Love Is In The Air
As a PR agency owner, possibly the most critical decision you’ll make is when to sell your firm eventually.
This experience can be quite daunting for anyone, especially if you’re not accustomed to the complexities of the M&A process. It can also be overwhelming, arduous and emotional if you’re not fully prepared for what’s ahead.
If a prospective buyer is courting you, it’s essential to first and foremost understand what they are looking for in your agency. When you know what motivates them to buy, you can take carefully measured actions to reap monetary benefits in a potential sale and ensure a sound cultural match and positive chemistry among leadership on each side.
What to Think About During the Courtship Period
To decide if the M&A journey makes sense for your agency, it’s crucial to start by answering some key questions. For example, is now the right time? More importantly, are you ready? Has your prospective buyer made other acquisitions? If so, do they have references you can talk to about their experiences before, during and after the process?
In my many decades of consulting experience in the PR agency M&A space, I always stress the importance of developing a positive working relationship between the seller and buyer right out of the gate – it’s truly the key to success. After all, an agency sale is more than just about the money; it’s about creating a healthy, positive and productive environment for the seller and their team that ultimately empowers.
Here are five considerations that can help you determine if it’s the right time to sell, especially if you’re currently being “romanced” by a prospective buyer:
Ensure that both firms’ synergies, collegiality and overall quality of life are sympatico. Synergy is a key element of a sale – it can exude a collaborative atmosphere and breathe new life into an agency. A newly formed or evolved PR firm – through consolidation and a solid united vision – can allow for greater purchasing power, reduce overhead, allow for better access to innovation and improved technology and potentially bring down the cost of debt and other benefits.
Make a list of questions to ask. Have your questions for a buyer lined up before the first meeting. Here are some ideas to get you started:
Why are you interested in this acquisition?
What is your firm’s niche?
How do you see our roles in the future?
What is the typical deal structure? Is it based on earn-out? Or will it be an up-front payment and an earn-out?
What has been your growth pattern over the past handful of years?
Where do you get funding for deals?
What changes will go into effect immediately?
Will my agency and brand be absorbed into your agency, or will it remain independent?
Can employees on both sides expect a round of layoffs, or can we negotiate a grace period?
Will leadership be required to stay on for a specific length of time to onboard the new owners/management?
Do your due diligence – check that the buyer isn’t running a pressure cooker! Show up armed with background information on each prospective buyer ahead of time. Never hesitate to ask them the same tough questions they’re preparing to ask you about your business. Study their portfolios (and any portfolio gaps) via their websites and SEC filings (if publicly traded). Ascertain how you can best position your agency and its services with everything they have to offer.
Determine if your firm is intended to be a meaningful, carefully thought-out strategy within the prospective buyer’s future. In other words, determine whether the prospective buyer is worth investing your time and effort into. The buyer’s goal should be to develop a foundation for a business discussion, impress you, keep you interested in learning more and demonstrate their full commitment to the proposal.
Show genuine interest in learning more about the buyer. Don’t be detached or impersonal; you will probably turn the buyer off immediately. Reflect in your voice and body language that you are interested in learning about their agency and getting to know them as a person. Also, show them that you’ve thoroughly done your research. Remember that you are building rapport with the buyer, so first impressions mean everything at this point.
The Bottom Line
There’s no arguing that the M&A process can be daunting. With so many considerations and steps to take before, during and after the process–and unanticipated obstacles along the way–it’s essential to have the proper support.
Enlisting the guidance of an experienced facilitator like a team member from The Stevens Group can help make the process go smoothly, protect you and your employees and get things done the right way the first time around. Sellers need someone who won’t slow the deal down by working to anticipate every imaginable (yet unlikely) risk and obstacle.
Whether you aspire to retire, hike, bike, golf, spend more time with family or move on to your next professional venture, a proper strategy with the support of a professional can help you sell your agency successfully–and avoid potential headaches. Creating realistic expectations in two areas – time and money – is also important.
Whether you’re actively working with a prospective buyer to sell your agency as soon as possible or slowly considering a future where you sell, I wish you the best of luck. And remember to be patient. If you want to sell, you want to ultimately sell to the right buyer for your situation. You want the culture to be as close to perfect as possible – and I believe that’s the most critical element.
