7 Steps to Sell Your Agency for Top Dollar
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As an agency owner, you’ve dedicated yourself to providing clients with high-quality services and getting results. Whether the agency is small or large, it’s an attractive acquisition target for the right buyer.
Although there are countless agencies out there (including web/graphic design, web development, marketing, social media, etc.), a successful and profitable agency is a valuable asset you can sell when you’re ready for the next chapter of your journey.
Many companies are looking for existing agencies to purchase because they can:
- Be scaled and grown for high return on investment (ROI)
- Achieve high profit margins
- Produce recurring revenue
- Allow for strategic expansion into new services
If you run an agency and you’re ready for something different, selling your agency could be a life-changing experience.
In a recent YouTube video, George Moulos of Ecommerce Brokers shared a step-by-step process for preparing and selling your agency. George used this process to exit his own agency and broker millions of dollars in agency acquisitions through Ecommerce Brokers.
George sets the goal of selling for 3-5x the trailing twelve months’ profit with 50-90% cash upfront at the time of the sale, and has a proven track record of achieving this.
This article is a simple guide that walks you through George’s seven steps.
How to Sell Your Agency
Step 1: Remove Your Personal Branding from the Business
Having your name and face all over your agency’s branding can make it less sellable. Buyers will question how much of the customer base is there for you rather than the business itself. When they purchase the agency, and you’re no longer involved, what will happen to the business?
To increase your agency’s value and make it more attractive to buyers, change the company name to something that doesn’t include your name. Notify your clients of the change and assure them that your services will not change.
If your agency’s branding heavily focuses on you personally, you’ll need to change this. You don’t have to do it overnight, but you can slowly remove yourself from the branding to prepare for eventually selling the business.
Step 2: Get Your Finances In Order
The first thing any potential buyer looks at is a business’s trailing twelve months’ financials. This can be an Excel sheet broken down by month with all the expenses and income clearly listed.
Ideally, you should hire an accountant to do this for you. Ensure every detail can be verified with invoices, recipes, tax returns, bank statements, etc. While the past twelve months are the most important period, you’ll also need similar records for every year of the agency’s history.
Having your financials in order before you try to sell will make the process significantly smoother, easier, and faster. If you don’t have the financials prepared ahead of time, the process can be delayed by months or years, and you may even miss out on a sale. Remember, potential buyers are evaluating many different businesses. If your details aren’t in order, they’ll probably move on to the next business.
Step 3: Get Your Legal Affairs In Order
Ensure all your contracts, including contracts with employees and clients, are in order. Put them in a data room for a buyer to review quickly. This step can increase a buyer’s confidence in your business and make them willing to pay more.
Additionally, make sure there are no ongoing disputes or potential lawsuits that could jeopardize the sale of your business.
Step 4: Put Company SOPs Together
Standard operating procedures (SOPs) can significantly increase your business’s valuation. Create videos to document how you and your team run the business, including all the essential tasks.
Naturally, buyers want to know they can continue running the business successfully after the acquisition. Thorough SOPs make the transition process much easier for the buyer and increase their confidence, which may lead to a higher valuation.
Step 5: Take Yourself Out of the Business
Buyers don’t want to buy a job. They want to buy a profitable turnkey business, and that’s not possible if you’re working 40 hours per week running the business.
To start, delegate specific tasks to your existing team members. You may be surprised how much of your work can be eliminated simply by distributing it among existing team members. You can also hire or outsource additional workers to replace you. It could be a single full-time employee or multiple part-time employees.
A business that runs smoothly with minimal involvement from the owner is a much more attractive acquisition target.
Step 6: Decrease the Churn Rate
The churn rate is one of the most important factors for buyers and is usually the first detail they want to know. Decreasing your churn rate will make your agency far more appealing and increase its value.
Potential buyers want to know that they’ll acquire a solid client base that’s likely to remain with the business for a long time. As a result, decreasing the churn rate should be one of your top priorities in exit planning.
Step 7: Talk to a Broker
Selling an agency is a complicated process. Many brokers, including Ecommerce Brokers, offer free consultations, which help you form your exit plan or strategy. If you’re considering selling your agency, there’s really no reason not to speak with a broker.
The consultation can help with assessing the sellability of your business and determining a rough valuation. After the consultation, you can decide if you’re ready to move forward and list the business for sale or if you need more time to prepare for the exit.
Moving Forward
If you’re considering selling your agency, follow these steps to prepare for a successful and lucrative exit. And if you’re interested in getting feedback from a professional, reach out to George Moulos and the Ecommerce Brokers team for a free consultation.
Disclosure: Flip My Site has an affiliate relationship with Ecommerce Brokers, meaning we may receive financial compensation (at no additional expense to you) if you list and sell your business through Ecommerce Brokers.
