Hinge Strategy Study Provides Valuation Advice for Professional Services Firms in Tough Economy

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Comprehensive research offers advice for businesses to maximize firm value

Hinge's study on premium valuations is enlightening-it shows clearly that choices around market positioning and development of a committed, quality management team are as important as achieving financial measures. Food for thought-and a call to action, for all of us charged with leading growing businesses.

Hinge Incorporated, a strategy and branding firm focused on the professional services marketplace, today released results from its research study "Top Dollar - How to Achieve a Premium Valuation for your Professional Services Firm." The national survey sought out best practices for maximizing firm value from 21 representatives of two key groups--valuation experts and companies that acquire professional services as part of their regular business practices.

Research Director and Managing Partner of Strategy, Lee Frederiksen, Ph.D., believes this new data can help professional services firms and technology companies better understand what characteristics experts look for when evaluating a potential acquisition.

"With the recent economic climate on the minds of every business person, it is important to focus on the strategic factors that improve corporate value," stated Frederiksen. "As companies plan for 2009, this analysis should help provide strategic direction."

Professional services industries covered in the study include IT service firms, accounting and financial services firms, architecture, engineering and construction companies, management consulting firms and government contractors. In today's economic climate, these firms are feeling increased competitive pressure, so it is imperative these companies understand which factors are most influential in building a thriving and valuable firm.

Key findings include:

  •     Past financial performance, as reflected in historic growth or the strength of the balance sheet, has less bearing on valuation than one might think. Projected growth rate - backed by a solid plan for execution - is far more important.
  • Employee retention is not as much of a differentiator as one might think. Unless employee retention is overtly poor, the employee base is seen as a given rather than as a differentiator.
  • Study respondents emphasized the importance of strategic growth. Growth without strategy actually limits a firm's value.
  • Overall, the strength of client relationships is the single most influential factor.

This final point is echoed by study participant, Kevin Robbins, Senior Principal of Corporate Development at SRA International, Inc., said, "For government services companies, the best determinant of both growth and discount rate is the strength of existing client relationships, regardless of what's happening in the economy. This study gets it right. Four of the top five criteria identified in this survey speak directly to the strength of existing client relationships."

To find out more about the top factors in building valuation, download a complimentary copy of "Top Dollar - How to Achieve a Premium Valuation for Your Professional Services Firm" at http://www.pivotalbrands.com/resources/surveys/topdollar.html.

Select Quotations from Business Leaders

"Hinge's study on premium valuations is enlightening-it shows clearly that choices around market positioning and development of a committed, quality management team are as important as achieving financial measures. Food for thought-and a call to action, for all of us charged with leading growing businesses."

Jim Lawler, CEO
Org Solutions International

"Hinge's study really pinpoints what is important to building a strong business valuation, and those value drivers remain true in good times and in bad."

Andrew C. Smith, Partner and Senior Managing Director
The McLean Group, LLC

"Even with all the concern about the economy, deals are still happening. Buyers are a bit more deliberate and cautious, which keeps us very busy. Top quality companies have a real advantage. This study lays out exactly what it takes to succeed in this or any other economy."

Adam August, Partner
Holland & Knight

About Hinge Incorporated
Founded in 2002, Hinge Incorporated provides revenue-increasing marketing strategies and award-winning brand design to professional services firms. From strategic analysis and assessment to market research and strategy development, Hinge helps clients build highly competitive brands. With a specialty in accounting, architecture, engineering, information technology, management consulting and government contracting firms, Hinge has built an expertise in finding and marketing the competitive advantage in any professional services business. The firm's work has been featured in magazines and trade publications and has won four "M Awards" from the Washington, DC chapter of the American Marketing Association. Because of their ongoing volunteer and pro-bono efforts, Hinge has won several community leadership awards and honors, including a commendation from the Virginia State Senate. Learn more about Hinge at http://www.pivotalbrands.com.

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Jamie Nolan

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