We took a deep dive into the world of marketing agency mergers and acquisitions to learn the ins and outs of selling an agency. We heard from Maneesh Goyal, entrepreneur and founder of MKG (acquired by Acceleration Community of Companies); Danielle Finck, founder of Elle Communications (acquired by Dolphin Entertainment); and John Burns, managing director at Clare Advisors (the M&A advisor behind Elle Communications and dozens of other marcomms agencies' acquisitions) about their experiences, strategies, and tips on navigating the sale process.
The takeaways:
Clarify Your Future Role: Define whether you want a complete exit or a role post-acquisition. Knowing your preferred outcome from the start will guide decisions and set expectations for both you and the buyer.
Assess Your Company’s Readiness for Sale: Take time to organize internal processes, documentation, and systems as if the agency were to continue on its own. Having a streamlined, self-sufficient operation makes your business more appealing to potential buyers.
Ensure Financial Stability: Diversify your client base to avoid over-reliance on one or two major clients. Buyers are more comfortable when revenue streams are spread across multiple clients, reducing the risk of major financial shifts if a key client leaves.
Maintain Confidentiality: Keep sale discussions as private as possible until it's time to announce, to avoid unsettling clients and employees.
Plan Your Announcement Carefully: When it’s time to announce the sale, communicate transparently with employees. Address questions proactively and provide reassurance to prevent anxiety about the transition.
Seek Insight from Experienced Peers: Speak with other founders or business owners who have gone through the sale process. Their insights can prepare you for unexpected challenges and provide a roadmap for navigating the journey.
Be Open to Diverse Buyers: Stay open-minded about potential buyers. The right match may not fit your initial expectations, so engage in conversations with a variety of interested parties.
Consider Timing and Momentum: The best time to sell is when your agency is performing well and experiencing growth. Buyers are drawn to companies with positive momentum, which indicates potential for continued success post-acquisition.
Look Beyond Financials: While EBITDA and financial metrics matter, focus on demonstrating consistent growth, a strong client roster, and future potential. Buyers are often as interested in the agency's growth trajectory as in its current earnings.
