26/09/2014

By Stephen Attree, Managing Director, MLP Law


Selling a business requires a lot of thought and planning. For those looking to sell their marketing agency there are a number of things that need to be considered so that the selling process progresses smoothly for all those involved. Here are six questions that you need to consider before deciding to sell your agency:

1. Is selling your marketing agency the right thing to do?
The first thing to consider is whether selling your business is really the best option. There may be a number of reasons as to why you are thinking of selling including to prepare for your retirement, or to raise funds for the next stage of the agency’s growth strategy.

It is also important to think about what will happen after you have sold the company. Do you still want to maintain a level of influence over the agency after the sale has been made, or would you rather end your relationship with the business completely?

This question is important as it will help you determine the type of purchaser you are targeting (a trade competitor, private backers or public investors) and how long the sale process should take.

2. Is your business in a strong selling position?
Buyers will offer a premium for marketing agencies that are likely to bring in a high profit and have been run well with the potential for growth in the future. If you look to sell your company at a time when money is needed to rescue the business, potential buyers will not be willing to pay as much.

Buyers will be able to see if your company has been run well by looking at how strongly it has performed, how good its revenues are and the structure that is in place to manage its progress. Your company should have goals that are achieved on a continuous basis, not shortly before you decide to sell in an effort to maximise the sale value.

3. Have you prepared your agency for sale?
You need to make sure that all the preparations are in place when selling your business. Make sure that the new buyer will have no internal issues to deal with once they gain ownership of your company. Things you need to address include checking that the workforce is motivated and ensuring the equipment and documentation is up to date. This might involve upgrading IT equipment, and making sure that commercial contracts, any outstanding litigation disputes and banking arrangements are in order.

4. Have you chosen the best advisers to guide you through the process?
There are a considerable amount of options and planning stages that you have to think about when selling an and it can all be extremely time consuming; especially if this is a process that you have never been through before. But there are professionals who have experience in buying and selling businesses and they can provide you with the information you require to get everything in order.

It is, however, of great importance that you spend the time looking into the advisers that are available to you so that you know you are getting the best possible guidance. Experienced advisers can guide you through the selling process and explain anything you don’t understand such as specialised legal terms like: ‘due diligence’ where the buyer looks into the business to identify any issues and ensure they are paying the right price for it; ‘warranties’ which are factual statements requested by the seller about the main aspects of the business; and ‘indemnities’ which are commitment from the seller that they will take financial responsibility relating to specific matters involving the business that have been agreed during the due diligence stage.

5. Have you prepared yourself for the sale?
A lot of time and money will be spent preparing the agency but it is also essential that you prepare yourself for the process as well. The majority of your time will be spent managing and overseeing the selling process and so you must pass on the day-to-day running of the business to the rest of your team. This frees up your time to become fully aware of each stage of the selling process so that all documentation will be complete for the buyer and you will be ready to take care of any issues that may occur.

Along with the ‘due diligence’ stage where the buyer accepts that the business is worth the sale value, a contract has to be prepared and negotiated ready for the finalisation of the transaction. This is known as the ‘contract negotiation’ stage. On completion of the transaction, all the required documents are signed and the funds passed over to the seller.

6. Do you know where you’re going to invest the money once the sale is complete?
The process is not over just yet. Now you have the big decision ahead of where to invest the money from the transaction.

After spending a lot of time selling your marketing agency, you need to make sure that the proceeds are properly invested to secure your future financial position and perhaps give you new business ventures to work on. Again you should seek professional financial advice here so that you can plan your investment decisions effectively.