owns admin access. Share a simple list of systems, seat counts, who administers them, and whether accounts are in the company name. Then show a few real reports, like ticket volume by client, response trends, time tracking compliance, documentation coverage, and documentation coverage. If the stack is messy, buyers mainly want a credible cleanup plan and timeline.

Taxes depend on your entity type and whether the deal is an asset sale or a stock sale. Buyers often prefer asset deals in services because it limits inherited liabilities, while sellers may prefer stock deals for tax treatment. Bring your CPA in early and model after-tax outcomes before you agree to a headline number. Rejigg keeps documents and offers centralized, so your CPA and attorney can review efficiently during the closing stage.

Most buyers ask for a non-compete so they are not paying for a client book you can immediately go resell. For IT consulting, the scope should match your real services, the geographies you serve, and a time period a court would view as reasonable. Also, clarify what work you can do if you stay on as an employee or advisor after close. Put the outline in the LOI and pressure-test the language with Rejigg’s negotiation guide.

Compare offers on the money you can actually count on, not just the headline price. In IT services, the real differences are cash at close, earnout terms, expectations for your time after closing, working capital, and whether the buyer needs seller financing to make the deal work. A side-by-side view helps you spot a “higher” offer that carries more risk. Rejigg’s offer dashboard tracks terms and timelines in one place.