In March 2021 my agency sale completed. I handed the business over and left two weeks later.
The sale completion followed a six-month process of meeting, vetting and negotiating with buyers, as well as all the due diligence, legals and paperwork.
JC Social Media was a social media agency based in Birmingham, UK but with clients all over the world. When we sold, the team was fully remote and we had no office. Our main service was social media management and 80% of our revenue was recurring. The remaining 20% was training, which we had offered since the start, and online courses, which we’d introduced a few months before selling.
In this article, I share the details of how I exited my agency, in case you’re looking to do the same now or some time in the future.
How I exited my agency
Background
I started the agency in 2011 fresh out of college and a graduate scheme. I didn’t think much about what business I was going to start, I just found a service I could start selling that suited my skills. Agencies are easy to start because they don’t require startup costs. Just me, my laptop and a bucketload of enthusiasm was all it took to start turning up to networking events.
Over the first three years, I grew the client base and team but hit a problem. Everything relied on me. I was the bottleneck to further growth because I was still the main point of contact for most clients, every member of the team reported to me and I was still doing all the sales for new work, plus I was booked for social media training, a new service we had.
Over the next year I worked to systemize my business to turn “The Jodie Show” into an actual business. And it worked. Sixty standard operating procedures (SOPs) later, I was free to travel and work on select projects rather than being involved in every part of my agency.
For the next five years I travelled one month in every three, working from and exploring cities around the world including Melbourne, Dubai, Vancouver, Cape Town and Stockholm. It was glorious. I felt like I had the best of both worlds; a company I enjoyed owning that didn’t require all my time to run, and the freedom to travel wherever I wanted. Then, shortly after I returned from a trip to Miami and the Bahamas, March 2020 hit.
When covid came
During March 2020, the start of the coronavirus pandemic, we lost 25% of our client base in one week. Many of our clients were in hospitality, travel and events, and the pandemic had hit them hard. This knocked on to us.
Unfortunately, I hadn’t documented a process to handle a black swan event like this.
I had two options here. I could let events unfold and trust the team could manage, hoping the business would survive, or I could roll up my sleeves and get back involved to make the most of a challenging situation.
I decided to get back involved to rally the team and sort it out.
Overall, we were lucky to only lose 25% of our client base, but it was still scary. We made use of the UK government’s furlough scheme to save some wage costs. Some of the team voluntarily went down to part time. When our lease expired, we moved out of the office and started daily huddles to keep camaraderie up. Then we got to work on being irreplaceable to the clients we had left and generate new business as fast as we could.
By August 2020, the situation had improved. In the last five months we had run webinars, got back in touch with old lists, been active on LinkedIn. We’d grown back to our pre-covid size by winning new clients. We’d also grown a further 20% when many of our past clients returned. We’d pulled together, made a plan, and been prolific at meeting as many new people as we could.
We’d weathered a storm and come out on top. So now what?
The decision to sell my company
For the team, this felt like the beginning of a new, bigger step. For me, it felt like a turning point and I had a decision to make.
As I saw it, there were three options.
- Go back to what I was doing before, travelling often and running the agency as a lifestyle business.
- Get back involved as I had over covid, and see if we could unlock a new level of growth. And finally,
- Admit that neither (1) nor (2) was what I really wanted to do and find a new home for my agency. I didn’t fancy working through another global crisis again and I didn’t have an urge to get back and execute either.
I chose (3) and set about finding a buyer.
Getting intentional about selling
In August 2020, I decided I was going to sell my business and I got intentional about making it happen. I told myself the sale was inevitable and the right buyer was out there, I just had to find them. I wrote a list of what I thought I should do next and I wrote myself a pretend cheque.
On the cheque? The amount I wanted for the agency and the date I wanted it. I signed it from “the perfect buyer”, then shut my journal and got to work.
Even though I was hatching this plan, no one knew. For the next six months I worked in stealth mode. My husband and best friend knew the details, but that was it. I didn’t want to risk any clients or team members knowing and getting unnecessarily worried. I decided the information should stay with me, only to be shared if absolutely necessary. Looking back, I know this was the right move.
Doing my research
I had never sold a company before, so my knowledge was lacking, and I knew I needed more. So I did two things. I spoke to an agency owner I knew about how she went about buying and selling companies. Her agency was about 8 times the size of mine and she had considered acquiring before, so she knew a lot. She told me the type of questions she asked to prospective acquisitions. She told me what she looked for. She talked and I listened, writing everything down and preparing the answers to questions I was ready to face.
Another ally for this period was trusty Mr Google. I researched acquisitions that were documented in the news and I found out the terms of the deals. I found hundreds. Agencies of all shapes and sizes were being sold regularly, and now I knew the types of companies that were buying them.
At the same time, my agency owner friend introduced me to an M&A consultant, who introduced me to an M&A broker. The plan was taking shape.
Getting sale-ready
Before any buyers sniffed around my agency, I wanted to make sure it was ready. Seeing it from a buyer’s perspective helped me work out what to do.
First, I dug into the numbers. I delved into Xero and got familiar with our revenue and profit for the last five or so years. I looked at our expenses, which were one-offs and which were necessary each month. I asked my accountant to do some housekeeping to make sure everything was where it should be. I got an idea of what the numbers could be for the next few years if we continued growing at the same rate.
Next, I cleaned up my folders. Contracts were found and put in their place. Supplier, team member and client agreements were labelled neatly and stored so they could be found. I wanted someone to look under the hood and find everything in order. I knew we had nothing to hide, and I thought being organised would be a tick in the box for a purchase.
After that, I prepared the deck. Writing proposals is a familiar exercise to most agency owners, and this was similar. The document was an overview of the agency; our team, clients, processes and assets. It contained everything I thought someone would need to know in order to imagine buying us. I used a lot of the information from my research and past conversations. I censored any sensitive information but the overview was solid and would be very useful during the next steps. It also helped identify any areas we needed to strengthen.
Finally, I wrote up my role. Since the business had thrived during covid I was back to that glorious stage of my business being ran by conscientious and competent people without needing me. I fielded the odd question, I coached my general manager and honed processes that needed it, but my day-to-day involvement was minor and I wanted to make this clear. I wrote a list of my tasks and the hours I worked, and saved it in a folder ready to use in the conversations that were about to begin.
Commissioning a broker
You can sell your agency with or without a broker. I chose to use one and I’m pleased I did. My broker was worth his weight in gold. He went out to prospective buyers and set up the meetings, then he or his colleague joined me for most of them. I had an ally during the process who had done this a hundred times. He demystified the journey and knew what to expect.
Once I understood the terms, got clear on what the broker would do and knew we were aligned on the goal, I pressed go. This kicked off exactly six months of meeting buyers and selling my agency. The broker prepared a one-pager of information about the company, went out to their little black book and began drumming up interest. While this happened without my involvement, I would soon be needed for chemistry meetings.
Holding chemistry meetings
My first meetings with potential buyers were affectionately known as chemistry meetings. Quite simply, the goal was to see if there was chemistry. To see if a long-term arrangement could work. To see if it made sense. The UK was still in and out of lockdowns, so all my chemistry meetings took place over Zoom.
The broker arranged the calls and collected the NDAs and I just got the Zoom link. I knew who I would be meeting so I did my research ahead of time. Reading their website and noting their clients and services. Finding the owner on LinkedIn and seeing their experience and background. By the time we met I had a good idea of how we might slot into their company.
The broker was clear that the buyer talked first, and this was useful advice. They talked and I listened. They told me about their business, they told me about themselves and they told me what they were looking for. Then it was my turn. With the information just received as well as from my research, I could lead with the most relevant information for them. The sorts of clients we had in the same industries as theirs. How our processes were similar, the complimentary services we offered.
We had twelve of these meetings and the structure of each was largely the same. In some there was chemistry, in some there was little. The broker took charge of the follow ups and we decided if we wanted to meet again.
Second meetings
Of the twelve chemistry meetings, six wanted to meet again. They liked what they heard and they could see potential in an acquisition. Second meetings delved a bit deeper. With the niceties out the way, we went into more specifics of how this could happen.
Sometimes prospective buyers got more of their team involved at this stage, sometimes they shared more of their plans, sometimes they asked about me and my goals for the future. Every one wanted to know the numbers, about the team and clients, and what I wanted to go next. I involved the deck I’d prepared earlier, tailored to each meeting and what I knew about the buyer.
Inviting offers
After the second meetings the broker contacted the prospective buyers and invited offers. After providing some more information on our numbers and projections, we received three draft heads of terms. I turned one down straight away. For me, this wasn’t just about the cash. I wanted the team and clients to be looked after. The buyer behind this offer didn’t fill me with confidence that would happen, so we politely declined.
The other two looked promising. They were along the right lines but they had some questionable terms. One included a three-year earnout, in which I would work in the company. The group that had placed the offer was exciting, for sure. They had a huge team, impressive clients and big plans. They wanted me to hold a role within the group and run the agency alongside their senior team. They wanted me to work for them.
Having designed my life around freedom and travel, there was no way I was going to get a job. The second offer included a similar arrangement, albeit for 18 months. Convinced this wasn’t necessary, I talked to my broker about why an earnout was there.
Clarifying the terms and negotiating
We went back to both offers and explained our rationale. My agency was solid, it ran without needing me. I showed them the list of my tasks so they could see how little I did. I told them that me getting back involved, in managing the team or handling sales, would only serve to undermine the team members responsible for those areas. It would mean a step backwards for the company.
The first buyer understood, but they didn’t care. They wanted me involved. They made the job even more attractive, so they thought. More money, more responsibility, more shares, on the condition that I stayed in the role for three years.
The other understood too, and they amended their offer accordingly. The full amount we had negotiated, with no earnout. No varying payout dependent on my performance in any way. As long as I gave a comprehensive handover, I wouldn’t be required.
This sounded perfect. I was hellbent on doing this right, not quickly. I knew I could give a solid handover that set the buyer up for success going forward. The team would be free to do their thing within a much bigger entity, and I’d be free to hand over, safe in the knowledge that they would be looked after. With just a few things left to finalise, it was looking like we were nearing a termsheet. After some subsequent discussions to iron out the details and get crystal clear on the deal, the term sheet arrived and we were ready to sell.
Due diligence and completion
The time between commissioning the broker and signing the term sheet was exactly four months. Next came the completion of the sale. While everything so far had moved swiftly, now lawyers were involved, so it was a different story.
First came due diligence. Financial due diligence, where the buyer dug around our Xero to make sure there were no nasty surprises, and legal due diligence, where they accessed the folders containing our contracts. I had been warned about the due diligence process many times. That it would suck my soul and that any discrepancies would jeopardise the sale. This turned out not to be the case. My accounts were in order and my files were neat and tidy since my pre-sale endeavours.
Next there was commercial due diligence, where the buyer met with me and my management team to get more of an idea about future potential and growth. Here's where some of the team now knew what was happening. I told them individually and explained what it would mean for them. They were apprehensive but excited. They were eager to meet the buyer.
Lawyers can be slow and this deal was no exception. I made sure I wasn’t the blocker to progress in any way. Whatever they wanted, I got it for them on the same day. I was open and honest, I moved things along. My lawyer was diligent and quick and progressed everything our side, and together we made it happen. In the meantime, I was preparing to hand over, telling the team one by one what would be happening, and reminding myself that it could all fall through at any moment.
Of the entire process, this was the most challenging time. I was eager to progress the sale and eager to begin my next chapter, but often it was out of my hands. While action comes naturally to me, patience doesn’t.
With so much energy that had nowhere to go, I reflected. I looked back over the last ten years and wrote a book. Ten Year Career was planned and drafted during those two months the sale took to complete. I would think about editing and publishing at some point in the future. In the meantime, I had an agency to hand over.
Handing over
The sale completed on 2nd March much to everyone’s excitement and relief. Documents were signed and cash and shares were transferred. Virtual glasses were clinked over Zoom and we got to work in handing over the metaphorical keys.
Like when writing the SOPs and manual, I wanted to do this properly. I wanted to give more detail than required to make sure I wouldn’t be called up for information in the future. I made it clear that the buyer or team could call me at any point in the future, but was keen to reduce the chance of that happening.
As with all great plans, the handover tasks were written into a spreadsheet. Providing logins, changing admin access to our software. Telling our suppliers, telling our clients, dotting every I and crossing every T. Sharing the manual and making sure the buyer was clear on how we invoiced and made payments and looked after the website. There was a lot to do but it happened. The handover took two weeks of non-stop effort, and then it was time for me to leave.
Leaving the agency
This part felt hard. I’d started the agency nearly ten years ago, and some of the team members had been there since the beginning. Having been so keen on building a business that ran without me, I’d made myself surplus to requirements. They were ready to take it from here.
The team made my last day really special. We had a group Zoom party, they showed a slideshow of photos from the early days and I had personal messages from every member, plus a bunch of goodies that turned up at my door. As difficult as it was to leave, it felt right. We were all beginning our next chapter. I was excited for all of our futures.
Finally
If you’re thinking about selling your agency one day, I hope me sharing my acquisition journey has been useful. Before I sold I didn’t know any of this, I learned as I went along. Hopefully knowing the process in advance will help you get an even better deal that’s perfectly aligned with what you want.
In hindsight, getting intentional and keeping my plans secret was super important, as was getting sale-ready long before the actual event. If you’re considering selling your marketing agency in the future, I put everything together in this course that provides more practical guidance for making your sale happen.
Something that surprised me was the range of reasons that prospective buyers wanted to buy us. Some were looking to bolt on a department, some were looking to strengthen an existing department. Some wanted to enter a new location, some a new industry. Some only cared about our clients and revenue, some only our team and capacity. Some valued our inbound leads and domain authority and others weren’t concerned with our brand.
Figuring out that buyer’s priority in the first half of each chemistry meeting was important for how I presented my agency to them. There was no point giving lengthy explanations of aspects they didn’t care about.
I’ve tried to be as useful and transparent as possible in the above piece, but if there’s anything else you want to know feel free to get in touch via my contact page. I am happy to provide more detail on the sale process if it will help you secure your dream sale. If you’re looking for a reputable broker, I will happily introduce you to mine.
Wishing you all the best for your future :)
