Here's Why You Should Consider Phantom Equity When Selling Your Agency
The Very Real Promise of Phantom Equity
The terminology may frighten some away. But phantom equity, especially when it comes to selling your agency, has the potential to breathe new life into your agency. The upsides are well worth taking the time to ensure that phantom equity is anything but elusive to you. Make phantom equity work to your advantage by using it as the adhesive that binds essential human capital to your agency long-term, especially post-sale, promising profit shares in return.
What Is Phantom Equity and Why Does It Matter When Selling Your Agency?
Phantom equity is both equity and not equity. It offers the benefits of company stock without actually issuing any. Known also as “phantom stock” or “virtual shares”, they offer deferred compensation in line with company performance much like actual stock would. And much like actual stock, this equity will vest over time and according to an agreed schedule. However, unlike actual stock, phantom equity never offers the opportunity to exercise a voting right; they are financial-only. This means holders of phantom equity don’t sit on the cap table, carry no liability and, as such, pose practically no added legal requirements or costs to get set up as phantom stockholders.
Should I Take Advantage of Phantom Equity When Selling My Agency?
If you are considering selling your agency and you’re an owner who is looking to stay on long-term, phantom equity makes perfect sense. Phantom equity ensures that a founder – or any other essential team member for that matter – stays on, stays committed and stays a part of the continued growth story even after a sale and post-sale transition period have been completed. Offering phantom stock in the business post-transaction offers an objective guarantee, aligning buyer and seller incentives for continued success.
After all, human capital is the key component to the business that was just acquired. Keeping the engine room of an agency firing on all cylinders means binding that human capital to the agency’s continuing journey down the growth path. Especially when the agency is a smaller business – approximately 15 people or fewer – the value of each team member tends to be magnified. Binding essential team members to the long-run success can be a sure-fire win-win.
When Does it Make Sense to Avoid Phantom Equity?
If you are looking at selling your agency but do not plan to stick around for the long haul once your agency has been sold, then phantom equity may not be for you. Even a full year of commitment post-sale is not in alignment with the purpose and likely vesting schedule of phantom equity. Generally speaking, it takes a minimum of a three-year commitment for phantom equity to really begin to pay off.
In addition, if a buyer only wants to incentivize team members that stick around for an agreed minimum period that extends beyond the start of the vesting schedule, they may want to consider a cash bonus plan instead. The reason here is that these are generally forfeited altogether when an employee leaves whereas the vested phantom equity could mean having to pay out somebody who left sooner than a buyer might have liked.
The Bottom Line
The initial post-sale transition period of, on average, 90 days is tied into every deal. What happens beyond that is down to the interests and alignment of seller and buyer. If the interest is there for a seller to stay on board long-term and keep reaping the benefits of an agency’s ongoing growth story, the direct path to participating in the profits to come, is phantom equity.
How to Grow The Value of Your Marketing Agency Without Raising Revenue
Top-line growth is only one end of the P&L statement. Agency owners that are not just sales-minded but understand operations just as well, know that their margins can be improved elsewhere too. Although an early-stage agency will need revenue to demonstrate traction and proof of concept, a company with enough track record – and one that is looking to sell – needs to do better than that. EBITDA will take center stage for a buyer looking under your financial hood – and there is plenty of ways to raise the roof on your EBITDA without having to drive sales. Especially in the current market environment that is still demonstrably shaken up by the ongoing pandemic, structural readjustments and remote work are redefining operations. If you are looking to drive up your bottom line as you line up a sale, we recommend you take a closer look at our five hacks to grow the value of your marketing agency without the need to raise revenue.
Five Hacks To Grow The Value of Your Marketing Agency
The Roof Overhead is an Overhead
Office leases, in particular, are dead weight in the current market environment. Long leases are not integral to the business of most marketing agencies – something that is especially obvious since 2020 and the proof of remote work as a key component of agencies in the digital age. As tools to work remotely become smarter and employees become more accustomed to them, it is worth reconsidering if that office lease or that prestigious address on the business card are worth their costs. No less, co-working spaces, insofar as they are open for business, offer a smart and flexible alternative. Why not survey your team to see how many days a week they would be happy working remotely and scale down accordingly?
Automate Where You Can
Automation and streamlining are essential ingredients to your margin improvement. Revisit your processes, workflows and operational architecture to check on where there is still room for automation improvements. Tasks that should raise the automation flag include tasks that involve compliance and audit trails, that require multiple people to execute or that are especially time-sensitive.
From invoice generation to time tracking and from automated workflows to streamlined communication through project management tools with automated notifications, the world of process automation is yours for the taking. Things to keep in mind are that no tool is a cure-all and any tool is only as good as its implementation. Set goals, assign accountability and measure your results over time. Your reduced likelihood of error and improved productivity will work its way into your margins in the medium to long term.
Improve Your Brand & Increase Prices
When was the last time your brand got a shake-up? Are your website and your logo still a little too close to when you first launched? It shouldn’t take a Fortune 500 company in the public eye to make rebranding relevant. Give your look and feel a lift that will strengthen your positioning as you gear up a sale – and that can help you justify giving your prices a lift along the way.
Invest In Your Team
Most importantly, take a good look at your team. They will be the ones carrying your agency not only over – but past – the finish line as you execute on a potential exit. Who are the top-tier candidates that will shoulder your agency and drive the marketing agency at this critical juncture? Invest in these individuals and shed any excess weight as you close in on the valuation home stretch and grow the value of your marketing agency.
Future-Proofing In Times of Crisis
It may be a cliché, but that doesn’t mean it’s not worth taking note: there is opportunity in crisis. Even if you are not looking to make a sale just yet, these are things you can do to improve your operational resilience. Take advantage of the current reshuffle. Let it serve as an eye-opener as to how to cut costs and restructure your agency to help bring the value of your marketing agency to where it needs to be so you can turn it into a listing no buyer would overlook.
M&A Timelines: How Long Does It Take To Sell My Marketing Agency?
When you finally say to yourself, I want to sell my marketing agency, you may think that things will move quickly. But the reality is that the waiting can be long and is often the hardest part. Normally – the Barney M&A timeline in its entirety is 4-6 months. However, knowing exactly what happens before, during, and after the sale of your marketing agency should provide the transparency you need to help you manage the process. Here, we help you understand the necessary steps – and the expected timeline attached to each of them – so that you can get a clear understanding as to how long it takes to sell your marketing agency.
Sanity Check
First things first. Before you jump into the deep and run the risk of amping up the expectations, you may want to ensure that you are ready to sell in the first place. Has your agency been showing sustainable growth, year-over-year? Are your margins raising eyebrows or just red flags? Are you delivering an EBITDA of $500k and up? If you need a quick reality check and a reminder of what an agency buyer will be looking for in the first place, take a look at our article dedicated to just this here.
The M&A Timeline to Triumph
While there is some flexibility around the exact duration of each element required to make the sale of your agency a success, the process that will take you there is very defined. The Barney M&A process in its entirety is 4-6 months. Here is the step-by-step:
- Initially, there is a valuation period before any agency owner enters the circle of sellers. This period requires the vetting of financials to get an accurate picture of what’s on offer. Once a price is agreed upon, the listing agreement is prepped and signed before a listing goes live. Expect this readying stage to take up to 1 week.
- Once your listing is live, it’s showtime. We do our homework on who would make the perfect fit before we scour the network to align your positioning and performance with a buyer’s long-term goals. We give this stage a solid month to generate enough leads in order to begin issuing a first term sheet.
- Once there is a genuine offer in place, expect a further two weeks to transform those initial leads into a detailed LOI.
- Finally, turning a serious buyer’s intention into a closed deal will take…well, it will take the time it takes, really. The due diligence timeline is correlated with a buyer’s thoroughness and a seller’s previous processes. As a benchmark, we attach an expected duration of 45 days – but that can move in either direction. Expect to be able to improve on this timeline with more sophisticated buyers that have gone through this before. In addition, the required paperwork to close a deal will be produced during this 45-day window, which takes into account a small buffer for the required back and forth.
M&A Timelines Vary
Depending not just on the experience but the type of buyer, the pace of the process can move in either direction as well. Strategic buyers with an eye for an operational fit will typically move faster while entrepreneurial types will take more time as they are likely entertaining more options. Financial buyers will put their targets through a Quality of Earnings report (think of this like a mini-audit), which can add another 3-5 weeks to the process.
Beyond getting the alignment right, which is something out of a seller’s hands, a seller can help shorten the M&A timeline as well. If a buyer and seller remain in agreement with the initial closing docs, and if a seller is well-organized and on top of his operations and financials during the due diligence process, this will help drive up confidence and drive down duration.
Understanding The M&A Timeline For Digital Agenices
Think Like A Buyer When Evaluating Your Digital Marketing Agency
Did someone say, “seller’s market”? Yes, indeed, we did. Now, does that mean your agency is automatically at the top of every potential buyer’s list? Unfortunately, not. Or, “thankfully not”, is what we ought to be saying since making the right kind of match happen is where long-term success rests. In other words, long-term success is about making sure that you don’t even begin the buyer-seller dance with buyers who aren’t suited for your offering. So, how can you make sure that there is an alignment of offer and potential buyer, how can you improve your digital agencies valuation, and finally, does your agency offer what a buyer wants?
Think Like A Buyer When Evaluating Your Digital Marketing Agency
We’ve put together a list of key items that will entice just about any agency buyer, and that an agency owner can consider as transactional glue on their way to seal the deal.
Retainers Over Projects: Retainers spell income visibility. Projects, while potentially lucrative in the short term, also spell potential volatility. To keep them coming in, the required sales effort and associated costs add to the challenge of making a dependency on projects look like an attractive prospect. Of course, a mix of both is not in and of itself unattractive, but keep the balance solidly tilted on the retainer side. Pay special attention, all you SEO and PPC agencies, as this speaks directly to your business model.
Year-Over-Year Growth: This isn’t Silicon Valley, and your agency is not a SaaS startup. Agency buyers are not the VC types looking for triple-digit percentages growth. Steady does it – because steady growth means managed growth. It means your growth was not part of a fad or a fluke. And it means that your growth is not only sustainable but responsible. Growth is not an isolated metric; it’s tied to everything from hiring and overheads to your value proposition and your sales cycle. When all these things are in line, your year-on-year growth will be a sign of stability, skill and success.
Sustainable Margins: In line with this kind of well-managed growth, come sustainable and reasonable margins. Reasonable because repeatable. No buyer wants one-off success. Buyers are looking for structured businesses, not side gigs. That means functioning operations and an engine room that keeps churning out an EBITDA of 20-35% – with some margin for crisis-based deviation.
Processes Over Relationships: Processes mean success is business-owned and won’t leave the business as an owner takes their final bow. Success that is tied up in specific relationships, is not transferable – and not repeatable. Think of it this way: can a new owner, with the same skills as the current one, continue to scale your agency? That’s your litmus test right there.
Challenge Yourself to a Pre-Mortem and Improve Your Digital Agency Value
There are plenty of buyers available on the market right now, so that won’t be where the failure to sell your agency lies, so challenge yourself to this pre-mortem scenario: it’s 6 months from today and you weren’t successful in finding a buyer in spite of actively trying to sell your agency. What did you do wrong? Turn our buyer’s wish list into your seller’s checklist to improve your digital agency value and make sure your agency’s offering is aligned with what buyers are after.
Why Honesty Is Essential When Selling An Agency
Are you selling an agency? There is one thing above all else that you can do as an agency owner to help make the sale of your agency, and the ensuing transition period, as smooth as Sunday morning jazz: Be Honest. A serious buyer will always do their homework – and a minimum 45-day due diligence period is guaranteed to reveal anything they weren’t able to uncover upfront. Better still, find out what is of particular importance to a buyer so you can be transparent about those key issues in particular. Not entirely sure what those are? We have a pretty good idea.
Selling An Agency Rule #1: No Surprises
Align your communication with your true intentions once you are no longer at the helm. If your aim is to keep the transition short, don’t communicate that you will be available for the long haul after the sale to try and get the deal done. Adapting the transition period to how long an agency owner will be around is crucial to make sure the necessary ground is covered. If you are unsure about the ins and outs of the transition period, you can read our piece on that here.
The same goes for what you plan to do once you have walked away. If you plan to start a new agency, you will need to put a workable non-compete agreement in place first. It’s not unlikely that a new agency could be your next move, after all. You have the founder’s DNA inside you and have lived and breathed marketing in some form or other for years. Of course, it’s only tempting for an alternative next move to be early retirement and more time spent with your growing guitar collection, but if what you’re going to do is start a new agency, start on the right foot.
A further point to be clear on is the role of employees and where the client relationships sit. If owners are essential to maintaining these, this needs to be addressed. Buyers will typically interview senior employees to get the low-down anyway, so all the more reason to be upfront about relevant roles and relationships. An agency’s employees will be the ones staying on to deal with anything that was not handed over cleanly and openly. Just one more reason to keep all the stakeholders – and not just the one shareholder – top of mind when communicating your sale.
Managing Expectations
Like with any other transaction and business relationship, success lies in the alignment of the objective value of an asset and the perceived value. In other words, managing expectations is the key to making an agency sale a win-win. There are enough buyers for every type of agency so making the right match based on the facts of the business will be the key to making your sale a success for all involved.
Acquisition Goals: It Pays To Know The Buyer You Want
Entrepreneurs often spend years building their agency and, when it comes time to sell, they naturally want to sell for the best price, whether to retire or simply to cash out and move onto something new. However, sellers often focus solely on the financial components of an offer and overlook some of the most important factors in determining if a buyer fully aligns with their acquisition goals. When selling your agency it pays to know the buyer you want!
Defining Your Acquisition Goals: Know Your Buyers
Buyers fall into four categories — strategic, financial, internal and solo entrepreneurs — and each type of buyer approaches buying a business like yours with a totally different acquisition goal in mind.
1 – Strategic Buyers
Strategic buyers often want a company that fits with their own, perhaps because of complementary products or to advance their geographic or vertical expansion. Often times these buyers are competing companies who place a premium on things like market share and brand recognition. Strategic buyers generally don’t value your current management team or employee base as much, since their team will most likely assume day-to-day operations. When evaluating agencies to purchase, strategic buyers like to see growing profits and the potential for even more in the future.
2 – Financial Buyers
Financial buyers are often times private-equity investors who want to grow earnings or merge companies to capture savings. These buyers almost always have the goal of selling the agency for a higher price in three to five years and aggressively pursue their agendas to maximize their investment return as quickly as possible. Financial buyers want free cash flow and growing revenue and are often times less concerned about profits since they view themselves as experts in squeezing the maximum from operations. Unlike strategic buyers who don’t place any value on your current management team, financial buyers favor a strong team that can execute on their vision. If the seller wants to cash out but would like to remain at the company for a few more years, a financial buyer would make the most sense.
3 – Internal Buyers
An internal buyer, often management teams or second-generation family members, are people who work at the company and often times share the owner’s vision and want to build upon it. These buyers are unlikely to pay the highest price, but they will almost always commit to preserving the culture or core ethos of the company. Internal buyers generally want to see strong financials and a solid balance sheet, as well as a good corporate culture and a diverse offering of products and services.
4 – Solo Entrepreneur
An entrepreneur buyer is generally a single person who is purchasing their first business or is looking to add a business to their modest investment portfolio. In most cases, solo entrepreneurs plan on being involved heavily in the day-to-day operations of the business and will most likely not plan on “flipping” the business in a few years. Entrepreneurs vary greatly in what they look for in a business and often require the most hand-holding during the business transition. For some sellers, the heavy involvement during the transition period can be a deal-breaker, but on the other hand, solo-entrepreneurs often pay top dollar for businesses because they are more emotional and personal purchasers than the other buyer types.
Identifying Your Goals As The Seller
Each seller has different motivations when exiting, ranging from their transition commitment after the sale to maximizing price or maintaining the company legacy – and this is where the matchmaking is critical. Remember, when selling your business it pays to know the buyer you want, and this starts with identifying your own acquisition goals.
A seller who has a primary goal of finding someone who will operate the company in the same manner and protect the current employees may favor a deal with an internal buyer or the right solo entrepreneur. A seller that’s retiring and wants the highest sale price should position the business to be most appealing to strategic, financial or certain solo entrepreneur buyers. When it comes time to sell your agency, knowing the right buyer type ahead of time can make the sales process quicker and more streamlined.
Once a seller has defined his or her acquisition goals, it becomes easier to make an honest assessment of the strengths and weaknesses of the agency through the lens of what that buyer-type values. After all is said and done, it’s important that no matter the buyer type, the seller feels confident that the buyer will be able to maintain or grow the company once they are no longer involved. Using an M&A advisor who understands the type of buyers that suit your agency and personal needs best will ensure you get what you’re looking for in an exit and can also save a significant amount of time in weeding out buyers that won’t fit.
Buying A Business: Where To Find Financing For A Business
If you’re considering buying a business in the near future, it’s a good idea to understand the different financing options that exist. Buying a business is most likely one of the most expensive and important purchases you will ever make, it is imperative to have qualified professionals guide you through the process. A knowledgeable business broker can guide you through the options and help you choose the method of financing that is right for your particular situation.
1 – SBA:
Put simply, an SBA loan is a small business loan that is partially guaranteed by the government (the Small Business Administration), which eliminates some of the risk for the financial institution who is issuing the loan.
You read that right – it’s not the SBA who is doing the lending. The SBA works with a network of approved financial institutions (typically, traditional banks) that lend money to small businesses. SBA loans can be valued from $500 to $5 million, opening SBA financing options to a wide range of businesses. Because the SBA partially guarantees the loans that these lenders extend to small businesses, lenders extend funding more frequently and with better terms than without the SBA backing.
When going through the qualification process, SBA backed lenders will take a close look at the business in question, as they will want to make sure you can repay the loan and still continue to operate the business.
SBA lenders will also look for a buyer with strong experience, 10-20% down as a cash downpayment and a solid credit score (over 680). Buyers are required to personally guarantee the loan and they may have to provide additional security in the form of assets they own.
SBA loans to buy a business have a guarantee fee, typically starting at 3% of the loan amount, and lenders may charge packaging fees of up to $2,500. There may also be other fees associated with an SBA loan to buy an existing business, such as application fees, third-party closing costs, or prepayment fees.
The upside on utilizing a SBA loan is that it is cheap money for the buyer (as compared to other options for financing a business). It also allows a buyer to purchase a business that may have seemed out-of-reach without significant financing. On the other-hand, in order to secure a SBA loan, a buyer may have to pledge a significant portion of their personal assets in addition to providing a personal guarantee.
Sellers also benefit from a SBA loan, as they will usually get of the purchase price upfront in cash (at least 80%).
When financing a business, it’s always a good idea to talk to multiple SBA lenders, as some banks prefer certain types of businesses over others.
2 – 401K/Retirement Plan Rollover:
A Rollover For Business Startups, commonly referred to as a ROBS, helps you access your retirement savings for financing a business purchase without paying taxes or early withdrawal fees – making it a great way to fund all or a portion of the purchase price.
A major upside – the speed. In a Rollover For Business Startups, the funds are generally available in two to three weeks, which is 4 times as fast as traditional bank financing. Another major positive, you’re tapping into your own money, not taking our a loan, so there is no debt and there are no future payments required by a lender.
In simple terms, you transfer your retirement account to a service company (very much like a 1031 exchange intermediary). They will act as your trustee and purchase shares of your new company.
By doing this, you can access your retirement account without having to take a taxable distribution. You can also mix this capital with other sources of funds.
The upside in this case is the buyer is completely in control of his or her funds and enters the business with little to no debt. The downside of this type of financing is that in the event the business fails, the buyer may loose her or her retirement funds.
It’s also important to note that there are a lot of rules associated with this type of funding, so it is imperative to involve a professional business broker during this type of funding.
3 – Traditional Bank Financing:
Securing funding for buying a business from a bank is very similar to SBA financing, but without the backing of the Small Business Administration. Banks like to see buyers with a strong background and an adequate down payment – usually 10-20% of the purchase price.
4 – AR Funding:
Existing businesses use AR funding to help alleviate cash-flow concerns or to help keep up with rapid growth. When funding a business, AR funding can be helpful in bridging the gap between the sellers expectations and the buyers available cash as well as provide the buyer with operating capital they may need to operate the business when they take over.
A 3rd party company will purchase some of the receivables (usually 60% or less) and charge a daily fee until they are paid. The cost of this type of financing is high; however, these are usually very short terms loans so depending on the cash needs of the parties, A/R funding is a good way to receive funds in as little as four to five days.
5 – Seller Financing:
Seller financing happens when the owner you’re buying your business from agrees to finance part or all of the purchase price. Sellers open to seller financing will typically finance 15% to 60% of the purchase price of the business they’re selling. This can help borrowers with less than prime credit profiles gain access to affordable financing they may be unable to get otherwise.
Over the past few years, seller financing has become a key element in financing a business, especially in businesses that have some level of riskiness (rapid growth, short time in business, etc). Seller financing also sends a strong message to the buyer that the seller is confident in the continued success of the business.
There is a lot of upside to this type of financing for both parties. Businesses that utilize seller financing typically close faster than those that use a more traditional bank or SBA backed loan. The seller essentially acts as the bank, so they get to make the decision with regards on who they will finance, how much they will accept, the interest rate, and the term. The seller is in the first position, so if the buyer defaults, they can take the business back quickly, without delay from another lender and get it back on track if necessary. In addition, seller financing may offer a tax benefit to the seller since they can defer some of the tax due on the business until full payment is received.
6 – Earn Outs:
Earn-out financing involves a certain dollar amount or percentage agreed on by the buyer and seller to be paid to the seller based on the performance of the company after a set amount of time has past after the ownership transition is complete. Earn-outs can be structured in a variety of ways and can be based on different financial benchmarks such as company’s revenues, gross profits or net income.
Earn-out financing is often used by companies that are in a turnaround situation, when buyers are purchasing on potential, rather than historical cash flow or when purchasing a business that is considered risky. Earn-outs are tricky and can carry risk for both parties. It is essential to have earn-outs written properly and that both parties throughly understand the terms of the earn-out.
Buying a business is most likely one of the most expensive and important purchase you will ever make, it is imperative to have qualified professionals guide you through the process. A knowledgeable business broker can guide you through the options and help you choose the method of financing that is right for your particular situation.
Tips To Sell A PR Agency For Top Dollars
Sell A PR Agency For The Best Price
You founded your PR agency, took the time to grow it, and now are reaping its benefits, but the time will eventually come for you to sell it. Maybe you’re at the top and are ready to strike while the iron is hot, or maybe you’re ready to join forces with a larger agency. Regardless, there are a few things you should do while you’re embarking upon the exit process. These tips for selling a PR agency will help you get top dollar for your firm.
1 – Streamline, Organize & Document Everything
Before selling a PR agency, take some time to streamline your systems to reduce waste, organize the company’s technology assets (like a CRM) and optimize your organizational and personnel structure. Think about your firm as if you were out of the picture…would it survive? If not, what can you do to make sure the walls don’t crumble if you’re gone? If you don’t already have thorough documentation of the ins and outs of your firm’s processes for key areas of the business, this is the right time to get those in place. Sophisticated buyers willing to pay top dollar for your PR firm will want to see a well-oiled machine that has proven systems and processes implemented company-wide.
2 – Make Your Biz Dev Process A Well-Oiled Machine
Business development is a really big deal to buyers! Given that most PR firms don’t have a lot (or any) collateral assets, a lot of the “secret sauce” lies in the way the firm gets new business. Do whatever you can to systemize this process, ideally in a way that doesn’t center around you. Even if you’re looking for a strategic buyer that will keep you on board for several years post transaction, buyer still want to see a clear business development process that operates without the founder leading the charge.
3 – Get Better Contracts
PR firms with long-standing, foil proof contracts sell for a significantly higher multiple than those that are project based. Often times, PR firms or agencies specializing in corporate communications have retainers in place with their clients (good!) but they have a simple 30-day out clause. Buyers like to see strong contracts that can be transferred over to the buying entity at close.
4 – Get Your Financials In Order
You need to have an accurate picture of your financials in order to sell your PR firm for the best price. Seems obvious right? In order to convince a buyer your firm is the right purchase for them, you need to know exactly what is coming in and out each month. Now is the time to take your mother-in-law off payroll and remove your business credit card from your Amazon account. For larger agencies, try to put non-revenue producing line-items (like labor for R&D) as a standalone line item on your P&L so buyers can easily add these back into their financial calculations.
5 – Find A Quality M&A Advisor To Sell Your PR Firm
Many buyers of PR firms are going to be large marketing agencies looking to acquire a strategic bolt-on that specializes in corporate communications. These buyers will understand the cross-sell opportunities available to them on day 1 and will appreciate the holistic approach to client services that PR firms generally undertake. Using an advisor who understands this dynamic is crucial. This could be the difference between selling your PR Firm for the best price and not. A quality advisor who understands your niche and industry (this is key) will be able to give you an accurate valuation, produce professionally designed marketing materials and most importantly, tap into their network of ready-to-go buyers. A great advisor will be worth their weight in gold at the end of this process and will absolutely help you sell your digital agency for the best price. If you need to connect with us, you can do that here.
6 – Figure Out What Your PR Firm Is Worth
Now that you have a clear understanding of where your company stands financially, it’s time to give it a valuation. A PR firm is only worth what the market is willing to pay for it, but there are some tried and true factors that go into a successful valuation. The firm’s revenue & profits, operational structure, years in business, supporting technology, growth opportunities and the current buyer pool are just a few of the factors that go into determining a valuation of a business. This is where it gets a bit tricky, and a good advisor is going to have unparalleled knowledge to price your PR firm just right to sell. (We can help, schedule an intro call here).
7 – Build Relationships With Seasoned Buyers (Or Hire Someone Who Already Has Them)
Unsurprising news flash – existing relationships with a pool of seasoned buyers is still the absolute best way to sell your PR firm for the best price.
If you’re using a business broker or M&A advisor, make sure to ask about their existing relationships with buyers in the marketing and agency space. They should have solid, and long-standing relationships with seasoned entrepreneurs and strategic buyers who are always on the lookout for their next opportunity. At Barney, over 80% of the Public Relations firms we sell get sold to an existing buyer in our database. We can’t stress this enough – these relationships are crucial!
In Conclusion…
If you decide to start and eventually sell an agency, there are things you can (and should) do to help prepare your agency for an exit. We can act as a resource along the way, don’t hesitate to reach out with questions! Connect with us when you’re ready!