Your Exit as Owner is Critically Important to Both You and Your Agency.
How to be fully prepared for growing your agency, planning your exit and ultimately selling the firm.
This is the second in our three-part series on preparing for the three crucial stages of agency ownership including:
Planning and effectively executing for growth.
Leaving the agency on your timeline.
Building a saleable asset.
Achieving successful outcomes for each of these opportunities all comes down to readiness. Is your agency ready to achieve ongoing growth and become a magnet for quality buyers?
In our previous mailing, we shared 1) what we’ve learned about the importance of strategic planning and 2) how our proprietary Growth Driver Audit delivers the core of the plan for generating and sustaining above-market growth.
(You can review that story HERE)
Today, the topic is exit strategy and planning. When it’s time for you to leave the agency, nothing is more important to both you and the continued health and long-term success of the firm than having a completely thought-through plan already in place.
Prosper Group has the proven experience and process to help you with every aspect of planning and executing a successful exit.
The key goals of an exit plan.
Exit planning is a holistic approach to leaving the business on the owner’s terms by:
Allowing you to leave on your preferred timeline.
Leaving the agency in the hands of your appointed successor.
Delivering to you the amount of money required to maintain your desired lifestyle.
Maintaining your control of the agency throughout the process.
There are four areas that need careful assessment.
Assessment Area #1 – Owner’s readiness.
Are you in fact ready to exit?
How much wealth do you currently have without the agency’s transition? How much more do you need to maintain (or achieve) your desired lifestyle post-transition? What’s the current value of the agency? Is it enough?
Next, determine your timing for the transition. When do you want to leave? How long are you willing to wait for full payment? (Please note that we strongly recommend that you begin the exit planning process at least 2-3 years before you’d like to leave the firm.)
Assessment Area #2 – Organizational readiness.
Is the organization fully prepared for this?
How will the agency operate without you? How can your relationships, skills and knowledge be replaced or transferred to others?
How does your exit have an impact on:
Agency strategy?
Client relationships and service delivery?
Business development?
Recruiting talent?
The firm’s financial performance and financing?
What’s the plan for making the necessary adjustments?
Assessment Area #3 – Successor and senior team readiness.
These people are the agency’s future (and a significant portion of your financial outcome will depend on them). Are they ready?
Is there an alpha successor already on staff? Does that person want the job? What will you do if the answer to either of these questions is “no”?
You can’t sell your agency (or achieve a premium sales price) if you don’t know who your successor is going to be. You need to have already identified, trained and prepared the right person who has the skills, knowledge, cultural fit, temperament and alignment on vision and values.
Your senior team will also need considerable care and attention throughout the transition process including:
How do they really feel about their post-transition roles?
Do they have the skills, knowledge, attitude, vision and values to be effective in those roles?
What incentives might be required to ensure they remain in place and committed throughout the process?
Assessment Area #4 – Continuity readiness.
Finally, what will be done if something happens to you?
You need to develop written instructions (essentially a plan) for how the firm will be governed in this event:
Who will be in charge?
Roles of senior leaders.
Roles of outside advisors and trustees.
“What if” insurance (e.g. – key person policies for you and your successor) also needs to be in place.
Review our more detailed piece on Exit Planning HERE.
Read our in-depth thinking on a wide range of other topics of interest to agency owners, HERE.
All of our experience is available to you now.
Prosper Group has helped many agency owners reach the four states of readiness outlined above. We have also helped owners achieve successful outcomes in more than 30 M&A transactions (involving several different scenarios) during the past few years.
We’re here to help you prosper.
Prosper Group exists to help the owners of independent marketing and communications agencies achieve their ambitions and maximize the value of their life’s work.
Our team is comprised of former agency leaders and owners who focus their deep experience on implementing proven proprietary methodologies across our three practices of agency performance, owner exit planning and M&A transactions in order to drive owner and agency success.
To learn more about us, please visit our Services page.
