Lessons every agency seller needs to hear (Part 2)

One of the most difficult lessons I’ve come to terms with in the last decade is that completing a deal is sometimes the wrong thing to do. Regardless of how good it looks on paper, and whether you’re a buyer or a seller, unless you’re absolutely clear on your motivation to complete, you probably shouldn’t.

Last week, we looked at why modelling a transaction is the easy bit, why closing the deal is just the beginning, why earn outs are psychological, why scale doesn't automatically create value, why debt changes behaviour, and how the hidden variable in M&A is founder psychology.

This is a continuation of last week's blog which you can find here.

This week's key takeaways

Not every business should sell
Structure determines lived experience
Using a buyer's mindset builds better agencies
Growth is the system that gives you choice

So without any further review, here is part two of my list of things I think agency sellers need to know. Of course, this is just my opinion. If you vehemently disagree with any of my points, I'd be delighted to talk to you in person.

Not every business should sell

As a buyer, I constantly questioned the motivation of sellers. In most cases, I got it right. In a couple, I did not. Those were always the most expensive mistakes, and not just for me. In the cases where I misread the seller’s motivation, they were chased out of the business pretty quickly. Nobody won.

Good agency sales are driven by understandable motivations. The obvious ones are retirement, the desire to join a bigger and faster-growing platform, or a change in life circumstances. There are many good reasons to want to sell an agency. Only you can know yours. Be honest with your buyer if you want to secure a good exit. Good deals don’t live on bad faith.

While there are lots of good (genuine) reasons to sell, there are more reasons not to. Yet. Unless your agency is ready to sell, and unless you are ready to sell it for the right reasons, you probably shouldn’t.

How do you know the difference?

Your agency becomes ready to sell as a result of how you’ve prepared it over the two or three years before coming to market. Any half-decent advisor will be able to shape your journey, but only the best will give you the full and frank feedback a buyer would.

Ideally, you want to start the process at least three years before you want out. If you haven’t prepared at all, know that you will not dictate the terms of the deal unless you’ve played an absolute blinder without an advisor. It does happen. But it’s rare.

You become ready to sell when you are in control of the process. Being detached from the business when you come to sell it gives you enormous power in negotiation and helps you manage the emotional side too. Don’t underestimate emotion. It has impacted almost every transaction I’ve seen. Be prepared.

Valuation is not most important variable: structure determines lived experience

Headline multiples dominate conversations because they are visible and comparable. They create a sense of competitive tension and allow founders to benchmark against peers. But headline price alone is an incomplete measure of outcome.

It’s structure not value that determines lived experience.

The proportion of cash at completion, the scale and mechanics of any earn-out, the governance framework embedded in shareholder agreements, and the capital structure sitting above the group all shape the next three to five years far more than a marginal difference in multiple.

Two offers at similar headline valuations can result in profoundly different realities. One may provide stability, clarity of control, and sensible leverage. The other may depend on aggressive growth assumptions, tight covenant headroom, and heavy performance conditioning.

As a buyer, I learned to look through the headline and focus on durability. As a seller, the same discipline is required. The most attractive number on day one is not necessarily the best outcome on day one thousand. So, don’t be swayed by the rumour you heard of an agency that sold at 8.4x. Without details of the structure, that number is meaningless.

Using a buyer’s mindset to build a better agency

Across all of these lessons runs a single theme: risk is the primary driver of value in agency transactions.

Buyers pay for predictability, for diversified revenue, for transferable client relationships, and for leadership teams that can operate without constant founder intervention. They discount concentration, opacity, and volatility.

If an agency is heavily reliant on a small number of clients, that concentration introduces fragility. If reporting lacks consistency and transparency, uncertainty increases. If growth is driven by individual heroics rather than repeatable process, sustainability comes into question.

Each time those risks are reduced, enterprise value strengthens. And importantly, the same disciplines that increase value in a sale process also improve performance in independent ownership. Professionalised systems, diversified revenue, leadership depth, and cultural cohesion are not cosmetic adjustments made for a data room. They are foundations of durable businesses.

Thinking like a buyer does not mean building solely for exit. It means building something that could withstand scrutiny, integrate cleanly if required, and operate effectively within a larger platform. It is an exercise in strengthening fundamentals rather than optimising optics.

The central lesson of the last eight years, and a (much, much) longer career before that, has become clear. Transactions are moments in time. Operating realities endure. If you focus on the enduring… on reducing risk, strengthening leadership, diversifying revenue, and embedding systems that support consistent performance, you will build a stronger agency.

Whether you choose to sell it or not? That’s your call.

But, adopt this approach and, when a buyer eventually does knock on your door, you’ll understand precisely what they are looking for. Because you will have already built with that perspective in mind.

Growth is the system that gives you choice

It is never too early to think about value creation. But IMO many agency leaders think about it in the wrong way.

Value is created through the quality of the systems the agency runs on; the growth system, the operating system and the management system. Value is not built in the year before a sale by trying to pump profit. Growth - real, durable, defensible growth, is the strongest value driver of all of the systems. It’s what will bring buyers to your door. The other systems keep them there.

Let’s talk about growth.

The mistake agency owners and leaders make is treating growth as a motivation problem. They set targets, push harder, add activities, and wonder why outcomes don’t materially improve. The answer, almost always, is structural rather than motivational. When the same results repeat themselves year after year; even with good, energised people, the explanation is in the system, not the people.

Growth produced by a well-designed system looks completely different from growth produced by effort.

Effort-driven growth is fragile. It depends on individuals. It creates key-person risk, which every buyer identifies and prices-in.
System-driven growth is repeatable, documentable, and transferable. It’s what buyers pay a premium for.

That's why I'm helping agencies implement a system - one that gives a role to every single person in the agency.

Whenever I used to complete a transaction, on the first available day after closing the deal I used to like to meet everybody in the new agency. I'll stand up in front of them and exclaim: ":growth is a team sport. From now on, we are all involved." Everybody always nodded. They made lots of positive agreeing noises. And then went back to doing exactly what they were doing before. Overtime, I managed to see that those agencies who were really making a difference operated a totally different system. That is what I've now encapsulated and it's what I'm bringing to agencies who are interested in finding consistent growth.

The system starts outside the agency, not inside it. It works from the market back. Most agencies do the opposite: they start with what they offer and push outward. But when only a fraction of potential clients are in market any given moment, and where winning a pitch – even with an established relationship - carries poor odds, the inside-out approach is wasteful and it fails.

My system has four components. They sound simple, but the full transformation programme - with all of the detail and nuance is a two-day workshop and six-month follow-up consult. It sounds a lot, but it works. I've tried to deliver it in a one-day workshop, but it's too overwhelming... there's just too much there.

The system parts are: where we get invited, what we win, what clients become and what we constrain. Sounds simple doesn't it? You'd be surprised how powerful this can become.

My belief is that the agencies who command the best outcomes are those where these dimensions are understood as a connected system rather than as separate problems to be solved one at a time. They are the agencies where the founders can speak clearly about how growth happens, why the client portfolio looks the way it does, and what would need to change for performance to improve. That clarity is not just a narrative advantage in a sale process. It is evidence of a business that has been genuinely managed.

It’s your call

Whether you intend to sell or not, building with this level of deliberateness creates options. It means growth is not hostage to a single rainmaker’s energy. It means revenue does not collapse when one client moves on. It means the business can continue and strengthen without you at the centre of it.

That is what gives you choice. Not just the choice to sell, but the confidence of knowing you could. These are the things that equip you to approach the market with confidence.

Of course, this is a blog and it’s only 1400 words. Putting this stuff into practice takes time, investment and determination. There’s a lot more detail to it than this. But, the important takeaway for you is that it is possible for you to dictate the terms of your sale if you have time on your side. Buyers wants to buy oven ready agencies. Businesses they can plug into their model and know that their growth forecasts are safe. If you can demonstrate this to them, you will be in control.