Selling Your Agency
It’s every agency owner’s goal to reach a point in the agency’s lifecycle to become highly profitable and marketable for all the years of putting in 70+ hour weeks. Selling one’s agency isn’t solely a matter of being in the right place at the right time. It’s also a matter of planning and putting oneself in the position of obtaining top value for your agency. The acquisitions market for the Public Relations & Web Design industry have been noteworthy these 5+ years due to the increasing competitive landscape facing these industries.
Most Agencies Have An Expiration Date
Increased competition and banks not willing to lend to small businesses has led agencies to look for alternate measures to reap top dollar on their investment. Owners who want to sell their agency in order to “cash-in” unfortunately will be disappointed. Agency valuations are currently depressed, with profit multiples lower than the previous years prior to the recent recession. Throw in rising interest rates and the talk of another looming recession within the next several years, more agencies are starting to look for an exit strategy.
Agencies need people and money to grow. The two go hand-in-hand. A potential buyer of an agency is either looking for a complete turnkey business that they can run themselves or they are looking for a specialized team that can complement their existing service offering. If either of these two variables are not completely met, a lower offer or no bid will occur. Very few agencies have intellectual property that can dramatically increase it’s valuation to prospective buyers.
Selling An Agency
Selling an agency is complex, as the details vary from deal to deal, owners can expect anywhere from 9 months to well over a year from the time of inquiry to the sale. Sellers are also resetting their expectations and are taking a more flexible approach to selling their agency. For instance, sellers are finding that vendor assistance finance through deferred consideration is the most feasible option of achieving an exit. With agency clients having more options than ever-before, revenue is not guaranteed as it once was. Agency clients are quick to leave to go to new agencies all the time. Agency owners are wanting to “lock-in” on their top line revenue before any major client(s) leave. This is a large factor in an owner’s decision to sell their agency.
Agency Evolution & Growth
While selling your agency will financially benefit the seller, it can also benefit the agency and it’s clients. Since Conversion Pipeline’s main benefit for acquisition is growth, this will enable your clients access a more robust service offering and technical skillset thus benefiting your clients. The agency sale can give your company the chance to grow and evolve in ways that were not possible before.
The additional resources and talent made through acquisition can inject new life into your agency, enabling it to compete for larger contracts and clients it may not have been able to obtain before. This can fuel the success and profitability of the agency you worked hard to build thus leaving a positive legacy.
Our Ideal Acquisitions
At Conversion Pipeline, we are looking for public relations and web design agencies that have a clear market position and are still in their growth phase. We are looking for agencies with a client base that we can cross-pollinate value-added marketing & digital services to. The overall principle is to gain a larger share of the marketing budget out of the client-base thus increasing the economies of scale and ultimately profit margins.
The decision to sell your business is not an easy one to make. The founders of Conversion Pipeline have been in your shoes. We all have had businesses that have been bought and merged so we understand what an emotional time it can be for business owners. Conversion Pipeline has successfully acquired and merged smaller marketing agencies since our inception. Our growth, in part, has been attributed to us merging and acquiring complimentary companies that fit into our ethos. The acquired owners have either joined our team to grow our overall business or they have chosen a different path based on their goals.
Selling your agency is an intimidating yet rewarding task that can benefit both the seller and the agency. If you are ready to start discussions about selling your agency, let’s have a conversation and see if it is a fit for both parties. There is no charge for the conversation and if you are local to the DC Metro Area, coffee is on us!