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.


Selling A Marketing Agency: How The Process Works

Selling a Marketing Agency: How The Process Works

Congrats on selling your marketing agency. This is a super exciting time for you 🙂 If the process seems overwhelming, don’t worry! With the right team guiding you through the process step-by-step, you can rest assured knowing that the acquisition process is a smooth and rewarding process.

Step 1 – Set-Up An Intro Call

Set-up an intro call with our team – you can do that here. On this call, we will answer any questions you have about the process of selling marketing your agency, like how agencies are values, the time it takes from start to finish and transition expectations for you after the sale is complete.

TimeFrame: Within 24 Hours

 

Step 2 – The Valuation

After the initial call, we’ll tell you exactly what we think your agency is worth today. You’ll send over 3 years of P&L statements and a current balance sheet, and we’ll turn around the valuation within 48 hours. There are 14 factors we consider when valuing an agency, the most important being the net profit of the company. Depending on your desired timeline to exit, we’ll work together to determine the appropriate listing price.

TimeFrame: Within 24 Hours

 

Step 3 – The Advisor Agreement

We get paid a % commission of the total sales price of the business upon closing + a retainer while the agency is listed and under contract. Pretty simple right? After the valuation call, our team will send you our Advisor Agreement for review, which outlines our role and responsibilities in acting on your behalf to market and sell your company.

TimeFrame: Within 24 Hours

 

Step 4 – Seller Questionnaire

Once the Advisor Agreement is signed, we will spend time getting to know a lot more about you and your company so we can build a unique marketing strategy, business prospectus and a strong case to our buyer pool as to why your business is a fantastic purchase for them. This phase includes information gathering like the following:

  • Growth potential
  • Key team members
  • Competitive advantages

TimeFrame: Within 2 – 3 Days

 

Step 5 – Prospectus & Documents

This is the holy grail set of documents we use to market your agency to buyers. This is our chance to separate your business from the dozens of others that buyers are looking at each month and showcase exactly why your business is a fantastic opportunity for them. FYI – Before any potential buyers view this document, we require them to sign a legal non-disclosure form to ensure utmost confidentiality.

TimeFrame: Within 3 Days

 

Step 6 – Deal To Market

We’re live! Your agency is officially on the market.

  • Our Buyer Database. Generally, 80% of our deals get sold to our existing database of buyers we’ve worked with in the past. Since we are meticulous in choosing the agencies we sell, buyers know us, they trust us and we’ve probably sold an agency to them in the past. Our database spans every state and includes large agencies that are interested in acquisitions and expansion opportunities, private equity funds looking to expand their portfolio and entrepreneurs who invest heavily in agencies & digital businesses around the country.
  • Our Marketing Channels. There are always new buyers coming into the marketplace across the country and globe, and we know how to reach them. Our team uses 11 marketing channels that are targeted specifically for your type of business. No two marketing strategies are identical. We know every agency is unique, and we treat the marketing strategy as such.

 

Step 7 – Buyer Inquiries & Vetting

As a result of our all-out marketing assault, we immediately garner significant interest from buyers who want to learn more. It’s important to note that not all buyers are the right buyers. It is paramount that the company or person who purchases your company will be able to successfully step into your shoes. We spend a notable amount of time getting to know each potential buyer and vetting them to see if they are a good fit for your particular agency.

Once our team has fully vetted the buyer and they have signed a non-disclosure and confidentiality agreement, we will share additional information about the agency and spend time answering all of the questions they have about your agency.

TimeFrame: Within 1 – 2 Months

 

Step 8 – Negotiate & Accept An Offer

Interested parties submit an initial offer (this is called an LOI, or Letter of Intent). We work on your behalf to negotiate the price and payment terms, using our expansive knowledge in selling businesses to justify why buyers should pay top dollar on favorable payment terms.

We work together to decide on the best buyer for you – discussing variables like the offer price, payment terms, requirements post-sale and the details of the buying entity. When you’re happy, we accept the offer.

TimeFrame: Within 7 – 14 Days

 

Step 9 – Due Diligence

The winning buyer gets an opportunity to dig deeper before they commit to the final purchase – verifying all of the company details we have provided up to this point. The initial offer, or Letter of Intent, provides specifies how long the buyer is entitled to conduct their due diligence. Generally, the more complex the agency, the longer the due diligence process.

TimeFrame: Within 2 Weeks – 2 Months

 

Step 10 – Contract Development

In most cases, when selling you marketing agency, the buyer is responsible for developing the contracts used to purchase the agency. Once the buyer provides preliminary drafts of the contracts, we spend significant time reviewing them to ensure all agreed-upon items are accurately reflected in the documents.

In addition, we always recommend that you also use a seasoned Business Attorney for another complete review, as the contracts will protect your interests after the sale.

TimeFrame: Within 2 Weeks

 

Step 11 – Money Is Exchanged

Contracts are signed, you’re paid and business assets are transferred to the buying entity. We are also paid at this time.

TimeFrame: Within 2 – 7 Days

Step 12 – Post Sales Training

After the deal closes on selling your marketing agency, there is a transition period where all facets of the agency are transferred over to the new ownership group. Undoubtedly, there will be some sort of training you need to do to make sure the buyer is off and running in their new business. The specifics of your requirements post-sale are negotiated and agreed upon before the deal closes.

TimeFrame: Within 1 Months – 3 Years