Is now the time to sell your PR business?Posted: February 15, 2011 | |
Few agencies live forever. Most eventually get bought as the founders seek to cash in on their years of investment. Every year, as a result, these people sit down and ask themselves: “is this the year to sell?” So is it? Is 2011 the year that agency owners should cash in? Here’s a simple check list that may help:
The questions you want a ‘Yes’ to:
- Is your agency growing faster than the average? 10% growth means yes btw.
- Is your agency likely to carry on growing for the next few years?
- Is your agency making decent profits? (15% margins and above)
- Is your agency positioned well in the digital transition?
- Do you have a strong leadership team or is it all dependent on you?
- Could you carry on working hard for another 3 to 5 years?
- Is your agency REALLY positioned well in the digital transition? (no lies please)
The questions you want to answer ‘No’ to:
- Does any client account for more than 25% of revenues?
- Is the equity in the agency only held by the founders?
- Is price what really matters in a sale?
- Are you in a hurry to sell?
Now Next Fifteen has bought quite a few agencies in the last decade. We love the agencies that are now part of the Group. In every case we acquired firms that weren’t ‘For sale’. They were firms we spent ages getting to know. First and foremost we had to have good chemistry with the people and vice versa. We jokingly say that we’ll never buy a business run by people that we’d hate to spend an evening with. Actually it’s not a joke. And in truth, in the PR world anyone who sells their firm to people they don’t like is crazy. Stephen Elop, who just took over running Nokia, recently reprised a Drucker quote: “culture eats strategy for breakfast.” Agencies that put strategy before culture will fail.
So is 2011 the year? There are certainly a LOT of businesses that think it is. We get approached by agents selling firms every week. We tend not to buy these businesses because a) they are ‘for sale’ and b) agents want to rush a process that is best done more slowly. They also simply want to get you to pay the highest multiple to justify their fees. I get it but I’d much rather find firms that we connect with, rather than firms who have agents that connect us. So if 2011 isn’t your year, let’s talk.