Could you sell your agency business tomorrow?
MiNetwork held its final chapter meeting event of 2013 in Leeds last week and Green Square’s founder Tony Walford came along to talk to around 30 independent agency owners and directors about the big agency stories of 2013 and ultimately what we can all learn from them to help us grow our businesses in 2014.
Obviously, while the biggest agency story of the year was the Publicis Omnicom deal, Tony also gave an interesting overview of all the regional M&A activity going on, which has seen quite a few independent agencies going on spending sprees to speed up their own growth this year. He expects more of the same next year, so if you are looking to sell your agency in 2014 it may not be one of the usual suspects that comes knocking.
But it was one comment Tony made early on that made the biggest impact on me during his altogether fascinating presentation. Tony said ‘you should always run your business as if you are going to sell it tomorrow. If you do that you will always have a well-run business’, which I thought was a huge statement all neatly summed up in one short sentence.
Think about your own business. Could you realistically sell your agency tomorrow? If you got a call this afternoon from another agency owner (or even Sir Martin Sorrell) interested in acquiring your agency to bolster their service offer or simply because they want your clients, would you be in a position to meet with them within a day or two with all the documents and systems in place to give them a broad and in depth view of your business?
Could you show them comprehensive client contracts all signed and sealed? Freelance agreements? Employee contracts? HR procedures? A company manual? Timesheet procedures? Workflow processes? Recruitment policies? Management structures? EMI schemes?
Of course it’s relatively easy to pull the financials together, your accountant could do that pretty quickly, but what about all the systems, processes and procedures that actually make your agency tick, the things that make the whole thing work and which would enable a potential buyer to see your business as one that is organised and ready for growth and financial success in the years ahead.
Any buyer will always value your agency on future growth so you need to ensure that the future growth that you are forecasting can be adequately supported by a real demonstration that all the systems, processes and procedures to deliver that growth are already in place and operating effectively.
I meet and speak with many agency owners in my role here at MiNetwork and it is often evident that while many agency owners are aiming to one day sell their agency, if they got a call tomorrow from an interested party they would be far from ready to extract maximum value from an agency sale.
I’m sure years ago agencies were bought and sold on little more than an enjoyable chat over a pint down the pub and some financial forecasts scribbled on the back of a fag packet, but today we will live in a very different world, a world full of due diligence, lawyers and policies for everything from switching on a light bulb to emptying the rubbish bins.
For many agency owners still in their first tentative years selling up is something that is many years down the line. It’s a dream for many that over the next few years they will build a successful business and create real value that they can then realise through a sale. But by taking on board Tony’s comment right from the very start of your agency’s life could have a huge impact on how your agency develops and ultimately how successful it becomes in the years ahead.
So, perhaps in this final week before many of us break up for a well-earned Christmas and New Year break you should give some serious thought to adopting Tony’s approach when you return to the office in January and really get your business on track for success in 2014.