Client advisory services (“CAS”) appear on every growth slide. Buyers look past the label, though. They want to know what changed in the client relationship and in the delivery model.

What good client advisory services change

Here’s a useful first-call test. Does the client call you before a major decision? Or do you learn about it at year-end?

Monthly reporting can be valuable, but it isn’t automatically an advisory relationship. Being one of the first calls is what changes things. That’s the appeal for buyers. The relationship becomes more regular and more embedded than episodic work.

The growth is real, too. In the CPA.com and AICPA CAS Benchmark Survey, CAS practices reported a median growth rate of 17%.

Recurring work can still be bad work

A CAS practice with vague scopes, low fees and endless exceptions creates recurring headaches. Recurring revenue alone doesn’t make it valuable.

Building a scalable line can take 12 to 24 months. First, find a leader. Next, choose clients with a real need. Then define delivery and train the team. Buyers will examine margins after full labor costs. They’ll also check whether the practice works beyond one partner.

The client advisory services ladder

It helps to view CAS as a ladder of service tiers:

  • Foundation: bookkeeping, payables and receivables, payroll support, reconciliations and financial statements.
  • Controller: close management, variance analysis, KPI reporting, cash forecasting, budgeting, pricing and margin analysis.
  • Fractional CFO: strategic modeling, capital planning, financing support, scenario work, M&A readiness and executive decision support.

Each tier carries different pricing, staffing and margin expectations. Buyers will want to see how your clients spread across them.

What buyers will test in a CAS practice

  • Monthly recurring revenue and engagement terms
  • Retention, expansion and churn
  • Average revenue per client and client concentration
  • Gross margin and labor model by tier
  • How much work follows a standard process versus a custom one
  • Technology, integrations and data security
  • Manager leverage, capacity and credentials
  • Whether advisory is delivered by a team or only by the founder

That last point often matters most. For more on how buyers assess it, see what buyers look for when acquiring business and professional services companies.

Build an operating model, not a menu

Start with your ten best clients. What was the last major decision each one made? Did they call you beforehand? If not, who did they call?

That answer may tell you more about your advisory position than the share of revenue you label CAS. A clear operating model turns client advisory services into a valuable part of the firm, rather than a collection of custom favors. It also shapes how professional services companies are valued when it’s time to sell.

If a sale is on your horizon, our guide to preparing a professional services company for sale is a good next step.

Sources and context

Educational material only. A firm’s value and transaction structure depend on its specific facts, buyer universe, market conditions, tax considerations and legal requirements.