Selling a business is a rather complex and specific task. However, there is some good news. As a marketing agency owner, you know all about the process of selling a wide variety of products and services, and selling a business is also subject to many of the general laws of sales.
Plus, marketing services, especially in digital marketing, are in great demand amid the pandemic and a sharp increase in the number of online businesses that may not have previously experienced marketing promotion in the digital space. This means that private equity investors may want to buy a company with already established practices, established clients, and professional employees.
Here's what you can do step by step to market your marketing company for sale.
Have a Clear Reason to Sell Your Company
Most likely, the first question you will hear from a potential buyer is the question of the reason for the sale. As a rule, well-performing and profitable businesses are liquidities that have no reason to part with them. But if you've made the decision to sell your marketing agency, then there is a reason. And it's better to say honestly about it in order to immediately establish a transparent business relationship with a potential buyer. For example, the desire to retire can be a very real and logical reason to sell your business. In any case, prepare an answer to this question and be honest so that the new owner has no reason to feel cheated and does not spoil your reputation.
Estimate the Real and Market Cost
It is extremely important to correctly assess the value of your company, without overstating or understating the price. If the price is too high, it is likely that the company will be sold for too long, and the longer the offer remains relevant, the more difficult it is to find a real buyer. The underpriced is also not the best option. In this case, you will either be able to sell the company quickly enough, but you will lose some of the profits that you could have received, or potential buyers will be suspicious and look for pitfalls in the deal with you.
It would be best if you hit the golden mean the first time while considering your company's real value, the actual solvency of your company, and the market price at which such transactions are made.
Let's start with the latter. In order to understand how much your company can cost on the market, analyze similar offers on specialized sites that allow you to buy and sell a ready-made business. For instance:
- ExitAdviser.com (this website)
- DealStream.com (formerly MergerNetwork)
For a realistic estimate of the value of your company, you can use a formula based on your annual profit. To do this, you need to multiply the value of your annual profit by 0.5-1.3, and the real value of your company will be within these values. Further, it remains for you to find a middle ground between the real and market value, as well as the amount that will be comfortable for you.
Make Sure All The Documents Are in Order
In order for your potential buyer to independently assess the level of development of your company and its business potential, all your documents must be in order until the moment of the transaction, and even before the first contact with the new potential owner. This applies to all financial documents, documents establishing your ownership or lease of commercial real estate, confirmation of payment of all necessary taxes, contracts with your clients, and documents confirming the legal hiring of employees, the amount and procedure for paying salaries, and so on.
In order to make sure that all your documents comply with accepted standards and rules, it makes sense to order an independent audit service. The audit team will help you make sure your documents are in order and/or advise you on what changes you need to make in order to fully prepare the current documentation for sale and transfer.
Prepare a Marketing Strategy and Hire a Broker
To sell your marketing company effectively, you need to think like a marketer. That is, the way you usually think. For example, when you get a task on increasing organic traffic or improving the return on investment from blog posting, the first step is to draw up a strategy based on the current state of affairs in your client's company. Mind the following:
- Develop a clear value proposition. Why is your company better than others?
- Come up with a portrait of the ideal buyer. For example, he could be a man your age or younger, with a good background in marketing and business management, who understands modern digital marketing trends and the needs of both businesses and their audiences.
- Determine the point of contact with the potential audience. For example, it can be any of the sites that we have listed above.
- Create a sales pitch. It should be a short story about your company that shares its core values, mission, and successes (i.e., your Sales Memorandum).
- Post your offer and stay in touch with potential buyers.
Hint! You can also create a landing page about your company and run PPC ads that will be shown to users in response to relevant queries - for example, buy a marketing company in the UK.
In order to leverage the above actions, you can also hire a business broker who has direct contact with potential buyers. Share your marketing materials with him so that he can present your company in the right light when a potential investor is interested in such an opportunity.
Make Sure You Are Selling It to The Right Person
The brand name, including the name of your company, is always closely related to the personality of its owner and founder. Moreover, your customers are already accustomed to certain relationships, personalized opportunities, and the trust that has developed between you and them. This means that you need to sell the company to a person who will also share your values and those of your customers. This is perhaps the most difficult task, but the identity of the new owner is of paramount importance for the future development of the company.
How do you determine that your potential customer can lead the company to new achievements? In part, intuition can give an answer to this question; in part it will become clear in the process of dialogue. Ask a question about the plans of the new owner, tell him about your clients, and share the already established practices.
Since the process of selling a business is subject to many of the laws of sales and marketing, chances are it won't be difficult for you to sell your marketing agency, especially if it is really promising and has a good value proposition in terms of existing clients and the practices you have used in your work. Determine the right price, find a broker you can trust, and pay attention to the buyer's personality. These three tips will help you make a fast, legitimate, and mutually advantageous deal.
Frank Hamilton is a blogger and translator from Manchester. He is a professional writing expert in such topics as blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.