This month, as lockdown has eased and business leaders shift to business revival and identifying future opportunities, we asked Doug Baxter, Founder & Managing Partner of Agency Futures, the big question:
Q. What are the best current options for agency owners?
Over the last few
More than a few of these owners have concluded that it is time to call it a day in their current business. They have been through the cycle of boom and bust a number of times, and they simply don’t have the appetite to go through another number of years of rebuilding in the hope that it will lead to further future growth. They would prefer to get out now, as long as they can achieve a fair price for the
So, what are the options for realizing the value of your life’s work in the current environment? Here are some routes that you can consider:
This is a perfect strategy for times of consolidation like the period that we are entering into. It will be the dominant force driving acquisitions over the next few years. In this
What should you look for in an agency roll up buyer?
Owners should examine the opportunity carefully to make sure that they believe that the new entity will succeed, and create the value that they are being promised. Some key questions are:
- Are the businesses synergistic? Will we be able to achieve cost savings and
increatethe services and value that we can deliver to clients?
- Are our cultures compatibles? Will we be able to work together once the deal has been done? Can I really spend the next 4-5 years of an
earn outperiod working with these people?
- What is the experience of other owners who have sold their agency to the network? Are they happy they did the deal? Are they achieving their
earn outexpectations, and have they been given the independence to continue making key decisions over the earn outperiod?
2. New international agency buyers.
The last few years have seen a shift in the dominant type of buyers in the market. The traditional buyers were holding groups such as Omnicom, Havas, IPG and WPP. These networks are experiencing real problems as growth has slowed, and they are struggling to achieve the economies of scale and client growth that underpinned their business models. In fact, many of the networks are now in a process of rationalization, which involves selling parts, or all of their non-core agencies to existing leadership, or other buyers, in order to reduce borrowing and become more agile.
As these traditional buyers have dropped out of the market a new group has appeared. Buyers from regions like Asia (Dentsu, Hylink, Blue Impact), Australasia (Enero) and Europe (Next 15, S4 Capital, SEC Newgate, Fimalac) have been acquiring independent agencies at a rapid pace in the last 2/3 years. Often they have deep
How can you connect with these international buyers?
- Scouring the trade press nationally and internationally to develop your knowledge of who these new buyers are. For example, PRovoke (www.provokemedia.com), Campaign Live (www.campaignlive.com), Ad Age (www.adage.com) and The Drum (www.thedrum.com) feature acquisition deals in their online bulletins. Sign up for these newsletters and reach out to buyers through LinkedIn and mutual connections when you see them doing deals.
- Developing thought leadership and profile for your agency, yourself and your unique capabilities. You can do this through webinars, developing and syndicating content and writing for national and international trade and business press.
- Participating in agency networks and industry bodies. This can be a great way to meet buyers that you would not normally encounter. Many of these organizations are now migrating to virtual meetings and knowledge sharing.
3. Passive ownership.
This form of delivering value for the agency owner is often overlooked. Generally
I know of a case where a
Finally, I would add that the process of selling an agency is not a quick one, unless you are desperate, and are happy to accept a lower price than you deserve. Buyers will discount the price against a series of structural and business processes that they will expect to see in place at your agency. Proper exit planning will allow you to put these in place, and extract the most value from what will probably be the largest transaction of your life.
Agency Futures was founded by Doug Baxter, an agency founder and CEO who has worked on growth and digital transformation projects with some of the world’s greatest independent agencies.
Doug uses his experience of 25 years in the digital, technology and content sector to help his clients transform and evolve their companies and build the agencies of the future.
Now based in London, Doug has worked extensively in the US, Asia and Europe. Doug leads a team of highly experienced former agency leaders who work with independent agencies across the globe. Doug is also the CEO of Cut to the Content, a content agency that supports other agencies with specialist strategic, digital, creative and production resources.