Seven secrets to selling your agency
In this guest post, William Leach & Sangeeta Leach offer seven tips on how to sell your agency at the right time and at the right price
There is a whiff of cash in the air. After the restrictions of the past couple of years, the agency groups are back on the acquisition trail.
Publicis Groupe have spent close to $1bn on recent purchases in China, Brazil and the US, half of that figure on this month’s purchase of Rosetta Marketing. IPG has announced its best set of results in a decade and is out to strengthen its agencies DraftFCB, Lowe and McCann and smaller players such as MDC Partners are active – purchasing Anomaly in February prior to raising cash for further expansion.
Locally we’ve experienced Saatchi & Saatchi’s failed bid for Three Drunk Monkeys and rumours that Host have closed a deal. And there’s plenty more going on behind closed doors. So if you are an agency owner looking to cash in on your years of hard work, how do you make your agency more saleable? It’s all about the money, right? Well, not quite. While revenue growth and sustainable margins drive price, there are other factors that help drive multiples.
Great post. What kind of multiples are the big groups paying, William? A discussion around the dollars would be good.
8th secret – Wait for the next cashed up group hell bent on acquisition to appear who can’t spell due diligence let alone practice it. Sound familiar…………..
The answer, of course, Barney is “it depends”. Two key driver are agency model/modernity and deal structure. For more traditional creative agencies, international buyers are offering as low as 3 – up to, maybe 6/7. For digital/social more modern agencies or those with unique offers 5-12. In terms of deal structure, the lower the risk, the higher the multiple.
great post William !
sorry, for the ignorant like me can we clarify whether are we talking revenue, earnings, or NPAT multiples and are they historic or 1 year projected? thanks
Usually EBIT. Usually historical average of past three years.
And well done to Sangeeta! William seems to be getting all the credit!