It’s no secret – running an agency is a huge challenge. So, if you do make the decision to sell your digital agency, you probably have a good reason for it. However, it’s still a big decision to make, and considering all the factors and potential outcomes before you sign it off is important.
Two of the most common reasons for selling an agency are insufficient revenue and management burnout. But while both reasons are valid, they can be rectified with the right strategy. Laying out all your options can help you see things more clearly.
However, if you’ve already come to the conclusion that selling is the right option for you, all that’s left to do is to find out which steps you need to take to pull off the best deal possible.
5 Steps to Selling Your Agency
Selling a digital agency isn’t as simple as listing it on eBay. There’s a specific set of steps and processes you’ll need to go through first to execute a legal sale that works to your advantage.
Step 1: Evaluate Your Agency
First things first. You need to find out what your agency is worth. You want to arrive at a figure that is fair to both yourself as the current owner and the potential buyers who may be interested. You can determine the valuation of your digital marketing agency in a variety of ways:
- Income-based valuation – This evaluation method is based on income and projected future earnings. If your business has significant growth potential, this is a smart method.
- Market-based valuation – Use recently sold agencies of similar value as a benchmark for how to price your own. This is arguably the most relevant and simple valuation method.
- Asset-based valuation – This approach focuses on the book values of your agency’s various assets, such as an office, technological hardware, vehicles, or stocks.
A significant part of evaluating the worth of your agency comes down to financial organisation. You won’t be able to make accurate estimates about its true value if you’re using outdated or error-filled records, so make sure your affairs are in order before you start drawing conclusions.
Step 2: Prepare the Agency for Sale
Before you can get the ball rolling on listing your agency for sale, you need to prepare it for a potential handover. This part of the process can take anywhere between several months to a year, or longer – it really depends on the current state of your agency and how much work is necessary for a sale.
One of the ways you can start preparing for a sale is to refrain from taking on any risky projects. You want your track record to be as clean as possible to attract buyers.
You can also start working on the infrastructure of your agency. That means fixing any serious internal operational issues, completing any open-ended projects, and making sure all your legal affairs are in perfect order. The financial organisation also falls into this category.
Think about it. If your digital agency were a family home, you’d spend some time fixing those leaky taps and holes in the wall before selling. You want your agency to be in the best, most attractive condition possible.
Step 3: Identify Potential Buyers
It’s not realistic to assume that someone will waltz in at the perfect moment and buy your agency. You need to perform thorough market research and make sure that A) there is a healthy enough market for digital agencies in your area, and B) buyers are interested.
If this part of the process leaves you feeling a little stumped, don’t fret. You can always hire a business broker or simply network within your community to get the word out faster.
Step 4: Negotiate a Fair Price
It’s also unrealistic to assume that potential buyers will immediately accept the price you have set. You should always allow for some wiggle room so that interested parties feel they are getting a fair price, and you’re able to sell your digital agency at a rate that suits your needs.
Step 5: Finalise the Sale
Once all the above steps have been taken, all you can do is hope that someone will bite. Continue to advertise the sale of your agency for as long as possible and on as many different platforms as is appropriate. This will give you the highest probability of a successful sale within your ideal time frame.
Tips for Selling Your Agency
Selling any major asset like property or a business can be a long-winded and difficult process. But with the right attitude and strategy at your side, anyone can do it. Here are some tips to help:
- Set Reasonable Expectations – Unfortunately, not all sales go to plan. While maintaining a positive and confident outlook, be aware that you may have to compromise on some things to get what you want.
- Have an Open Mind – The sale may not happen in the way that you imagine. Keeping an open mind can help you stay flexible and may be the reason you sell at the end of the day.
- Research the Market – The more you know, the better prepared you can be. Educate yourself on the market for digital agencies in your area and use the information you find to guide you.
- Understand the Regulatory Environment – A regulatory environment is the set of rules and regulations ascribed to your government’s laws around business operations. Make sure to research yours to prime your agency for a smooth sale.
- Get Professional Help – There’s a reason why business brokers exist: it’s for people in your position. If you get stuck, don’t be afraid to ask for help.
Sold!
Although selling an agency can be a tedious process, it doesn’t have to be. When you understand the steps involved and how to execute them one at a time, the path to a successful sale becomes a lot clearer.
With this guide, anyone can sell their digital agency in a methodical and effective way.