Thinking about selling your agency?

Preparing your agency for sale

Many founders dream of a successful sale. But achieving best value doesn’t happen by accident - it can take years of diligent preparation.

Here are five key things to get ready:

1.      A track record of growth and profitability.

It’s no surprise that a buyer will want to know your business has been growing and performing strongly and consistently in recent years – with lasting clients and low staff churn. Think double digit growth and 20%+ EBIT for three years or more.

After years of strong growth but a tough 2024, an agency leader asked me if they needed to restart the clock on their growth story. Possibly, I said, but not necessarily. If there are valid reasons for a flat or lower growth year and you have made changes to mitigate these in future, it may be accepted. And it may be balanced off against the strength and uniqueness of your offer and fit with a buyer.

2.      A compelling future growth strategy.

A buyer will be thinking how quickly they can recoup their investment, and so a compelling long-term growth strategy is really key. As well as the practical steps you plan to take, dig deep into the uniqueness of your proposition and your positioning in the market - ask yourself what makes you different and better able to succeed than others? Given that many ‘people’ businesses don’t have much in the way of IP, a credible strategy is likely to give buyers greater confidence - and you a higher multiple. 

Think also about who you want to be bought by and how you might benefit them. For example, a buyer may be interested because you would enhance their own proposition.

3.      Incentivise your top team.

Building up to sale, and any earn out, is a high pressure and long-term endeavour. Make sure the people you need are incentivised to come on the journey. To achieve long-term value and return, the buyer will also want to know certain key people can be persuaded to stay.

In a previous role, my team and I had two fruitful, exploratory conversations with an agency founder about buying her business. Then, out of the blue, the COO who had not been incentivised, resigned leaving the founder in the lurch. Not surprisingly, we walked away too.

4.      Are all your clients under contract?

We’ve all won the big pitch and excitedly started work while the legals are being sorted. Are you sure every contract actually got signed? Maybe you signed it and sent it to the client but - now you think about it - did they ever sign and return a copy?

A buyer will want proof that all your clients and revenue are under contract – otherwise where is the financial security in their purchase? Do the boring but important admin.

5.      Be committed for the long term.

Many founders are genuinely excited at the opportunity of moving into a wider business and partnership through sale. Others want to sell because they want to move on.

A lot of buyers want founders to remain involved for years to come – especially if they are the main reason the business is successful. So start preparing for sale while you are still hungry, and commit to the journey.

Showing a lack of commitment could lose or devalue the sale and undermine your team’s cohesion. You need to be the most excited person you know - pumped about delivering the long-term plan you have presented. 

Fancy an exploratory chat about growing your business? Get in touch.

Read Andrew’s bio here.