Agency Owners: How to Properly Prepare Your Business For Exit Jonathan Herrick You’ve invested a great deal of time, money and effort into your agency, but maybe you’re thinking you want to sell your business, retire, or at least move on to something new. Selling an agency like yours isn’t something to rush into. In fact, it’s smart to have a well-considered exit strategy in place. If you aren’t sure how to prepare your agency for your exit, here are a few suggestions that should put you on the right track. Planning Your Exit Selling your agency and leaving the company is a big step that you should carefully prepare for. Before you even start looking at possible buyers, plan your exit strategy and determine exactly how you want things to go. You also need to decide whether you wish to have any lingering connections with the company or if you want your exit to be a full withdrawal from the agency. When considering the extent of your stepping aside, here are a few of the options: Step down from ownership. You’re leaving your ownership position but may retain some other role within the company (possibly on a part-time basis). Take a board position. You’re leaving the agency but will still retain a seat on the board of directors or other advisory board. Serve as a consultant only. You’re leaving the agency but will retain a role as an outside consultant, available to give advice or assist with certain tasks on an as-needed, paid (or not) basis. Make a full exit. You’re leaving the agency completely and will not have any continuing connections with it (other than hoping for its continued success). Depending on the specifics of your agency and how things run, you may have a few other options as well. Ensuring Agency Stability One of the big things you’ll want to do when preparing to exit your agency is to make sure that things will continue running smoothly after you leave your ownership role. This means that your employees should have well-defined roles and job security through the transition. Even in those instances where some employees fill multiple roles within the agency, do your best to clearly define what it is that they do so potential buyers will know exactly who is doing what within the company. The better you can define these roles, the less likely it is that a buyer will shake things up when taking over operations. This is also the time when you should put a hard focus on locking in long-term clients and ensuring revenue streams moving forward. The more you can do to establish recurring revenue and long-term profitability now, the easier it will be to show that your agency is a good value for any potential buyers. Getting Things in Order As soon as you decide that you want to exit the company, start getting all of your paperwork and accounting in order so that it’s easy for potential buyers to understand. Bring your accountant and lawyer in to help with this, since they’ll have a greater insight into your finances and the legal obligations of your role within the agency. As everything becomes organized, take the time to create a summary or other report for potential buyers to highlight the key factors of your business. This will serve as a helpful reference when digging into paperwork and financials and will also make it easy for you to show your agency’s profitability and potential without having to dive deep into your accounts and data. Getting the Best Offers Getting the best offer for your agency may involve a lot of negotiation and possibly a few false starts. Research buyers who you think would be a good fit for your agency and approach them first. Detail your agency as an investment opportunity, showing its profitability and customer satisfaction as key selling points. Explain your reasons for wanting to leave the agency and what you plan to do afterward, and be prepared for potential buyers to ask for things like a no-compete contract or other guarantee that you aren’t going to turn around and become direct competition for the agency you’re leaving. Finding the right buyer may take some time, and you may need to open things up and solicit bids from other interested parties. But the time you put into finding offers will help ensure that you get the best return on your investments over the years. Completing Your Exit Once you’ve made sure your employees are taken care of, gotten all of your paperwork and financials in order and found the perfect buyer, all that’s left to do is complete the sale and follow your exit plan. Some agency owners find this to be the hardest part, but at this point, you’ve done all you can to prepare. Now you just need to go through with it and move on to that next big project that’s waiting in the wings.