Equity Advisory: Why We Bet Our Fees on Your Success
The consulting industry has an incentive problem. We built a model to fix it.
The Misalignment
Traditional consulting runs on time and materials. The consultant bills hours. The client pays hours. The consultant's revenue is maximized by longer engagements. The client's value is maximized by shorter ones.
This creates a subtle but persistent misalignment. The consultant's best financial outcome is to uncover more problems, recommend more phases, and extend the engagement. The client's best financial outcome is to solve the problem and move on.
Fixed-bid engagements attempt to solve this but introduce a different problem: scope rigidity. The consultant prices risk into the bid, the client gets less flexibility, and change orders become the new profit center.
Neither model aligns the consultant's economic interest with the client's business outcome. The consultant gets paid the same whether the project generates $100M in value or $0.
The Fee-for-Equity Model
We built an alternative. Instead of billing at our full rate, we accept a discounted cash rate in exchange for equity participation in the outcome we help create.
The mechanics are straightforward:
Cash component: We bill at a discounted hourly rate -- typically 25-30% below our full rate card. This covers our operating costs and ensures the engagement is not speculative.
Equity component: The discount we give on our cash rate converts to equity in the client's business, product entity, or a jointly owned subsidiary. The specific structure -- direct equity, revenue share, milestone-triggered vesting -- is negotiated based on the engagement.
Alignment outcome: We only realize the full value of our engagement if the business succeeds. Our financial interest is identical to the client's: build something valuable.
Why This Works for Clients
Lower cash outlay during the critical early stages. When you are building a new product line, launching a subsidiary, or investing in AI capabilities, cash is typically constrained. Paying full consulting rates competes with product development, sales, and operations. Our model reduces the cash burden during the period when it matters most.
Senior talent at accessible rates. Our equity-deal engagements are staffed with the same senior architects, engineers, and strategists who work our full-rate engagements. The equity component makes it economically viable to deploy senior talent on engagements that could not support full-rate billing.
Built-in accountability. When your consultant holds equity, they care about adoption, not just delivery. They care about whether the architecture scales, not just whether it passes the review. They care about the five-year trajectory, not the six-month SOW.
A partner, not a vendor. The dynamic shifts fundamentally when both parties have financial exposure to the outcome. Conversations become more honest. Disagreements become productive. The relationship is a partnership in the truest sense.
Why This Works for Us
Portfolio diversification. Hourly billing is linear revenue. Equity positions create asymmetric upside. A single successful equity engagement can generate more value than years of hourly billing.
Deeper relationships. Equity engagements are inherently long-term. They create the kind of deep, trust-based relationships that generate referrals, expand into adjacent work, and compound over years.
Intellectual honesty. When our compensation depends on outcomes, we cannot recommend unnecessary work. Every recommendation is filtered through a simple question: does this actually increase the probability of success? If not, we do not recommend it.
Proof of conviction. When we take equity, we are making a public statement: we believe in this opportunity enough to stake our revenue on it. That signal carries weight with boards, investors, and other stakeholders.
When This Model Fits
Not every engagement is an equity-advisory candidate. The model works best when:
- There is a definable outcome -- A new product, a subsidiary, a platform that will have its own revenue stream
- The timeline is 2-5 years -- Long enough for value creation, short enough for reasonable return expectations
- Our contribution is material -- Technology architecture, product strategy, and execution are the primary drivers of success, not just incremental improvements
- The equity structure is clean -- A clear path to participation that does not create governance complexity or conflict with existing shareholders
- The market opportunity is real -- We conduct our own diligence before accepting equity. We are selective because our model requires us to be.
What It Looks Like in Practice
One of our largest engagements follows this model. We provide technology advisory for a new AI product subsidiary within an established insurance company. The parent company funds operations. We provide architecture, engineering, and strategic advisory at a discounted rate. In exchange, we hold a meaningful equity position in the subsidiary.
Our interest is perfectly aligned: the more valuable the product becomes, the more valuable our equity position. We are not incentivized to extend the engagement. We are incentivized to accelerate value creation.
If the product fails, our equity is worth nothing. We accept that risk because we believe in the architecture, the market opportunity, and the team. That belief, backed by financial exposure, is the strongest form of commitment an advisory firm can make.
The Industry Needs This
The consulting industry is overdue for a compensation model that aligns with outcomes. Clients are tired of paying for effort and hoping for results. Consultants are tired of being treated as interchangeable vendors when they deliver differentiated value.
Equity advisory is not the right model for every engagement. But for the right opportunities, it is the most honest structure available. Both parties succeed together or not at all.
David Boggess is Managing Partner and CEO of Boggess Advisory Group. BAG's fee-for-equity model has been deployed on engagements targeting $240-350M in value creation.