To start an executive search firm, pick a niche where clients already know you, check what your current contract lets you take with you, set up a company, write one set of terms of business, decide how you will charge, and fund the months between signing your first mandate and being paid for it. The legal setup is the cheap part: in the UK a company costs £100 to register online and the ICO data protection fee starts at £52 a year; in the US an EIN is free from the IRS and entity fees are set by your state. The expensive parts are your own runway, your software and data, and the cash gap built into how search fees are paid. Most new firms win their first mandates from people who already trust them, not from marketing.
This guide walks through the decisions in the order you will face them: before you resign, the legal setup in the US and the UK, the fee model, the first clients, cash flow, the stack, and the first year. Where we cite a fee, a price or a rule, it comes from the source named in the last section. Where nobody publishes a reliable number, we say so rather than guess.
Key takeaways
- The legal setup costs little. As of October 2026, registering a UK limited company online costs £100 and the ICO data protection fee for a micro organisation is £52 a year; an EIN from the IRS is free.
- In the UK, a permanent-placement agency does not need a general licence, but it must follow the Employment Agencies Act 1973 and the Conduct Regulations 2003, and it cannot charge candidates for finding them work. In the US, rules are set by states and cities: New York City, for example, exempts executive search firms that never charge the candidate, but they must still follow New York's law for employer-fee-paid agencies.
- Retained fees are usually about a third of first-year cash compensation, paid in thirds. On typical timelines, the final third of your first mandate arrives four to six months after you sign it, so the runway you need is set by the payment schedule, not by your first win.
- Published executive search software prices run from $119 to $179 per user per month as of October 2026, before data and research tools.
- This guide is for senior recruiters and partners leaving a larger firm to set up a retained or boutique practice. If you plan to run temporary staffing, the rules and the economics are different.
Before you resign: what can you take with you?
Read your employment contract before you tell anyone. The restrictive covenants in it decide how fast your new firm can start earning.
Four clauses matter most for a search consultant:
- Non-compete. Whether you can work in executive search at all for a period after you leave, and where.
- Non-solicitation of clients. Whether you can approach the clients you served, usually for a set number of months.
- Non-solicitation of candidates and staff. Whether you can approach people you placed or recruited, or colleagues who might join you.
- Confidential information. Candidate notes, client lists and market maps you built belong to your employer in most contracts. Taking a spreadsheet out the door is the fastest way into a dispute.
The law on these clauses differs by country and, in the US, by state. In the US, the Federal Trade Commission's 2024 rule banning most non-competes never took effect: a federal court blocked it in August 2024, and in September 2025 the FTC dropped its appeals and accepted that the rule is vacated. So your contract and your state's law are what count. In the UK, courts will enforce a covenant that protects a legitimate business interest and goes no further than reasonably necessary. In both, take legal advice on your actual contract before you resign, not after.
Plan the new firm around the covenants rather than against them. A client non-solicit of six or twelve months is a reason to pick a niche where your reputation reaches beyond your old client list, and to use the period to build your market maps from public sources.
Which niche should a new search firm choose?
Choose the niche where a buyer would call you without needing an introduction. For most people leaving a larger firm, that is the function, sector or level they have placed most often.
A niche works for a new firm when three things are true:
- The buyers know you. You can name 30 to 50 people who hire for this kind of role and would take your call.
- The market is mappable. You can list the companies and seats that produce the profile. A market map of that universe is the asset you will sell from, and the first thing you should build.
- The fees can carry a retainer. Senior, scarce, confidential roles are where retained search earns its fee. A niche of roles that fill from job adverts will push you towards contingency.
Narrow is not the same as small. "CFOs for private-equity-backed industrial companies in the DACH region" is narrow and can still produce a year of mandates. "Senior hires in technology" is broad and gives a buyer no reason to choose you over the firm you just left.
How do you set up the business in the US and the UK?
The setup takes days, not months, and costs far less than your first month of runway. The detail differs by country, so the two are set out separately.
United States
- Form the company with your state's secretary of state, usually as an LLC or a corporation. Filing fees and annual fees vary by state, so check your own state's schedule.
- Get an EIN from the IRS after the entity exists. The IRS application is free and online, and the IRS warns against websites that charge for one.
- Open a business bank account and keep the firm's money separate from your own from the first invoice.
- Check whether your state or city licenses employment agencies. New York City is a useful example: an agency that finds jobs for a fee needs a licence from the Department of Consumer and Worker Protection, but an executive search firm that places only commercial, clerical, executive, administrative and professional candidates and never charges the candidate a fee does not, although it must comply with New York State law on employer-fee-paid agencies. Other states and cities set their own rules.
- Arrange insurance. Many clients ask for professional liability cover before they sign; ask a broker what your target clients are likely to require.
United Kingdom
- Register a limited company with Companies House. Since 1 February 2026 it costs £100 online and £124 by post, and directors may need to verify their identity first.
- Pay the ICO data protection fee. A search firm holds personal data on every candidate, so it will almost always need to pay. As of October 2026 the fee is £52 a year for tier 1 (turnover up to £632,000 or no more than 10 staff) and £78 for tier 2.
- Follow the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003. GOV.UK sets out the core rules, including that you cannot charge a work-seeker a fee for finding them work.
- Check whether you need a licence. A permanent-placement firm does not need a general licence. Agencies supplying workers in agriculture, horticulture, shellfish gathering, or food processing and packaging need a licence from the Fair Work Agency, and nursing and care agencies may need to register with a care regulator.
- Register for VAT when your taxable turnover passes the threshold, or earlier if your clients prefer it. A single retained fee can take a new firm a long way towards the threshold, so ask your accountant early.
In either country, have a lawyer review your terms of business once and reuse them. That document carries more of your income than any other.
What should your terms of business cover?
Your terms of business are the contract every mandate runs on, so write them before the first client asks for them.
| Clause | What it should say | Why it matters for a new firm |
|---|---|---|
| Scope | The role, the scorecard, the market to be covered, what you will deliver and when | Stops the brief changing after the slate without a conversation about the fee |
| Fee basis | The percentage and exactly what counts as compensation: base, bonus, sign-on, equity | Two proposals at "33%" can differ widely on what goes into the base |
| Payment schedule | When each instalment is invoiced and the payment terms | Your cash flow is set here, not at the placement |
| Exclusivity | Whether you are the only firm on the search | Retained work without exclusivity is contingency with an invoice up front |
| Off-limits | Which client companies you will not approach for candidates, and for how long | Protects the relationship and tells you which markets you cannot recruit from |
| Guarantee | What happens if the hire leaves early, usually a free replacement search rather than a refund | A refund promise you cannot afford can wipe out a year of margin |
| Cancellation | What the client owes if it cancels, pauses or hires internally | The work already done should already have been paid for |
| Candidate introductions | Whether a fee is due if the client hires someone you introduced, within what period | The most common source of fee disputes |
Retained, engaged or contingency: how should a new firm charge?
Charge in a way that pays for the work before the hire. For senior roles that usually means retained or engaged search rather than contingency.
| Model | How it is paid | Usual fee | When it suits a new firm |
|---|---|---|---|
| Retained | In instalments, whether or not a hire closes | About a third of first-year cash compensation, paid in thirds | Senior, confidential or scarce roles, and buyers who already trust you |
| Engaged (container) | Part up front, balance on hire | Typically 25 to 33% | Buyers who know you but have not paid you before |
| Contingency | Only when your candidate is hired, often with other agencies on the same role | Typically 20 to 30% | Roles with an active candidate market; poor for a firm that needs predictable cash |
The fee ranges are market practice as published by search firms and fee guides, and set out in more detail in retained executive search. They are not a Topliner price.
New firms are often tempted to discount or to accept contingency to win the first client. A lower percentage is easier to recover from than a contingency habit: a contingency search pays nothing if the client fills the role another way, and the research you did for it pays nothing either. If a buyer will not pay anything up front, ask for an engagement fee before you start mapping, and move to a full retainer once you have closed a few searches for them.
Where do the first clients come from?
The first clients of a new search firm nearly always come from people who already know your work. Plan your launch around them before you plan a website.
- Write down everyone who has hired through you, been placed by you, or referred you a search, and who could plausibly do so again. Check each name against your covenants.
- Tell them individually what the new firm does and which roles you want to be called for. A short personal note does more than a launch announcement.
- Pick a few target companies in your niche where a senior hire is likely in the next year, for example after a funding round, a leadership change or an acquisition, and approach them with something useful, such as a view of the market for a role they will need.
- Publish what you know. A short regular note on your niche, on LinkedIn or by email, turns you into the person buyers think of when the seat opens.
- Keep a talent pipeline warm between mandates, so the second search for a client starts from a bench rather than a blank page.
Expect the first mandate to take longer than you hoped. A buyer who liked working with you at a large firm may still need to see the new firm's terms, insurance and process before signing.
How does cash flow work in the first year?
Cash arrives in pieces, weeks after the work. That gap, not candidate finding, is the main financial risk in the first year.
Here is how one mandate pays out on common timelines. A typical retained search runs 12 to 20 weeks from signing to accepted offer, with the slate around weeks 5 to 8. Suppose the fee is a third of the hire's first-year cash compensation, invoiced in thirds, on 30-day payment terms.
| Instalment | Invoiced | Paid on 30-day terms | Share of the fee |
|---|---|---|---|
| First third | At signing (week 0) | Around week 4 to 5 | 33% |
| Second third | At the slate (weeks 5 to 8) | Around weeks 9 to 13 | 33% |
| Final third | At accepted offer (weeks 12 to 20) | Around weeks 16 to 25 | 33% |
These are our own sums from those assumptions, not a survey. They show why a new firm with one mandate will not have its full fee for four to six months, and why a mandate signed in month three may not pay out in full until month eight or nine. Late-paying clients, a slate the client rejects, or a final third that waits for the start date make the gap longer.
Three things shorten it. Invoice the first third on signing and do not start mapping until it is agreed. Tie the second third to the slate, not to the first interview. And plan your personal draw from cash received, not from fees signed. How you fund the gap, from savings, a partner's income or a credit line, is a personal decision; not having sized it before you resign is the common mistake.
What does the stack cost in year one?
A solo firm needs a system of record, a source of candidate data, email and calendar, e-signature and accounting. The system of record and the data are the large lines.
| Line | What it is for | What to expect |
|---|---|---|
| Executive search software | The mandate, scorecard, market map, off-limits, slate and client reporting, in one record | Published prices run from $119 to $179 per user per month as of October 2026; some vendors quote only. See <a href="/library/executive-search-software-cost">what executive search software costs</a> |
| Candidate data and sourcing | Finding and contacting people who are not looking | Often the largest line for a research-heavy firm; many tools quote on request or charge by credits |
| Email, calendar, video | Day-to-day work | A business email and video subscription |
| E-signature | Signing terms and offers | A small monthly subscription |
| Accounting and invoicing | Invoices, payment chasing, tax | Matters more than it looks, because cash flow is the main risk |
| Insurance and fees | Professional liability, data protection registration | In the UK, the ICO fee from £52 a year |
The software decision is the one that is hardest to undo. Pick a system built for retained search rather than a staffing ATS, because the work is a mapped market of people who did not apply, not a pipeline of applicants. Read the contract terms as closely as the feature list: renewal increases, whether you can reduce seats, and how to export your data if you leave. The questions to ask are in how to choose executive search software, and the difference from an ATS is in ATS for executive search.
What does the first year look like?
The first year is usually slower to pay and lonelier than people expect, even for consultants with a strong book.
Nobody publishes reliable numbers for how many new search firms survive or what a founder earns in years one to three, and we will not invent them. What tends to decide the first year is easier to see:
- How many mandates you can run at once. A solo consultant running research, approaches and client management alone can hold only a few live searches before quality slips.
- Whether every invoice buys something the client can see. A scorecard and map at the first third, a slate with coverage at the second, and a closed offer at the last. The executive search process sets out what each stage should produce.
- How concentrated your income is. If one client provides most of your fees, a hiring freeze there is a crisis for you.
- Whether you have help on research. The large firms carry the first third of every search on a research team. An independent consultant has to produce the same map and coverage with fewer hands, through a researcher, a partner or a system that does part of the work.
The honest downside: some consultants find that the network that brought them mandates at a large firm belonged partly to the firm's brand. The first two or three searches tell you how much of it is yours.
Where does Topliner fit?
Topliner is an executive search OS for independent and boutique retained firms. We sell software and research in this category, so read this section as a vendor's view.
Topliner holds the mandate as one record: scorecard, market map, off-limits, approaches, slate and client report, with an ATS and CRM on the same data. Senior researchers can run the research beside you, so a solo consultant can deliver a mapped market and a slate without hiring a research team first. The research platform holds 2.6M+ executive profiles and 234K+ companies as of October 2026, and 1,200+ executive searches have run on it.
Topliner is not sold per seat. It works with independent firms as a partnership, on a revenue share, by invitation, so the cost follows the searches you run. A revenue share is not automatically cheaper than a licence, so compare it with your expected fees.
How do you start an executive search firm, step by step?
- Read your contract and take legal advice on your restrictive covenants before you resign.
- Choose a niche where 30 to 50 buyers already know you, and start a market map of it from public sources.
- Size your runway from the payment schedule: assume the first full fee arrives four to six months after the first signing.
- Set up the company, bank account, tax registrations, data protection registration and insurance for your country.
- Have a lawyer review one set of terms of business covering scope, fee basis, payment schedule, exclusivity, off-limits, guarantee, cancellation and introductions.
- Decide your fee model, and ask for money up front on every search.
- Choose a system of record built for retained search, and check the contract terms before you sign.
- Tell the people who already trust you, one by one, what the new firm does.
- Run your first mandates so that every invoice is tied to something the client can read.
How we know
Company registration fees are from the Companies House fees guidance on GOV.UK, updated 25 September 2026, and the Registrar of Companies (Fees) (Amendment) Regulations 2025. The data protection fee tiers are from the ICO's guide to the data protection fee. The UK agency rules and licensing exceptions are from GOV.UK's guide to employment agencies and businesses, and the Conduct Regulations 2003 on legislation.gov.uk. The EIN details are from the IRS. The New York City licensing rules are from the Department of Consumer and Worker Protection's employment agency licence checklist. The status of the FTC non-compete rule is from the FTC's rule page and its press release of 5 September 2025. All were read on 30 October 2026.
Fee ranges are market practice as published by search firms and fee guides, as set out in our retained executive search page; search timelines are from the same page. Software prices are from vendors' own pricing pages, read on 29 October 2026 for our executive search software cost guide. The cash-flow table is our own arithmetic from the stated assumptions. This is a general guide, not legal, tax or financial advice; rules change, so check them for your country, state and contract.
If you are setting up a retained desk and want the research loop on the system we use ourselves, request an introduction.
Questions people actually ask
How much does it cost to start an executive search firm?
The legal setup is small: £100 to register a UK company online and £52 a year for the ICO fee as of October 2026, or a state filing fee and a free EIN in the US. The real cost is your runway until fees arrive, plus software, data and insurance.
Do you need a licence to start an executive search firm?
In the UK, a permanent-placement firm does not need a general licence, but must follow the Employment Agencies Act 1973 and the Conduct Regulations 2003. In the US it depends on your state and city; New York City, for example, exempts search firms that never charge candidates a fee.
How do new executive search firms find their first clients?
Mostly from people who already know their work: past clients, placed candidates and referrers, contacted one by one and within any non-solicitation limits. Content on the niche and a warm talent pipeline help after that.
Should a new search firm work on retainer or contingency?
For senior roles, retained or engaged search, because it pays for the research before the hire. Contingency pays nothing if the client fills the role another way, which is hard for a new firm's cash flow.
How long until a new search firm is paid?
On typical timelines, the first third of a retained fee arrives about a month after signing and the final third four to six months after, depending on how fast the search closes and how quickly the client pays.
Can I take my clients with me when I start my own search firm?
It depends on your contract's non-solicitation and confidentiality clauses and on local law. Take legal advice before you resign, and never take your employer's candidate or client data with you.
What software does a new executive search firm need?
A system of record built for retained search that holds the mandate, the market map, off-limits, the slate and the client report, plus a source of candidate data. Published prices run from $119 to $179 per user per month as of October 2026.