As the Associate Director of Membership for a global recruiters network, I see split placements being made every day. With each recruiter taking home 47.5% of the client fee, it adds up quickly – and for most of our members, it’s more like “icing on the cake” for the profitability of their business. So, it goes without saying that recruiting can be a very lucrative business, but what happens when you decide you want to retire? How do you ensure that your independent recruiting firm has a resale value that amounts to more than your unpredictable client list?
Add contract work – Active contracts are guaranteed revenue for your business and can be valued and purchased outright. Obviously, this is more tangible than working on a contingent basis.
Expand your client base – If 70% of your business comes from one client and that client decides to move to another recruiting firm, your business will be significantly devalued.
Specialize – Once your specific niche is defined, figure out how to grow it. You want to be the “go-to” firm for executive placements in your specialized niche. Your team should experts and this knowledge will give them an edge with clients and prospects.
Create business procedures – Create standard business procedures and document them. It is valuable information, especially if they are efficient and help make your firm successful.
Use a unique business name – Avoid naming the firm after yourself, e.g. “Smith Global Services.” Chances are the party interested in purchasing doesn’t have the last name Smith.
Try (as much as possible) to avoid turn-over – If your top producer decides to stick with the firm through the sale, they are a big asset and valuable to the bottom line.
Purchase real estate – It goes without saying, but owning the building or space where your business is operated will significantly increase the sale price. Even if the building is not being purchased, it’s an asset that can be sold seperately.
Disclaimer: I’m not a black, blue, or even green level expert in this area. Most of what I’ve included might already in your exit strategy, but it never hurts to continually re-evaluate based on the current economic and industry conditions. The bottom line is – your business is worth what someone is willing to pay for it.
What are you doing in your global recruiting firm to ensure a high business valuation?
