What’s The Deal After You Sell Your Agency?

The day has finally arrived. After many months that entailed decision-making. Also discussions that gradually morphed into due diligence, the deal is now done. Congratulations, and a bottle of celebratory champagne, may well be in order. – Also they won’t be the only order of the day! Your work is not over just yet.  So, what next? The handover that takes place once the paperwork is complete is not a ‘one size fits all’ period. Based on our experiences here at Barney, two scenarios are most common. Let’s take a closer look at both to make sure you have a detailed answer to the question, what happens after you sell your agency.

Scenario 1: Signed, Sealed, & Delivered

Transitions are rarely easy, be they personal or professional. And we have come across any number of justifiable reasons to keep this period to a minimum. From job offers to moves to family planning, wanting to complete a sale. Also it required transition in the minimum amount of time required is often the only way to go. 

However, that minimum is definitely fixed. – And that means 90 days are included in any viable deal looking to make an agency sale a success. And, take note, not only are those 90 days included, they are comped by the sale of the agency. Staying on beyond the 90 days means you’re making yourself available for the extra mile. Also that means any compensation after a standard 90 days becomes a matter of negotiation.

Generally speaking, when you want to be totally out after the 90 day transition period. Also you’re likely to get not-so-great terms at closing. Remember, standard deal terms involve a combination of cash at close. Also seller financing and a non-guaranteed earn-out based on the continued successful performance of the business. With a limited guarantee, the business will continue to operate the same without you there, buyers are more likely to reduce the cash at close piece and increase the non-guaranteed earn-out.

The good news is, we are currently experiencing a seller’s market – and a hot one at that. This means the likelihood is currently greater that a buyer can be found who will accept an owner looking to sell. And who isn’t willing or able to put in the additional stint beyond the standard 90 days.  With that being said – if you truly want top dollar for your agency – sell it before you really want or need to be officially out the door – which brings us to option 2.

Scenario 2: The Deal After Tomorrow 

While there may be good reasons for not being able to pull off the long-haul transition. Also it will most certainly be the option that yields the better results. Owners that are able to commit to a full year of oversight after they’ve signed the dotted line invariably tick more of the essential boxes from a buyer’s perspective. 

First, owners that stick around offer a buyer a sense of security that can make all the difference. It means an owner will likely be around for long enough. And to manage more of the unforeseen moments that probably won’t all arise in just the first 90 days. It also means having the necessary experience and leadership around across all the business’ seasons and the fluctuations that these will bring. 

Next, the full-year option means there is a virtual guarantee in place that no stone has been left unturned before the handover is complete. From managing new, shifting internal dynamics to assuring key client accounts are under wraps. Also 90 days can mean leaving a narrow margin for smooth sailings. Commitment means covering your bases.  

Finally, offering your services for the full year after an agency sale also means casting the net wider in terms of finding a buyer. Offering greater peace of mind and requiring a less instant fit will ensure less time is needed at the front end of the deal. 

All Aboard

Last but not least, think of your team. An agency sale isn’t just between an owner and a buyer. The people that helped you build the agency that is now becoming someone else’s dream will stand to benefit from having the founding DNA around for a longer transition period – and making sure it’s being passed on properly. Want to talk through this a bit more? Connect with us and let’s schedule a time to chat 🙂