How to sell an agency and find the right buyer (2023)

Headspace, a web design agency, was my first venture - my baptism in entrepreneurship - but I couldn't let my romantic attachment to the agency or my pride get in the way. My business partner Kevin Springer (now my co-founder here at Proposify) and I had to leave the agency industry.

The decision to sell our agency would have been more difficult if Headspace had been making a lot of money, but splitting our focus between running a successful agency and trying to build a young Proposify hurt us, and we had to shit or shit the proverbial pot raise.

After a few promising leads that went nowhere, we got a call from a local businessman who seemed serious about buying Headspace. For nearly a year, we endured call after call, email after email, countless legal complications and cash flow shortages as we desperately tried to keep Headspace afloat and move Proposify forward.

I took a low-paying freelance job just to pay the bills myself, and Kevin got a full-time job in case things went wrong. It was without a doubt the darkest moment of my life as an entrepreneur. I thought it was all going to come crashing down at any moment.

Eventually, the deal closed.

Here's what we learned about trying to sell an agency that could help make your process a little less painful and hopefully positively prepare you for your next business venture.

Why sell your agency?

Many agency owners don't have an exit strategy in mind when starting their businesses. I am not.

I started Headspace because I loved design and wanted to make a living doing what I loved and still be able to choose who to work with. Also, I really couldn't think of anything.

Even if you think you'll never sell your business today, having an end goal in mind will improve the way you run your business now.

Here's the devastating truth: most agencies have an expiration date. The chances that you or I will build the next Ogilvy & Mather or Crispin Porter are astronomically slim, and eventually you'll want a less stressful job before you retire.

While there are many different reasons to sell your agency, and many of them will be specific to your personal situation, one reason you shouldn't trust is that you'll take a financial hit. This rarely happens.

Selling Your Agency: An Entrepreneur's Guide

Service agencies are among the toughest businesses to sell. According to a recent study, only a quarter percent of agencies were sold in the last twenty years.

Compared to a brick-and-mortar business with physical assets or tech startups that can scale exponentially, service agencies need people to grow and rarely own intellectual property.

The prospective agency buyer is looking for a turnkey business that can operate independently of existing owners, or is looking for a specialist team to complement their wide range.

So to get your agency a deal, let alone the best possible deal, you need to start with the right foundation.

(Video) How to Sell an Agency and Find the Right Buyer - Proposify Biz Chat

1. Make sure you have a salable business

The most important part of selling your agency starts long before you actually sell it. You have to create something worth selling right from the start.

It's important to start your business with the right mindset. For example, think about buying a house. A homeowner who plans to change ownership will treat the home very differently than someone who plans to live there for the next 20 years.

How to sell an agency and find the right buyer (1)

As I mentioned earlier, most small agencies cannot be sold because there is nothing to sell. They have no recurring revenue, no unfair advantage, no repeatable formula for generating new business, and no well-known brands.

You need one of those things, at least one, if you want to withdraw money. See how:

Create an unfair advantage

Anyone can hire designers, writers, digital strategists and programmers.

as Peter Levitanleg is:

"It's not easy to sell a business where assets walk out the front door at 6pm every day."

To truly compete for customers globally, you need clear leadership. This usually means they offer a specialized service that is sold to a vertical market where the agency has in-depth knowledge and years of experience.

I've interviewed some amazing agency owners who do just that:

For example:

  • An Bordspecializes in public relations for technology startups.

  • One400specializes in content marketing for the legal industry.

  • Organic SEOspecializes in search engine marketing for purpose-driven businesses.

  • Ribotspecializes in developing mobile apps for retail.

If your business has a clearly defined target customer and years of experience in a specific industry, you will have a much more valuable business in the buyer's eyes.

When a larger company buys your agency, they may be looking for an impressive client list or a highly talented team, but those deals are rare and difficult to close. Even Teehan + Lax, the respected design agency behind Medium,initially indicatedwas acquired by facebook but how is ithe finished,In fact, 40 employees were laid off and only the partners were hired by Facebook.

(By the way, Jon Lax once told me that every agency has three months to close.)

(Video) How To Identify The Right Buyer For Your Agency Acquisition

Being good just isn't good enough.

Create a repeatable formula

Most agency owners are the senior salespeople for their agency. This is fine for the first few years, but your goal should be to turn your sales process down to a science and be able to hand over the reins to your business development team in most situations.

When we interviewed the owner of the incoming agency Kula Partners,Carmen Pirie, on our salesperson hiring podcast, he said:

“Your job is to work your way out of a job. When you're integrated into the day-to-day operations of a company, you can't leave even if you want to. A lifestyle business distracts you from a better purpose that creates a sustainable business that can survive without you."

It's hard to do thoughYou have to work on your business, not your business.

Create a respected brand

How do you create a “reputable” brand and what does that mean?

1) The agency that creates beautiful, innovative, award-winning work for popular products

An example would be MetaLab, which helped design Slack.

To build a company like this, all you have to do is hire A-players and create the kind of culture that attracts the best.

2) The owners have a huge following online due to the content they produce (speeches, written books, popular blogs, presentations).

Examples would be Jeffrey Zeldman's Happy Cog design and Mike Monteiro's Mule design.

To do this, you need to invest your time and energy into creating quality content and speaking to an audience. In short, build your personal brand as an expert in your industry.

Achieving any of these feats is not to be underestimated, but even if you are not a celebrity agency, you simply need to have a decent reputation at a smaller, more local level, having all the other ingredients (e.g., solid finances, specialist industry ). . knowledge, a repeatable sales process, a great team culture) increase your chances of attracting a qualified buyer.

Create recurring revenue

Larger advertising agencies operate on a retention model, where they charge clients a monthly fee on a long-term basis, usually 12-18 month contracts. However, most small boutique agencies work on one-off projects for clients.

In recent years, more and more small agencies, especially those that started offering inbound marketing services, are emphasizingongoing monthly commitmentcompared to project work. An example would beKula Partners, which increased its recurring revenue by 1,066% in one year.

Ongoing retention contracts are much more attractive to buyers as they can focus on growing the business rather than starting from scratch in three months because all existing projects are complete.

2. Find the right buyer at the right time

Regardless of what you are selling, you are always in the best position when you have nothing to lose and in the worst position when you are desperate.

(Video) How To Find A Media Buyer For Your Agency (What I Learned From 150+ Applicants)

Your ranking will be lower when you are losing customers and owing hundreds of thousands of dollars.

How to sell an agency and find the right buyer (2)

To use the house analogy again, when you plan to sell your house, you will first make necessary renovations that will add value. The same goes for selling your agency:

  • Plan a year ahead and get the books in order.

  • Do not waste unnecessary things and do not take on risky projects.

  • Have as much money as possible.

How do you find a buyer for your agency?

Hire a business broker

A business broker can make things easy as they have a network to leverage and will be pushing for the highest possible sale based on their commission. While many business owners have used an agent to help sell their business, Kevin and I tried an agent once when we sold our agency and it was not a successful experience.

Use your own network

Have some open conversations with your closest contacts, tell them you are thinking of selling your business and ask if they know anyone who might be looking for you. Eventually someone will talk to the right person and you'll get a few emails.

Come in armed with information

When buying a car, don't look at the purchase documentation until you've had a chance to ask the seller about cost and mileage, then take it for a test drive.

How to sell an agency and find the right buyer (3)

Once you start talking to potential buyers, there are some basic things they'll want to know before starting the time-consuming and expensive due diligence process.

Here are some documents to have on hand:

  • non-disclosure agreementYour potential buyer shouldn't have a problem signing this, as you're about to give out extremely confidential information.

  • balance sheetImportant! You have to ask your accountant for one each month, so if you need an updated one, it's just a few clicks away.

  • Other financial recordsThings like lost profit, a list of payables and receivables.

  • performance metricsGross Margin, Net Margin, Consumption Rate, Completion Rate, Usage Rate, and Customer Lifetime Value.

  • Client/Project SummaryThis should show all current projects in progress, how much they are worth, how many resources are needed, and when they will be completed.

3. Negotiate the terms

Rankings are difficult and subjective, but remember that businesses are ranked like anything else:

(Video) Buyers Agency Explained to For Sale By Owner

  • How big is the demand for what you offer?

  • What are the goals of similar companies in your market or geographic area?

  • How much is it worth to a potential buyer?

If your buyer asks how much you're asking, it's okay to be shy at first, but you should still have a number in mind. When you finally show your cards, you have something to back up your assessment. You can't just say you're selling your company for $10 million just because you think it's worth it.

If finances aren't as strong as you'd like, you can still get a decent rating if you have what banks call "intangibles," such as a good market reputation, strong expertise, or high customer standing.

There is no such thing as a smooth exit or a clean deal.

Getting a buyer to say "yes, I'll buy" is the easy part compared to the financial due diligence and expensive hot potato game you'll be playing with the attorney for the next 12 months. Even the simplest of deals will have complications that slow things down.

How to sell an agency and find the right buyer (4)

This is where your skills as an entrepreneur will be most tested. Can you still run your business efficiently, keeping your end goal firmly in mind, surviving the legal negotiations?

I can't offer a trick to make this quick and easy, but I can give you a few tips to keep in mind:

Hire a lawyer who is sensitive to the big picture

It's easy to say that hiring a reputable attorney at a large firm, but that doesn't always bring the best results. Some attorneys get in the way of sales by overanalyzing small details and pushing them back so far that they turn off the buyer.

If selling is important, and by that I mean getting out of the agency business as soon as possible is important to your life goals, then you need a lawyer who understands that and is willing to work with you.

You need someone who doesn't slow the deal down by trying to anticipate every possible (but unlikely) risk. They should be able to save their reserves for major threats, but otherwise get down to business quickly.

How to sell an agency and find the right buyer (5)

Be wary of long-term payments or fractional share purchases

Buyers prefer to keep the down payment as low as possible, so they often suggest paying in installments over a period of about 12 months. I would reject a longer buying period because it would otherwise be too risky.

If the buyer cannot finance the business, is he stable enough to run the business? Or are they just hedging their bets in case it doesn't work out and then try to reverse the deal later?

What if they want to pay part of the way in stock? I would be careful with that because it might be their way of keeping you loyal to the company. If the buyer is Apple and they give you Apple stock, that's one thing, but if your profit is directly tied to the agency's performanceafterIt's out of your hands, so you're likely to be disappointed in the long run.


Whether your business is just a young acorn just beginning to sprout or a mighty oak tree with deep roots, you must manage it as if it will one day be sold, even if you don't think that will be the case now.

(Video) Sell Your Business For $10 Million | Making A Digital Marketing Agency Sellable

When you have this build-to-sell mentality, you regularly step back and work on the business as a whole, rather than getting bogged down in the little day-to-day things that take up your time and force you to lose touch. . with the bigger picture.

Selling our agency didn't bring much profit for Kevin and me, but it was necessary so that we could focus on our true passion, Proposify. Maybe one day you'll have another reason to sell. And when that day comes, I hope you're ready for it.


How do you determine a good buyer? ›

Skills of a good buyer include:
  1. Industry knowledge. The first thing that a buyer needs is an understanding of their industry. ...
  2. Organisation. Another one of the most important characteristics of a buyer is organisation. ...
  3. Relationship building. ...
  4. Passion for products.
Oct 4, 2018

How do I sell my company to a client? ›

Photos courtesy of the individual members.
  1. Focus On Their Buying Journey.
  2. Start With A Personal Approach.
  3. Identify The Business Problem You Can Solve.
  4. Know Your Client Well.
  5. Ask Questions To Build Trust.
  6. Don't Treat Them Too Differently From A Large Client.
  7. Respect Them And Help Them Reach Their Goals.
Jun 14, 2021

What to consider when selling a business? ›

8 Essential Things to Consider Before You Sell Your Business
  • The timing of your sale.
  • Your emotional preparedness.
  • Why you want to sell (and for whom)
  • What a potential buyer in your market wants.
  • Your business's value.
  • Your financial prospects.
  • What you're going to do next.
  • Whether you're truly 'finished' with your business.
May 21, 2019

How can I sell my small business fast? ›

A Summary of the Steps to Sell Your Business Fast
  1. Prepare to put your business on the market.
  2. Time the sale for the right moment.
  3. Calculate the value of your business.
  4. Get professional help — broker, lawyer, and accountant.
  5. Perform sell-side due diligence.
  6. Put your business on the market.
  7. Pre-qualify buyers.
Jul 8, 2021

What makes a strong buyer? ›

Strong negotiation skills. Excellent communication skills. Relationship building and management skills. In depth understanding and knowledge of the industry.

Who is an ideal buyer? ›

An ideal customer should be ready to buy what you sell; the decision-makers have to understand that they have a problem or an opportunity and that you can help them solve it or seize it. An ideal customer has to want to make a change and be ready to invest both money and time into getting up to speed with your product.

How do you sell professionally? ›

In that time, I've discovered 10 tips that can help you close more professional services deals:
  1. Research your buyers and their needs. ...
  2. Provide real value. ...
  3. Be proactive with new opportunities. ...
  4. Let current clients speak for you. ...
  5. Focus on quality. ...
  6. Pay attention to timing. ...
  7. Create multiple options. ...
  8. Be persistent.
Jun 2, 2021

What is the best way to sell professional services? ›

1. Sell as You Serve: Great service providers create better futures for their clients that the clients didn't know were possible.
  1. Ask questions.
  2. Provide expert opinions.
  3. Work hard.
  4. Prepare.
  5. Are accessible.
  6. Build creative solutions.
  7. Deliver what you say you're going to deliver.
  8. Develop relationships.
Jan 17, 2018

What should you not do when selling a business? ›

7 Mistakes to Avoid When Selling Your Business
  1. Not Being Prepared. ...
  2. Not Understanding Where A Company's True Value Is. ...
  3. Not Taking Advantage of Professional Help. ...
  4. Not Being Honest or Misrepresenting a Business in the Selling Process. ...
  5. Pricing Incorrectly When Selling a Business. ...
  6. Not Pre-Qualifying Buyers.
Aug 2, 2021

What are 2 key things you should do when you are selling your business? ›

Start planning the sale of your business early to make the most out of the deal.
Here are some other tips to consider before the deal closes:
  • Get potential buyers to sign a non-disclosure agreement.
  • Work with your business advisory team to make sure you're not disclosing more than you should early in the process.
May 4, 2021

How do you calculate what a business is worth to sell? ›

Add up the value of everything the business owns, including all equipment and inventory. Subtract any debts or liabilities. The value of the business's balance sheet is at least a starting point for determining the business's worth.

How much is a business worth with $1 million in sales? ›

Business valuation FAQ

The exact value of a business with $1 million in sales would depend on the profitability of the business and its assets. Generally, a business is worth anywhere from one to five times its annual sales. So, in this case, the business would be worth between $1 million and $5 million.

How do you sell immediately? ›

Market sell order.

This type of order allows you to sell the stock immediately and it guarantees that the order will be executed without specifying the price of execution. Market orders typically get filled at or near the bid price when selling stock, just as they are filled near the offer price when buying.

What small business sell the most? ›

8 most profitable small business ideas
  • Fitness or physical therapy services. The pandemic seems to have permanently changed the fitness landscape. ...
  • App development. ...
  • Online consulting services. ...
  • Dropshipping. ...
  • Home improvement services. ...
  • Information security. ...
  • Event planning and virtual event planning. ...
  • Commercial cleaning services.

How can I impress a buyer? ›

25 Easy Ways to Impress Your Sales Prospect
  1. Remember their name(s). Basic, right? ...
  2. Focus on the buyer's mission not your commission. ...
  3. Listen. ...
  4. Take notes during your sales presentation. ...
  5. Ask strong discovery questions. ...
  6. Use (appropriate) humor. ...
  7. Do the unexpected. ...
  8. Show empathy.

What are the 5 types of buyers? ›

Buyers are generally categorized as belonging to one of the following groups although, in reality, most buyers fit into more than one.
  • The Individual Buyer. ...
  • The Strategic Buyer. ...
  • The Synergistic Buyer. ...
  • The Industry Buyer. ...
  • The Financial Buyer.
Mar 25, 2022

What are the three types of buyers? ›

Types of Buyers and their Characteristics. Buyer types fall into three main categories – spendthrifts, average spenders, and frugalists.

What makes a smart buyer? ›

Being a smart buyer entails making accurate decisions. It involves doing window shopping. You should know when to buy your items. Purchase items you only need.

How do you start a selling process? ›

The first step in the sales process is prospecting. In this stage, you find potential customers and determine whether they have a need for your product or service—and whether they can afford what you offer. Evaluating whether the customers need your product or service and can afford it is known as qualifying.

What to do when you have no customers? ›

What To Do When You Don't Have Enough Customers
  1. Go Back to Your Intention. What was your original intention in starting your business? ...
  2. Dig Into the Books. ...
  3. Gauge Quality Control. ...
  4. Value Your Current Customer Base. ...
  5. Embrace Social Media. ...
  6. Offer Discounts. ...
  7. Create a Loyalty Program. ...
  8. Stay Centered.
Aug 18, 2015

What is the golden rule of selling? ›

THE GOLDEN RULE OF PERSONAL SELLING refers to the sales philosophy of unselfishly treating others as you would like to be treated.

How do I sell smartly? ›

The Twelve Golden Principles of Selling Smartly and using CRM
  1. Principle 1: Always Sell to People. ...
  2. Principle 2: You Have To Sell Yourself. ...
  3. Principle 3: You Must Ask Questions and You Must Also Listen To Understand. ...
  4. Principle 4: Get Connected & Develop Yourself. ...
  5. Principle 5: Features Must Be Linked to Benefits.

What are 5 techniques you can use to sell? ›

Effective sales techniques: 7 tips for more consistent sales
  • Be systematic about generating leads. ...
  • Know your sales cycle. ...
  • Know your numbers. ...
  • Actively seek referrals. ...
  • Focus on securing appointments. ...
  • Get ready for objections. ...
  • Follow up and listen.

What are three personal selling methods? ›

Personal selling involves direct communication between a salesperson and a potential customer. This can occur in person, over email, on the phone, or via video. Personal selling is most commonly used for business-to-business (B2B) selling, although it can also be used in retail and trade selling.

How do you hard sell a service? ›

4 Simple Tips to Successfully Implement a Hard-Sell Approach
  1. Ensure You Know the Product or Service Well. ...
  2. Hire the Right Type of Salesperson. ...
  3. Create High Quality, Persuasive Content. ...
  4. Leverage Email Marketing.
Dec 30, 2022

How do you sell to high end clients? ›

High End Clients – Top 10 Methods to Attract them
  1. Define your target audience.
  2. Create client personas.
  3. Design a compelling, high-end website.
  4. Use targeted ad campaigns.
  5. Launch a social media campaign.
  6. Improve your SEO.
  7. Establish your brand.
  8. Create compelling content.

How do you consider a buyer as a purchaser for value and good faith? ›

A buyer for value in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property.

What makes a good strategic buyer? ›

Key Takeaways. A strategic buyer is a company that acquires another company in the same industry to capture synergies. Because a strategic buyer expects to get more value out of an acquisition than its intrinsic value, it will usually be willing to pay a premium price to close the deal.

What determines how a buyer reacts towards the price of a good? ›

In competitive markets, supply and demand govern the ways that buyers and sellers determine how much of a good or service to trade in reaction to price changes.

How are you going to determine your potential buyer? ›

Familiarize yourself with the market. Talk with other producers who are already operating in your general market. Get a sense of the products demanded by that market, potential level of interest and typical prices offered. Know your processing and transportation costs.

What makes one an innocent purchaser for value? ›

An innocent purchaser for value is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property.

What is the most important factor between a buyer and seller? ›

Effective communication and trust

For a mutually beneficial buyer and supplier relationship, communication is important for the procurement department to run smoothly. Open, honest, two-way communication not only helps each party to understand the other businesses needs but helps to build trust.

What is the bona fide purchaser rule? ›

So long as a bona fide purchaser properly records the transaction, the bona fide purchaser takes good title to the property despite competing adverse claims. Those parties holding competing adverse claims may bring an action only against the party who fraudulently transferred the property to the bona fide purchaser.

What are the three elements of a good strategy? ›

To be a good strategy, it must precisely diagnose the problem being solved; set a guiding policy that will address that problem; and propose a set of coherent actions which will deliver that policy.

How do you win buyers and influence sales? ›

6 Ways to Influence Customers and Grow Sales
  1. Make them feel uniquely special. Smile and truly welcome your customer. ...
  2. Offer lots of information. ...
  3. Customers need to be involved in the decision. ...
  4. Tell the story. ...
  5. Make realistic promises. ...
  6. Provide a high level of service.

What are the 3 factors that determine price? ›

Determinants of Price in Marketing

The main determinants that affect the price are: Product Cost. The Utility and Demand. The extent of Competition in the market.

How can a seller determine whether it is a price taker? ›

A price-taker is an individual or company that must accept prevailing prices in a market, lacking the market share to influence market price on its own. Due to market competition, most producers are also price-takers. Only under conditions of monopoly or monopsony do we find price-making.

What determines the quality of a good that buyers demand? ›

Demand Equation or Function

The quantity demanded (qD) is a function of five factors—price, buyer income, the price of related goods, consumer tastes, and any consumer expectations of future supply and price. As these factors change, so too does the quantity demanded.

What are good questions to ask a buyer? ›

General buyer interview questions
  • What do you like most about being a buyer?
  • What part of your job do you find the most challenging?
  • Tell me about a time when you disagreed with your supervisor.
  • Describe your negotiation strategy.
  • Would you consider yourself to be an agreeable person?
  • What's your management style?
Feb 28, 2023

How do I find strategic buyers? ›

How to Find a Strategic Buyer for Your Business
  1. From the very beginning, make decisions with an acquisition in mind.
  2. Build a business that investors and savvy business owners will want to buy.
  3. Make connections in the community and your industry.
  4. Build partnerships with other companies.
Jan 19, 2022

What is the first step in identifying potential customers? ›

Get Familiar with Demographics

The first and most important step towards defining your target market is creating a demographic profile of your customers. The age group, gender, location, marital status, occupation and annual income are the basics to start with.


1. Find Federal Agency Buyer Direct Contact Information | Selling to the Federal Government
(Neil McDonnell)
2. Do You Need Contract For Your Agency? (HONEST TRUTH)
(Iman Gadzhi Extended)
3. The ONLY 4 ways to MAKE BILLIONS as a service based business..
(Alex Hormozi)
4. Exclusive Right To Buy Buyer Agency Contract - Form 130
(Matthew Thrift)
5. Complete AGENCY Money Guide | GTA Online Agency Guide & Tips To Make MILLIONS
6. SCR Form 130 - Exclusive Right To Buy Buyer Agency Agreement
(Matthew Thrift)
Top Articles
Latest Posts
Article information

Author: Terence Hammes MD

Last Updated: 06/28/2023

Views: 5866

Rating: 4.9 / 5 (69 voted)

Reviews: 84% of readers found this page helpful

Author information

Name: Terence Hammes MD

Birthday: 1992-04-11

Address: Suite 408 9446 Mercy Mews, West Roxie, CT 04904

Phone: +50312511349175

Job: Product Consulting Liaison

Hobby: Jogging, Motor sports, Nordic skating, Jigsaw puzzles, Bird watching, Nordic skating, Sculpting

Introduction: My name is Terence Hammes MD, I am a inexpensive, energetic, jolly, faithful, cheerful, proud, rich person who loves writing and wants to share my knowledge and understanding with you.