Have you ever considered selling your agency? The idea of selling your agency might feel daunting— you’ve put your blood, sweat, and tears into it, not to mention the relationships you’ve developed with your clients and your team.
Maybe you’re finding yourself less enthusiastic about the work, or maybe you’re pondering your future and wonder will happen to everything you’ve built when the time comes for your retirement.
IBO co-founder Michael Reynolds recently hosted a webinar titled, “How to Make Your Agency ‘Sellable’” that tackled this very topic. Michael owned an agency for 20+ years before he successfully sold it to focus on other ventures. Here are some of the gems he shared!
Prepping to Sell is Good for Business!
Taking the time to prepare yourself for the future— no matter what it might hold— is a valuable exercise. Sure, it can be fun to look back and see how far you’ve come since your agency began, but it’s also a good way to ensure that your agency continues to be successful.
You might be surprised to learn that the very principles that make your agency “sellable” are the same ones that make your business great. You don’t need to cut corners or make big changes to be attractive to prospective buyers.
That said, there are key things you should be aware of before you consider selling your agency.
Check In with Yourself
Some agency owners feel like selling is giving up. That’s truly not the case! It might bring up a lot of emotions, but sometimes it’s the best path toward bigger and better things— not just for you, but for your team and your clients, too!
You might feel that you’re failing your team or your clients or letting yourself down, and that’s understandable. But if your heart isn’t in it anymore and you’re ready to focus your passion and energy elsewhere, it’s the best thing for everyone to move on. Selling the agency can be a logical and thoughtful transition to your next stage in life! If you feel that you need someone to grant you permission, here it is!
Selling is Both Easier and Harder Than You Think
Some people approach the idea of selling with trepidation. “I’ve had a tough year, so I need to turn things around before I even think about selling.” That’s not necessarily the case. Everyone has something of value in their agency that will appeal to a buyer. It might not be a life-changingly large amount of money, but it definitely has some value.
Selling your agency will be time-consuming and complicated, so you want to make sure you find the right buyer for your agency. (This is where it can get challenging.) It’s easy to find interested parties-- but it’s a little harder to find the person who’s going to be a good fit.
You should be careful to avoid overestimating the value of your business. To you, the person who poured your heart and soul into the business for years, it’s probably hard to place a valuation on the agency. The buyer is looking at it with a far more objective gaze, and with the spreadsheets in hand. It’ll be a lot easier to sell when you accept that.
What EXACTLY Are You Selling?
There are three things that buyers are looking for when they purchase an agency: Clients, teams, and reliable/recurring cash flow. In rare cases, they might also be interested in intellectual property.
Generally, buyers want longtime clients as well as clients with significant growth potential. Of course, it makes sense that buyers are seeking established clients, but what does “growth potential” mean? Maybe your agency focuses on one particular aspect of client work— you create the marketing strategy, but you don’t update websites. If the agency that acquires you has a robust dev team, they can pitch these expanded services to the clients that might utilize them. This provides the new agency with the potential for growth.
It’s also important that you’ve got diversification among your clients. If one client provides the majority of your revenue, you need to mix it up! The last thing you want is to be beholden to one client’s business to keep you afloat.
If you have a team of 5+ people who are skilled, developing in their careers, happy with their jobs, and intentionally retained, this can very appealing for a larger agency. If they acquire your clients as well as a competent team that will ensure minimal impact to said clients, it’s a win/win for that larger agency. They’re improving their bottom line with no change in their team’s day-to-day operations.
Reliable/Recurring Cash Flow
Long-term retainers and longtime contracts are attractive to potential buyers. Lots of one-off projects? Not so much. To be honest, ensuring that the bulk of your work is through long-term retainers and longtime contracts is a great way to ensure your agency’s health in the long run, regardless of whether you sell or not.
This is rare for a marketing agency, but if you have special software or you focus on a specific niche that might be appealing to a certain type of buyer, you have valuable intellectual property that would be part of the sale. Even your processes, if they’re different from most other agencies, could be considered intellectual property.
Learn to Let Go
A simple but effective way to ensure that your agency is ready to sell is to provide your team with autonomy. If the members of your team can’t function without your oversight, it’s going to be rough to hand over to a new owner, regardless of when you choose to sell. Ideally, your team should feel empowered to handle the work that comes their way.
The goal should be for you to get into an owner mindset, not dwell in a manager mindset. Work to get to a point where you’re minimally hands-on; you’ll be available to your team for mentoring and coaching, and you’ll be available for clients on an as-needed basis, but ideally, you’ll be out of the day-to-day operations.
Look to your team-- surely there’s someone who routinely steps up and displays burgeoning leadership tendencies. Hand over the reins! The transition will be infinitely smoother if your team can run without you.
Keep It Simple
You’ve certainly heard it before, but it bears repeating. The simpler your operations are, the easier it will be for a buyer to integrate into your agency. If there are tons of moving pieces, it could be harder for buyers to envision themselves at the head of the company.
Make a point of focusing on the things you do best. You can’t be everything to everyone, so just concentrate on your strengths and leave the rest.
One of the best ways to ensure simplicity is to create systems and processes for everything. From serving and billing clients to running internal meetings, if everyone knows what’s expected at every point in your workflow, it’ll be much easier to transfer the workload to someone new.
Clean It Up
One of the best things you can do for yourself, whether you choose to sell or not, is to avoid any financial “messiness.” Keep your books clean! For many, this means taking the bookkeeping off your plate and handing it over to a professional. This ensures that everything is up to date and properly categorized.
If you choose to do it on your own, make sure that you’re taking advantage of the many types of accounting software available to business owners. It’s vital that your accounts are spotless and you can generate a report at a moment’s notice.
Run It Like You’ll Never Sell!
Say you find yourself at the point where you feel you have no choice but to sell; it’s easy to fall into a mindset of neglect-- after all, you’re ready to move on. You might feel a little checked out and let things start to slide. How do you avoid this? Just run the agency as if you never plan to sell it. This mindset will keep your agency strong now and continue to add value should you decide to sell down the road!
Interested in learning more about what you can do to successfully sell your marketing agency? Check out the webinar! (I haven’t begun to dig into the questions asked during the Q&A portion!)
Ready to take some of the day-to-day tasks off your plate? IBO is here to help! Schedule a discovery call today!
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