Your agency is in one of these four states: which is it?

Whether you like it or not, your agency will fit into one of these four boxes.

Is your agency for sale?

If your agency is for sale, you’ll be entertaining offers, or planning to solicit offers.

If your agency is not for sale, you’ll either politely decline all the offers that come your way, or you’ll at least have a conversation, just to see what’s what, but you don’t think that the valuation you’ll receive will match your expectations (or you’ll just be enjoying running your agency far too much right now).

There aren’t really any states in between, although there are plenty of agencies that are preparing themselves to go to market (and it’s a common reason to hire a non-executive director like me) and it’s either that:

• You’ve got a good thing going and believe your agency will be worth more in 1, 2, 3 years than it is today, at which point you’ll hit the “go” button; or
• You’ve got some issues to address, such as some missing pieces of the leadership team; a mixed track record when it comes to financial growth; some shoring down of client contracts that aren’t where you know an acquirer would like them to be; some dilution of a very big client with some more big clients; or some other hurdle that you need to jump before you can think about it.

At the time of writing, I’m speaking to more agencies that are not for sale than I ever have. Sometimes that’s because the owners believe that their agencies have lost some value and they want to recoup it (or that they missed their chance); sometimes it’s because they are just fed up with compromising on issues of culture or being held hostage by certain clients; sometimes it’s because they are happy doing what they’re doing.

We can sometimes hear the phrase “lifestyle business” as something derogatory: it isn’t. Running an agency is fun. I’m back working with agencies because I love it. There’s no reason to sell your agency if you don’t want to.

So I want you to decide which of the following statements feel like you:

1. You want to have sold your agency by this time next year
2. You want to sell your agency at some point in the future
3. You don’t want to sell your agency ever.

Is your agency saleable?

Agencies are still being acquired (although the acquiring businesses are often not the same ones that bought agencies five years ago) and many of the things that make an agency saleable are the same as they always were:

• Quality of earnings (clients that are spending fairly consistently and are bound by contracts, ideally for a long period of time…or at least have a long history of paying you, ideally on time)
• A growth trajectory (fairly consistent growth over a period of several years and an expectation of more growth, ideally with a track record of closing big deals)
• A good story (something that differentiates you
• Some strategic advantage (like being located somewhere exciting,

Different buyers are looking for different things, of course. I spoke at Prolific North’s From Growth to Gold event last week, where KPMG’s Nenad Simonovic outlined some of the recent trends and Tim Grice, Leigh Gammons and Martin Corcoran talked about what the acquirers were after when they sold their respective agencies earlier this year.

You will probably have some idea whether you have something worth buying, but if you don’t, or you want a second opinion, talk to someone like me or Nenad.

Why is this exercise worth doing?

• If you’re not for sale and you’re not saleable, as you were. I’m in this box: as a solo consultant, I’m probably not going to get bought other than as an acquihire (and I don’t want to do that)
• If you’re not for sale and you are saleable, crack on. Maybe you’ll change your mind at some point; maybe you won’t; but it’s probably true that you’re running a good business and you will have options if you do decide to (or are forced to) sell at some point
• If you are for sale and you’re saleable, continue talking to your corporate finance partners about how you might maximise your valuation and perhaps you’re already talking to someone like me about how that transition is going to work and what the fallout might be (I’ve worked for agencies that have been acquired and for agencies that have acquired other agencies, after all)
• If you are for sale (or want to be for sale soon) and you’re not saleable, I might be able to help you get your agency into the right place, so drop me a line.