Whatever the reason may be, you’re currently considering selling your digital agency. It’s a decision many founders and business owners have to face, and it isn’t always easy. But one thing that will always make it a lot harder is not being prepared.
In order to get top dollar out of your agency sale, there are a number of important factors to consider — why you’re selling, who you are looking to sell to, and how to go about it. But before anything else, you have to know your business on a deeper level. Yes, that means your finances.
So here’s some helpful things to consider as you figure out how to sell your digital agency for the best price.
Reasons to Sell Your Digital Agency
Let’s start with why exactly you’re selling. Through experience, we’ve learned that there are three main motivators for selling an agency.
- You’ve Stopped Growing
It happens. Sometimes, you just reach a cap and can’t seem to figure out how to grow past it. At this point, you may have built your team to a very solid 40-50 employees, but from here, any additional growth would require a much more convoluted step, involving high-profile contracts and partnerships that your agency may not have access to. While it may not have been your intention to sell, you’ve realized your goal of scaling isn’t feasible, so selling your business may be the best solution for your team and for you in the end.
- You’re Looking to Expand
When this desired growth isn’t possible on your own, it may be with someone else involved. A strategic partnership could be just the thing your digital agency needs to take the business to the next level. Whether it’s getting acquired by a larger agency to access additional customers or merging with another team to offer additional services, figuring out the right collaboration for your business could offer a new route to success.
- You Want the Profit
Hey, the whole point of starting your own agency in the first place (aside from a passion for what you do, of course) is to make money! Whether the goal from the very beginning was to sell at some point, or you simply feel the best way to maximize your investment is to sell now while you’re profitable, then go for it. More power to you.
Regardless of your reason, knowing your business is key.
Finding the Right Buyers
Timing is everything. And the best timing is really determined by your data. When your company valuation shows you’ve got nothing to lose, you’re far more marketable than when it proves you’re desperate. But regardless of your financial health status, the more you know about your business, the better you can market yourself to the right buyers.
Think of it this way. If you’re buying a new car, you want to see some numbers; the cost, gas mileage, financing. Buying a business isn’t any different. The more data you can provide your potential buyers and the better you can highlight your strengths, the more likely you’ll find one — the right one.
And more often than not, finding the right buyer means leveraging your own extended network. It means having candid conversations with your contacts and asking if someone you know knows anyone who may be interested. Eventually, the word will get to the right person. But then it’s up to you to be prepared.
Ways to Sell Your Digital Agency
There are two primary ways to actually sell your agency, defined by which aspect of your business your buyer is acquiring from the sale. It’ll also depend on what your business has to offer.
- Selling Your Talent
In this acquisition, known as an acquihire, you’re not selling the cashflow or customer side of your business, but instead, the value is in your employees. Maybe you have an incredible team and culture, but unfortunately, your product or strategy just isn’t taking off like you’d hoped. In this case, your team is your best asset, and the perfect fit for another agency interested in expanding their own services or improving their current workflow.
An established team not only has experience working together, but also the expertise a lot of agencies are seeking, but would usually require a lot of time or money in training. So in the end, buying this talent is often the smarter and cheaper move in order to continue scaling.
- Selling Your Core
There’s only one way to be successful in this transaction: knowing your financials. And that’s because that is all your buyer cares about. How is your cash flow performing? What’s your YOY profits? How much money does each customer bring in? No matter how much you brag about the brands and projects in your client list, without the financial proof to back it up, your talk is cheap. Your value is measured in real numbers, so if you can’t provide them, your buyer will have to make estimates for themselves. And letting it up to the other side is almost a guaranteed way to get an offer you’re not happy about.
No matter what your goals or approach may be for selling your agency, the only way to get top dollar for your business is truly knowing what it’s worth. Even if selling isn’t in the immediate plans, tracking your profitability and utilization now is the only real way to understand what steps you can take now to improve. With better financial health, you can start enjoying the success now and really enjoy the pay out later.
To learn more about the most effective way to track all your financial data in one place, contact Metric.ai today.