Once you’ve decided it’s time to exit the creative agency you’ve built and capitalise on your hard work, there are certain things you should do to make sure you get the biggest possible payday.
It’s a bit like selling a house. You don’t want to give any potential buyer an excuse to walk away or try to knock down the asking price.
So, you finally get round to fixing the loose door handle in the kitchen, you give the front room a lick of ‘elephant’s breath’ emulsion and you might even invest a few thousand pounds sorting out the drains.
At the end of the day, you want there to be as few objections or obstacles in the way as possible. People will happily pay more if it saves them stress and hard work down the line – if they can see the dream within reach.
Selling a creative business is different, though, because a lot of the things you can do to make it more attractive to potential buyers aren’t superficial – they’re about fixing underlying structures, the culture, systems and processes.
You are not the agency
There are loads of good reasons to ensure your business can operate without you.
For starters, there’s the old hypothetical question about what would happen if you got hit by a bus.
Could the management team cope without you? And would the agency stagnate in the long-term if you weren’t around to make big strategic decisions?
Creative businesses are a bit unusual in that often clients are specifically buying into the talent of individuals, whether they specialise in copywriting, visuals or devising great campaigns.
With that in mind, prepping a creative agency for sale isn’t necessarily about removing your personality from the brand – it’s about showing that you’ve infused the firm with your values and brought along talented people who can continue to do things your way.
Think about David Ogilvy. He retired from the agency that bears his name in 1973, but the culture he built as ‘the father of advertising’ lives on at Ogilvy even two decades after his death.
One approach is to make sure you’ve got a clear successor – someone convincing that buyers will want to work with. Tim Cook hasn’t done a bad job stepping into Steve Jobs’ shoes at Apple, for example.
You should also make sure that what makes your agency special is baked into the way it works. Try to turn at least some of the way you think, and your approach to creativity, into repeatable processes, or guiding principles.
Ask anyone selling a business and they’ll tell you it’s a lovely little earner requiring very little work to turn a tidy profit. Well, they would say that, wouldn’t they?
Any potential buyers of your agency will expect something a bit more than a ‘sez you’. They’ll want to see evidence to support your claims, ideally with the input of a credible, objective outsider.
When we at Alchemy produce a valuation of a client’s business, we approach it with the same obsession with detail that we apply to their accounts.
It’s about showing your working and providing answers to awkward questions before any potential buyer has a chance to ask them.
You can read more about all that in my recent post about valuing businesses.
Good financial health, sound financial records
Of course I’m going to emphasise the importance of the financial stuff, aren’t I?
To back up that valuation, your agency needs tidy books, comprehensive paperwork and reports potential buyers can actually wrap their heads around.
They’ll be especially keen to see historic profit figures, up-to-date profit forecasts and details of liabilities and debt.
Again, it’s about reassuring them that buying your business is a safe bet.
If you’re planning to sell your business in a year, five years, or even ten years, getting your house in order now will save a lot of trouble down the line.
No legal entanglements
One thing you’ll often notice businesses do as they start courting buyers is settling outstanding legal disputes.
Very few people will want to take on an agency that has unsettled employment cases, trademark disputes or whatever.
Frustrating as it can be to cave in when you know you’re in the right, this could be the time to compromise and get things squared away, even if it costs a bit.
Cut the fat
Now might also be the time to ask if your agency is as lean and efficient as it can be, in every sense.
Businesses readying for sale will typically identify the one or two products or services that really drive their economic engine and focus all their energy there.
For example, if you’ve got a thriving digital marketing division, given the sudden switch to online we’ve seen in 2020, then perhaps that’s what you’re really selling.
Equally, if you’ve been keeping a print design service on life support for a few years, perhaps out of sentimental attachment, you might consider winding it down.
At the simplest level, it’s also a good idea to review your staffing bill, subscriptions and licences, premises costs and so on. This can really help your cash position which, of course, sends all the right signals to a potential buyer about the health of the agency.
One final push
Finally, there’s an underlying principle to bear in mind: even with retirement or your next passion project on the horizon, don’t relax – double down.
You need to be acquiring leads, increasing your client base and growing your revenue. People need to see a vigorous, growing business, not one that’s winding down. And they’ll expect your head to be in it.
The best motivation? It might be the size of that final pay cheque. Or maybe it’s knowing that the groundwork you’ve laid means you’ll be able to find just the right buyer, do right by your team and preserve your legacy in the long run.
We can make preparing your creative agency for sale easy – get in touch.