Plunkett Research predict a rebound in 2010 after an awful 2009 for the consulting industry. These are some of the major trends in the research ...

• More consulting firms will accept fees contingent on success
• Other industry sectors will move into consulting and outsourcing
• Corporates will develop internal consultants to reduce costs
• Corporates will want sold returns on IT investments
• Government consulting will be strong in the Transportation, Health Care, Energy and Cyber Security sectors
• Consultancies will move towards globalization
• Offshoring to India will drive changes in global consulting
• White-collar and professional activities will be offshored to a greater extent - BPO and KPO

Those of you timing your exit ,selling your consulting business, and aiming to make your equity realisation as tax efficient as possible, will be keeping a keen eye on what the new Conservative/Lib Dem coalition government is aiming to do to reduce the deficit through increased taxation and in particular how CGT will be targeted in that mix of measures.

CGT currently stands at 10% for the first £2m, then 18% above that, however prior to the Coalition agreement the Liberal Democrats wanted the 18% rate of CGT brought closer to the 50% top rate of income tax.

The expectation now is that CGT will be increased for non-business assets up towards income tax rates, but there should be large exemptions for profits from the sale of businesses in order to not excessively tax entrepreneurs.  Confirmation of the tax on owners of consulting businesses realising equity will have to wait for 50 days or so for the expected emergency Budget. 

Kennedy Consultancy Research & Advisory's 'Benchmarks in Consulting- Financial and Operational Metrics' report has identified an average 12% (approx) reduction in gross margins for firms in 2009. The spread from worst to least worst was 14% with smaller firms being hit the hardest.

This correlates with our sales revenue analysis outlined in our recent article on the 2010 Consulting Industry M&A Outlook. Our index on large firm revenue performance indicated that sales dropped by around 8% and our own small firm research identified an average 10% drop in 2009.

However that was 2009 and even at the end of that year our analysis in the UK small firm market showed that sales forecasts were much more optimistic.

The MCA (in association with Management Today) presented its 14th Management Awards ceremony to a packed house in London on 29th April 2010. The winners were drawn from a long list of management consulting firms who demonstrated that they were “business superfuel and could deliver faster, smoother, better results and go the extra mile for their clients". The winners were drawn by a panel of 10 judges made up of leading consulting industry figures including our own Paul Collins. Go to the MCA website to view the winners list.