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Consulting partnership with another firm

consulting consulting firms consulting industry
Edited on Apr 10, 2024
5 Answers
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Anonymous A asked on Apr 06, 2024

I have my own consulting business and was approached by another firm that says a client of theirs is interested in my services.  They said they would recommend me to their client however they want %15 of the take.  Is that leading practice?  A fair deal?  Seems extremely steep.  I also don’t have a good feeling about such arrangements. If I were to recommend them to someone I would then also have to apply the same principle.

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Alberto
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Content Creator
replied on Apr 08, 2024
Ex-McKinsey Associate Partner | +15 years in consulting | +200 McKinsey 1st & 2nd round interviews

Hi there,

It is difficult to judge based on the limited information you shared. A few questions for you to think if this is a fair deal:

  • Are you keeping a fair share of the revenue after paying the 15% commission?
  • What is the grow potential you might have with this client?
  • Is there any potential this consulting firm becomes a recurrent channel to get clients?
  • What is your opportunity cost here (e.g., saying no to other clients

Best,

Alberto

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Anonymous A on Apr 08, 2024

Thanks, yes that’s what I’ve gathered. Lots of pluses for doing it, more clients through that source, building credentials. Any fees are gonna be factored in as well so financially will accommodate for it. Thanks

Udayan
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Content Creator
replied on Apr 06, 2024
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /12 years recruiting experience

It's pretty natural for someone that refers you to have a ‘take rate' or referral fee that is a cut of the rate you charge. For example if you go through a platform that helps you find projects they do the same thing and their rates can be up to 20%. 

If you're not comfortable with this rate you can try and negotiate it down but it seems normal to me. 

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Anonymous A on Apr 08, 2024

Thanks, seems to be normal for that percentage and. In many cases much higher. Thanks

Hagen
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updated an answer on Apr 10, 2024
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

I would be happy to share my thoughts on your questions:

  • First of all, referral agreements like the one you're considering are quite common in the industry. The commission can vary widely, but 15% is within the normal range, especially if the partner firm is bringing a significant client or adding substantial value by endorsing your services.
  • Moreover, I would advise you to consider both the short-term and potential long-term qualitative and quantitative benefits. For instance, that one new client could lead to more business opportunities and enhance your firm's reputation.
  • Lastly, it's crucial to listen to your instincts. If something doesn't feel right about the arrangement, it might be worth exploring further or negotiating the terms.

If you would like a more detailed discussion on your specific situation, please don't hesitate to contact me directly.

Best,

Hagen

 

You can find the DACH consulting salaries report 2024 here!

(edited)

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Pedro
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updated an answer on Apr 08, 2024
Bain | Roland Berger | EY-Parthenon | Mentoring Approach | 30% off first 10 sessions in May| Market Sizing | DARDEN MBA

Yes, I've seen several situations where a business developer would take a 15% cut for a lead. So regarding the commission % yes it is within normal range.

What may not be normal is the way you were approached. Usually one would have a business development contract (or understanding) before any concrete opportunity. 

Coming to you AFTER they have the opportunity sometimes means there's some “funny business” going on, and as such you want to do your due diligence on your counterpart to validate they are acting in their client's best interest. Because in this situation they are on the “buy side” but tring to get a margin on the “sell side” which is not a standard practice (and depending on the context, may not be ethical or legal). This is different, of course, if they are trying to get an arrangement for multiple opportunities they have, in that case, they are basically trying to get a partner in order to further monetize their client base.

(edited)

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Cristian
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replied on Apr 08, 2024
#1 rated MBB & McKinsey Coach

I'd start by looking into whether your services are complementary. 

Then there's scope for collaboration. 

Or whether you can use each other to manage extra capacity. 

But outside of this, I don't understand the logic of the partnership here. 

Think first about what you would want and how they could enable it.

Best,
Cristian

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Alberto gave the best answer

Alberto

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Ex-McKinsey Associate Partner | +15 years in consulting | +200 McKinsey 1st & 2nd round interviews
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