Consulting, IT services, staffing, marketing, engineering, accounting and other knowledge-based service firms.
The asset leaves every evening
A professional services firm has little to sell except its people, its client relationships and the way it turns one into the other. That is why buyers of consulting, IT services, staffing, marketing, engineering and accounting firms ask the same first question: if the owner or the senior partners stepped back, how much of the revenue would stay? The key-person risk guide explains how the answer shows up in price. The management consulting guide and the accounting and tax firm guide apply it to firms where the relationship usually sits with an individual.
Revenue quality sets the multiple
Two firms with the same EBITDA can be valued very differently if one earns its revenue from retainers, subscriptions or multi-year contracts and the other must sell its projects again each year. Buyers test renewals, notice periods and the history of scope changes. The IT services guide separates recurring, project and resale earnings, and the market research guide shows why the renewal rate matters so much.
The size measure matters as well. A marketing agency is better measured by net revenue than by billings, as the agency guide explains, and a staffing firm by gross profit, as the staffing guide shows.
Owner and partner pay
In a firm where the owners also do the work, reported profit depends on what the owners pay themselves. Buyers restate compensation to a market level for the roles the owners fill, and it can be a large adjustment. The add-back guide explains the method and the limits of what a buyer will accept.
Working capital and deal structure
Service firms fund payroll before clients pay, so receivables and work in process absorb cash. The engineering and architecture guide shows why fixed-fee work in process is tested project by project, and the working capital peg guide shows how the target is set.
Because value can leave with people, buyers sometimes defer part of the price. The earnout guide and the rollover equity and seller notes guide cover the common structures. The training and professional education guide adds a related point: who owns the content the firm sells.
Public-market reference data across the sector
The January 2026 data for the six public groups used in this series show a wide range. Enterprise value to EBITDA runs from 9.3x for education, with 32 US-listed firms, to 17.2x for engineering and construction, with 48 firms. EBITDA margins run from 8.0% for engineering and construction to 17.3% for information services.[1][2]
Public-company reference data, United States, as of January 2026[1][2]
| Damodaran industry group | US-listed firms | EV / EBITDA | EV / EBIT | EBITDA margin | Gross margin |
|---|---|---|---|---|---|
| Business & Consumer Services | 155 | 14.3x | 20.1x | 15.7% | 33.4% |
| Computer Services | 64 | 14.1x | 19.2x | 9.0% | 24.3% |
| Advertising | 52 | 12.0x | 20.9x | 14.1% | 36.2% |
| Engineering/Construction | 48 | 17.2x | 25.2x | 8.0% | 15.5% |
| Information Services | 15 | 11.5x | 17.8x | 17.3% | 34.1% |
| Education | 32 | 9.3x | 14.5x | 16.6% | 45.8% |
The multiples cover companies in each group that have positive EBITDA; the margins come from the same author's separate margin dataset for the same industry groups. Most private companies are smaller, less liquid and less diversified than these public companies, so private-company transaction multiples differ, and often sit below them. The groups are broad, they differ in size, and none is specific to one kind of professional service firm, so they show a range of public pricing and not what a private firm is worth.
Public groups are far larger and more diversified than a typical private firm, and none is specific to a single type of firm. The guide to valuation multiples explains how buyers adjust such data, and the comparison of strategic and financial buyers shows why the same firm can attract different prices from different buyers.
Professional and white-collar services guides
- Management consulting firms: How buyers value management consulting firms: partner dependence, utilization and realization, client concentration, retainers versus projects and deal structure.
- IT services and managed service providers: How buyers value IT services firms and managed service providers: recurring revenue, contract terms, churn, project and resale mix, tool costs and multiples.
- Staffing and recruiting firms: How buyers value staffing and recruiting firms: temporary versus permanent placement, gross profit, payroll funding, compliance and client concentration.
- Marketing and advertising agencies: How buyers value marketing and advertising agencies: net revenue versus billings, retainers, client tenure, key creative talent, platform risk and multiples.
- Engineering and architecture firms: How buyers value engineering and architecture firms: backlog, utilization and multiplier, work in process, licensed ownership rules, liability and deal structure.
- Accounting and tax firms: How accounting and tax practices are valued: recurring fees, client retention, service mix, seasonality, staff and succession, ownership rules and deal structure.
- Market research and information services: How buyers value market research and information firms: subscription renewals, data rights, deferred revenue, proprietary datasets and custom research.
- Training and professional education companies: How buyers value corporate training and professional education companies: content ownership, enterprise contracts, instructors and accreditation.
Thinking about a sale or an acquisition?
The Impetus Group provides sell-side and buy-side M&A advisory, from preparation and buyer outreach to negotiation and closing. A transactional valuation is often the first step, scoped and priced separately.
Sources
- Enterprise Value Multiples by Sector (US), data as of January 2026. Aswath Damodaran, NYU Stern School of Business. Accessed October 8, 2026.
- Operating and Net Margins by Sector (US), data as of January 2026. Aswath Damodaran, NYU Stern School of Business. Accessed October 8, 2026.
This guide is general education. It is not a valuation opinion, appraisal, investment advice, or legal or tax advice. How these guides are made.