Merging, Acquiring and Everything Inbetween

Screenshot 2024-06-05 at 17.25.57
We just wrapped our latest event Exit Tales, where we explored the art and strategy behind successful agency mergers and acquisitions (M&A). For those in the agency world, growth often leads to an exit, and understanding the intricacies of buying or selling an agency can make all the difference.

Exit Tales offered valuable insights from those who’ve been there, done that.

First up we heard from our sellers panel which showcased industry luminaries who’ve successfully grown, sold, and exited their agencies:

  • Nick Thorp, who orchestrated the sale of LikeMinds to IGG in 2023
  • Will Critchlow, who was behind the sale of Search Pilot to Brain Labs in 2020
  • Steve Firth, who was behind Gravity Thinking’s acquisition by Vivaldi in 2019
  • Maira Genovese, who was behind MG Empower’s acquisition by DXG in 2024
We then heard from our buyers panel featuring leaders who drive acquisitions for their organisations including:
  • Oliver Yonchev, Co-Founder of Flight Story and architect of one of the agency world’s biggest success stories
  • Chloe Leech, instrumental in Inspired Thinking Group’s Martech and agency acquisitions strategy
  • Luke Bristow, Partner and Board Director at the Kairos Group, spearheading international expansion and acquisitions
  • Ross Barker, Co-Founder at Entourage, working with both agency sellers and buyers to structure deals that work for both parties
Read on to find out what they shared.

Sellers panel discussion at Exit Tales.

Who knows M&A better than a M&A advisor?

“[The first time around] Not having an M&A advisor was a mistake” Maira Genovese
The process of selling an agency takes a lot of time with a lot of intricacies. Our panel discussed how important it was to have a seasoned guide to help them through the tricky terrain that is selling their business. An advisor with expert negotiation skills, who can advocate on your behalf to secure the best possible deal terms and handle any disputes that may arise. From initial marketing to due diligence to closing, they help you manage the entire process, coordinating with other professionals to ensure a smooth and successful transaction. Lucky for you, reader, Entourage has a great team of M&A advisors ready and waiting to help you with your sale.

Deciding to sell is subjective, there is no right reason.

Selling your agency is a big deal (pardon the pun). However, there’s no universal right or wrong reason for doing so; what matters most is your confidence in the decision. Our sellers panel exemplified this diversity of motives. From meticulously planned long-term strategies, to spur-of-the-moment decisions scribbled on napkins, their paths to selling varied widely. Yet, amidst these differing experiences, a common thread emerged: each seller’s unwavering commitment to the success their agency and its people.

Merge with your culture intact.

“What makes a great business is the people who are behind the scenes” – Maira Genovese

During a merger, keeping your agency’s culture intact is essential. It makes merging easier and keeps your employees on board. By holding onto what makes your agency unique, you create a smooth transition and show your dedication to the success of the new setup.
Buyers panel discussion at Exit Tales.

Buying is just like dating 

Buying an agency is a lot like dating— requiring patience, charm, and a dash of wit. From that first glance across the room (or the inbox), to the first meeting, and the inevitable excitement along the way, it’s all part of the game. So, instead of expecting instant commitment, treat it like a courtship—take your time, and let the acquisition come naturally.

Red flags are more visible than you think.

As a buyer, it is crucial to know what to look out for and have a keen eye for red flags. Here are some of the key things that you should watch out for when in the early stages of a deal;

The agency’s ability to collect cash. Happy clients pay quicker. This is a good indicator of the quality of the agency’s work.
Does the agency have high attrition rates? If the agency has a good culture and work structure, they often keep employees around for longer.
Re-negotiation never works. Agencies that agree to things and then change their mind makes acquirers think they don’t have their ducks in a row.
Being manipulative with how an agency presents their data. Trust is a big deal in M&A and not being honest from the get go creates more setbacks.

Valuation of an agency is not just about revenue.

As a buyer, the success of an agency and how that reflects in the revenue value is essential for you to get a deeper understanding of what you are acquiring. However, there are also other things you can be looking out for from your prospects. Here are some things our buyers panel highlighted;

Alignment of visions. An agency can have the best revenue and growth potential, however, have completely different motivations and business goals.
Resilience to conflict. Being honest about the agency’s journey and ability to work through the rocky periods is very valuable knowledge.
Client roster. Balance is key. It’s not just about knowing the seller agency’s client list; it’s about understanding the balance and diversity of that client portoflio, along with understanding what rosters the agency is on. Having one big dog client that brings in 80%+ revenue for the agency is not going to be appealing to you. An agency that has a spread of revenue reduces the risk for you to acquire them.
Motivation and storytelling. It goes a long way. Sellers should ensure they have a strong way to portray and tell their story and journey to date. You want to know that the agency is excited for the opportunity and see the passion you have for your agency and what it can offer.

Top tips from the buyers:

  1. Get yourself an M&A advisor.
  2. Start the process of preparing to sell as soon as you decide on the intent to sell.
  3. Keep chatting and meeting with potential buyers. Because, the more you meet will help you figure out what you really want and which new home might be the perfect fit. and take on the opportunities if they are presented to you.
  4. Make yourself super super sexy to your potential buyers. The less risks they see, the more likely they will want you.
  5. Get your metrics straight.

Final thoughts:

From preserving culture to navigating the exciting challenge of M&A, Exit Tales uncovered the secrets of successful agency mergers and acquisitions. Sellers, remember to preserve your agency’s essence and enlist expert guidance. For buyers, it’s like dating – look out for red flags, seek alignment, and embrace the challenge. So, whether you’re selling or buying, heed the advice: get prepared, get noticed, and get ready to win.

Looking for a fresh approach to M&A?

Over the past 12 years we’ve built a wealth of knowledge about the independent agency space worldwide. 

Take this knowledge and couple it with our heritage in starting and nurturing conversations, and you get the ideal agency M&A partner.

For us it’s about finding you the right partner – not just tapping up businesses we know, but actually doing the 1-2-1 outreach to match you with the perfect-fit agencies and tech businesses which meet your strategic acquisition goals, for both acquirers and sellers. 

We go out and assess the entire industry, taking care of all the top of funnel heavy lifting and making sure that every owner you meet already ticks all of your qualification criteria. It’s about finding the right seller or buyer, with the right cultural fit, at the right time. Our knowledge of the agency space is second-to-none and we know exactly what ‘good’ looks like.

We’d love to chat if you’re looking for fresh ideas on how to turbo charge your M&A programme, drop us a note here.

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