Selling your agency can be a daunting task no matter what stage of the process you are in. You’ve likely had questions cross your mind such as, “How much is it all worth?” or, “Am I even ready to do this?” While strategic questions such as these often serve us well, there comes a point where it’s time to put it all aside and make a decision! In this article, we’ll walk you through some of those exciting stages.
How much could your agency be worth?
There are many factors that can contribute to the value and ultimately the price of your agency.
EBITDA
Earnings before interest, taxes, depreciation, and amortization are some of the most immediate indicators of your agency’s success to investors.
Net Profit Margin
The profitability of your company is the factor that determines how much it could be worth. Depending on the business sector, profit margins hovering between 15-20% is the sweet spot.
Revenue Trajectory
If your agency’s revenue figures have been growing consistently, or even exponentially, it will be more appealing to potential investors. The longer the track record, the better! This is one of the biggest reasons people choose not to sell, “too early”.
IP Value
IP increases both your agency’s operational and non-operational value. Having a branded asset library, copyrights, or even trademarks/patents can provide investors with the extra edge in their decision to buy.
Human Capital
HR can be a massive undertaking. Having a solid team ensures that investors won’t have to actively hire in the future and thus makes your company all the more valuable.
Customer Databases
Have a big CRM system? What about email lists? The coveted contact book is always a plus for investors. It’s more promising to buy a business with 200 customers than 10 (assuming a consistent budget.)
Geographic Diversification
Lastly, some investors may be seeking worldwide domination! Having multiple branches can allude to easier expansion in both the short and long run.
Finding a buyer to fit your needs
There are many different types of potential buyers for your company. You have even potentially already been approached by some of these individuals. If applicable, be sure to verify they are legitimate offers before moving forward with any existing inquiries.
Don’t worry if you haven’t received any interest yet, there are many resources available to get your company listed and sale ready. Try reaching out to a local business broker or a reputable acquisition company!
Once you find a suitable buyer, request a Letter of Intent if they haven’t sent you one. This document how much the potential buyer thinks your company is worth and how much they are willing to pay for it. At this point, the next step is either to move forward with the deal or negotiate the potential price.
Securing the deal
Once you and a potential buyer have sorted out the terms of the Letter of Intent, it’s time to refine the smaller details. Payment options and an employee or other operational transitions are agreed upon at this stage. Once everything is agreed upon, it’s time to close the deal! You and the buyer will make collaborative documents including a terms sheet, and both parties will sign. After that, it’s considered official!
We wish you the best of luck on your M&A journey.
Sell your agency today
If you are interested in selling your company to Online Growth Systems, visit our contact page!
