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Agencies 4 Growth Festival Logo

Agency Growth: Is it better to buy or to grow your own?

'Tales from the non-exec’ harnesses the insights and lessons gained from the board rooms of marketing agencies around the UK and abroad from one of the most experienced non-exec directors in the sector, Miles Welch, the founder of Milestone Advisory and former CEO of Digitas and COO of Harvest Digital. Issues such as business strategy, exit planning, growth pains, expansion, culture, leadership, process and people will be covered in the form of tips, tools and advice. Powered by The Drum Network, ‘Tales From the non-exec’ is an essential read for any agency leader looking to grow a better business.

I often get asked about the value of making a small acquisition over growing your own talent through recruitment. There are of course merits in both approaches and a lot depends on what your trying to achieve, the depth of your pockets and time.

If you’ve decided that an acquisition is for you then there’s a lot to consider. Here are a selection of things to help you think about an acquisition in the right way.

1. What’s the strategy?

Making an acquisition for the sake of growing is not a strategy. An acquisition only ever makes sense in the context of whether it helps you to achieve your overall long term goals. Goals should of course be time stamped so if makes sense that you’ll achieve them in the planned time (or sooner) then good

2. Speed.

Can you complete an acquisition and integration in the time you could hire the people you need and on board them to be productive?

3. Cost.

You need to weigh up the cost of hiring organically and any associated recruitment fees with the cost of an acquisition. Buying a business will normally be much more expensive, unless you find a distressed business or one where the shareholders are ready to exit.

4. Reasons for selling.

There are many reasons why people want to sell, they may have reached the limit of their capability to grow the business further without help, they may want to retire or the business may be in distressed. Make sure you full understand the reasons why, it will help in your negotiation and give you confidence you’re not buying a turkey. Buying a distressed business is cheaper but make sure you have the capability and resources to turn it around in a timely fashion. Some careful due diligence is needed here, any client survey feedback, talking to key staff, client and service line profitability.

5. Funding.

Normally a mixture of cash and shares in the parent company. If the acquired business is throwing off cash them that working capital can help fund the acquisition and earn out.

6. Strategy over Vanity.

Opening an office in sunny climes can sound appealing but one better is to consider clients and their needs. Can you acquire new clients in a new location and also service some of your own better as a result?

7. Size.

What size of acquisition makes sense? A smaller team could be easier to integrate, a larger acquisition could have a cultural impact.

8. Culture.

Is there a shared vision and values? What are they in business for and how do they go about it. Look for the similarities and see if you can accept the differences.

9. Clients.

Look for synergies where you can cross-sell or enter a new sector. Are you looking for fame or fortune clients? What size or type works best? Is there any overdependence on a single client and can you take on that risk comfortably? Do they have the right level of relationships?

10. Reputation.

Does the reputation of the target sit with the owner/founder or the business brand. How strong is their brand and is there value in it?

Milestone are non-exec advisors to SMEs in the marketing communications sector. The team’s collective experience is substantial; agency leadership, corporate finance, M&A and preparing for exit. Miles can be contacted at

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