Why I keep telling agency owners not to sell
Since 2022, the market for creative agencies has been brutal. Margins are compressed, clients have churned, and most owners are exhausted. They want out. But wanting out and being ready to sell are two very different things.
The last three agencies I've met were all different. Different markets, different stages of evolution, different circumstances. But, they all received the same advice: don't sell yet. You're not ready.
You might think that's strange coming from someone, part of whose job is to help agency owners exit their businesses? I understand why. But hear me out.
Since mid-2022, the market for creative agencies has been brutal. Nearly four years of compressed margins, client churn, and economic uncertainty have ground a lot of owners down. People are tired. They want out. And that's completely understandable.
But wanting out and being ready to sell are two different things.
Three types of agency selling right now
The distressed seller
Headcount is down, working capital is thin and shrinking and the client roster looking shaky. Owners in this position often look to sell because they want to capture whatever value is left before it erodes further. And, the logic feels sound from the inside. Get out now while there is still something to sell.
But buyers are not sentimental. They see exactly what the numbers say.
Buyers see a business whose best days are behind it, with no clear evidence that the next chapter will be any different. The offer, if one comes at all, will reflect that. Heavy on deferred consideration. Light on cash at close. Long on conditions.
The tragedy of the distressed sale is that it often locks owners into an earn-out on a business they have already mentally left. They end up trapped, trying to hit targets on a company they no longer believe in, watched closely by a buyer who is already wondering what they have bought.
I have seen exactly this scenario as a buyer more than once. Getting out now, if possible at all, will feel like being rescued. You might escape, if you're lucky, but you'll also lose all of your power. You'll be a poodle. There's a different way of doing this. Get in touch with me and I'll happily share my remedy with you one-to-one.
The succession seller
These are many owners approaching retirement, or who simply have other things they want to do. You can't escape demographics or time. Both are pointing towards more retirement sales.
Retirees whose businesses are trucking along quite happily have built something good, something durable. They have people they care about and in many cases, they want to find the business a decent home so that they can make good on the promises they made to their team along the way.
This is the most emotionally complex sale. The financials matter, but so does the story. Who is buying? What will happen to the people? Will the culture survive?
The challenge for succession sellers is getting out cleanly. Many end up in three-year earnouts that keep them just as tied to the business as they were before. The freedom they were selling towards never quite arrives.
One owner I worked with described the process as brutal. They had no idea what to expect, having previously been through a damaging experience with an acquirer that left them bruised and mistrustful of the whole thing. That is more common than people admit. Most agency owners have never sold a business before. They are negotiating one of the biggest financial events of their lives with almost no prior experience, often against buyers who do this every day.
Succession needs a plan.
The growth seller
The rarest animal in this market. An agency that is genuinely performing well, with momentum, and looking to grow faster by joining something bigger. New markets, new talent, new capabilities, new clients.
These businesses sell on their own terms. They have options. They can afford to be selective. And because they are not selling from a position of need, they tend to get better deals with cleaner structures.
This is the outcome every agency owner should be aiming for, even if it feels a long way from where they are right now.
The uncomfortable truth
Each situation is different, but there is one thing all three have in common: if the fundamentals of the agency are not in good shape, any sale in this market is compromised.
That is not a harsh judgement or pessimism. It is just the reality of how buyers think at the moment. They are buying future cash flows, not past reputation. If the business can't demonstrate a credible, owner-independent future, the price will reflect that uncertainty.
So what is the remedy?
Building value before you sell
For most agency owners, the right move is not to sell now. It is to spend the next two to three years deliberately building the conditions for a better exit. That means a few things in practice:
Be honest about the team. Do you really have the people you need to drive the business to the next level? Have you hired people better than you, or have you hired people who will do what they are told? Before you do anything else, you need to be honest with yourself about the team you've built. If your sales have eroded year-on-year and you still have the same MD, is she/he right for the job?
Find a path to growth. Easy to say, hard to deliver. The best way of doing this is to create a growth system, owned and operated by your team (i.e. specifically not you). Our system has four components, each of which has many sub-parts. Together they create something you can iterate and improve over time. The components are: where we get invited; what we win; what clients become; and, system restraints. I'd be pleased to tell you more... agencies are using it right now and it works.
Reduce owner dependency. If the business cannot function without you, buyers will price that risk in. The goal is to build a leadership team that can run the business day to day without your involvement. Not because you are checked out, but because you are building something transferable.
Stabilise and diversify the client base. Revenue concentration is one of the most common reasons deals fall over or get repriced at the last minute. If one or two clients represent the majority of your income, that needs to change before you go to market.
Focus, focus, focus. While it makes sense to diversify your client base, do not be tempted to diversify your service offering along the way. Full service agencies can work in small, provincial or bull markets, but they don't play well on a bigger stage or when the going's more bearish. Focus on your superpowers and be proud to be a specialist and you'll achieve a better sale.
Get the financials telling the right story. Clean management accounts, clear margin visibility, and a credible growth narrative. Buyers do not want to go digging. They want to see a business that understands itself.
Document what you do and how you do it. Systems, processes, and intellectual property that exist only in people's heads are a risk. Getting that knowledge out of heads and into the business adds real value and reduces perceived risk.
Invest in tech. Implement systems that help you with sales and operations. A good CRM, woven into your processes and an agency operating system to drive efficiency in delivery will signal that your business can continue to produce.
None of this is complicated. But it takes time, and it takes honest assessment of where the gaps are. That is something we help owners work through, both through direct advisory and by working alongside their teams on the areas that move the needle most.
The owners who get the best outcomes are not always the ones with the best agencies. They are the ones who prepared properly, understood what buyers were actually looking for, and gave themselves enough runway to fix what needed fixing before going to market.
What next?
If you are thinking about your next chapter, the single best thing you can do right now is start that process. Not when you are exhausted. Not when the numbers are under pressure. Now. While you still have time to shape the outcome.
Tell me where I'm wrong.