Acquisition Checklist

Steps For Success: Your Acquisition Checklist

So you’ve decided to sell your agency - now what? Here is your Acquisition Checklist to guide the next steps in your plan before formally listing your agency for sale. 

Your Acquisition Checklist

1. Define Your Motivation For Selling Your Agency

Diving into the narrative behind why you are selling your agency will help set your roadmap for success when embarking on an acquisition journey. Questions to consider:

  • Ideally, what does post-transaction life look like for me? - Do you want to fully exit the business and retire to a small beach town, or are you seeking a new opportunity with a strategic partner who has more resources to take your agency to the next level? 
  • How long of a transition period am I willing to stick around for? - You’ve built your agency to the amazing success it is today making you the top asset in the organization. How long, and in what capacity, are you willing to stick around to help facilitate transitions for your clients, talent, and processes?

Well-defined motivation for selling helps your dedicated Deal Team during buyer vetting to identify buyers whose acquisition intentions align best with your goals. 

2. Prepare Your Financials Documents 

The first step in taking your business to market is determining the Total Enterprise Value of your agency by going through the valuation process. Agency valuations are determined by both quantitative (financial) and qualitative (intangibles) factors - with the financials at the core of the equation. Documents you should have cleaned, prepped, and checked include, but are not limited to:

  • Monthly P&Ls for the last 3 years
  • Projections for the upcoming fiscal year 
  • Balance Sheets for the last 3 years
  • Annual Sales by Customer Reports for the last 3 years
  • Monthly Sales by Customer Report for the last closed fiscal year
  • Team Roles, Compensation, Tenure & Location Report

Preparing your financials ahead of time will help guide strategic decision-making and support a smooth transition when you're ready to exit your agency. If you need help getting your books in order, it might be time to consider engaging a Fractional CFO.

3. Identify Your M&A Support Team

Going through an acquisition is a significant undertaking - if you manage the process all on your own. Having the right experts on your team protects your agency from disruption of day-to-day operations which could lead to financial downturn or cause suspicions among your staff. It’s important to do your own due diligence and identify the M&A advisory team that:

  • Understands the Agency Space: Digital agencies are not valued the same as traditional companies. You need to find an advisor who understands the value of a service based, asset lite business model to ensure you receive the most accurate valuation. 
  • Has Established Buyer Relationships: Let’s face it - business transactions are all about relationship-building. You need an advisor who knows the key buyers interested in your agency type to accelerate your acquisition timeline and ensure you’re connected with buyers who are not only a great financial fit, but have cultural alignment as well. 
  • You Have Synergy With: Going through an acquisition is a big commitment both financially and emotionally. Throughout the process you will be in constant communication with your advisory so it’s important to have a great relationship! You need someone who understands the ups and downs of selling an agency and is here to provide you with as much personal support as they are business support. 

An acquisition is an exciting opportunity to launch your agency, and you personally, into the next phase of your life! There is no time too early to begin preparing to make your dream exit a reality. This Acquisition Checklist is just the start - connect with our team to learn more about best practices to prepare your agency for a sale.

Acquisition Checklist | Barney | Middle-Market M&A Advisors For Digital Marketing Agencies

What Is A Fractional CFO?

What Is A Fractional CFO?

Having organized, clean financial documents is the key to understanding the value of your business and ensuring a smooth transition when you’re ready to begin the acquisition process – but when you’re a busy entrepreneur, things can get messy with your attention being pulled in a hundred different directions. When you’re seriously considering a sale within the next 9-24 months, it’s time to bring in someone to help you prepare for this journey – it’s time to engage a Fractional CFO.

Who Is A Fractional CFO?

A Fractional CFO, also known as an outsourced CFO, is a financial professional that provides management and advisory services on a part-time or project basis. These experts are typically employed by small to medium-sized businesses who may not have the resources for a permanent CFO (Chief Financial Officer), but still require financial expertise and oversight. 

Understanding The Differences Between Key Financial Roles

While all Fractional CFOs, Controllers, and CPAs all play critical roles in business financials – they have a number of key differences in their scopes of work:

  • Fractional CFO: A Fractional CFO is a strategic financial leader who provides high-level guidance and oversight to businesses. They focus on the broader financial aspects, including financial planning, strategic decision-making, and long-term financial sustainability. Fractional CFOs focus on actions to drive business growth
  • Controller: A Controller is responsible for the day-to-day financial operations of a company. They often facilitate the management of internal financial systems and mid-level financial teams. Unlike Fractional CFO, they typically do not provide advisory to executives and work in a more administrative capacity. Controllers focus on communications to ensure streamlined operations. 
  • CPA: A CPA (Certified Public Accountant) is a financial professional who has met specific educational and examination requirements to achieve this elevated professional designation. CPAs have a narrow, specialty focus in terms of business financial operations handling operations only related to accounting and taxation. CPAs focus on compliance to handle regulation financial obligations. 

While a Controller and/or CPA can help keep your books, billings, and taxes in order from a technical perspective, a Fractional CFO provides strategic guidance and focuses on long-term business planning to drive overall success.