Making Your Creative Agency Attractive for Acquisition

0:28All right, so we have a little treat for you. But I'm getting so much inbound these days. I'm trying to acquire my company and I don't understand why. And I don't know if you saw the notes, but I just wanted to somewhat explain to me why I'm getting so much inbound to try to buy my company. I don't have automation in my company. You know, I don't have like recurring revenue stuff that a lot of you guys have. Because I have a brand strategy agency, media buying. I do a lot of custom development for really large companies. So it's not, you know, it's not set up for, you know, rolling things. I have contracts, but not like, I feel like you, you all have a lot of just invisible money that when you're sleeping, like people are signing up for things.

1:08That's just not how my company operates. So anyway, I just, my question was, my question, my question really is why, why would anybody want to acquire a company that doesn't have the things I just mentioned, the money while you sleep? And two, if I was ready to sell my company, what would be, what would be what would what ideas could you share that would say you know what these are the types of things you should do to make your company more appealing for someone to want to buy and i say that my business i have been in business for um almost 30 years no wait i'm sorry i've been married 32 years but my business has been almost that much amount of time um so i have a lot of brand authority and i do have assets that i could sell that are connected to the company name um and i also have certifications as a woman-owned business and a black-owned business so if a woman owner black one wanted to acquire my company it would probably be you know easier for them right because i have all these things so anyway i'm really interested to hear what you all think because i actually have a couple of very serious interested brokers not buyers brokers that are like we have people that want your company which i'm like okay why that was my first question my My second question was, I have a lot of - Would you just go with your first for now, Ginger?

2:24Oh, okay. That's totally fair. Totally fair. Totally fair. Yeah. Go ahead, Kevin. Sorry. I got a lot of opinions. I like opinions. I've had three exits, software, services, a franchise. The key that I think today, what's happening today, why there's a lot of activity is a lot of baby boomers are retiring. and they don't really have a way to get rid of their business. So there's a lot of brokers who are scraping businesses that there's a buyer out there. And there is a lot of smart money out there, buyers that are buying businesses probably at a lower valuation just because the company's not ready to sell.

3:09And they have the team behind it to bring in management, marketing, whatever to spin it up. And then maybe they have already interested buyers at a higher level, like PE firms, things like that, that would buy it if they built it up and set it up for sale, if you will. Definitely monthly reoccurring revenue, MRR, is a key. So if there's a way to find ID8 and find services that you could offer your clients that give them peace of mind, maybe after the project's done, where it's kind of like a support contract, or there's lots of lots of ways to do it I don't know exactly what you do happy to I've done this for a lot of startups I'm in kind of one of the top 10 incubators in the world in here in Cincinnati and so I do a lot of mentoring with startups so we do a lot of planning for exit at the beginning but yeah I would just say definitely want to build up your the more MRR you have the more valuation multiple you could get the other aspect is it is a business dependent on you if you won the lottery today would the business be able to operate by itself or you know with somebody there you want to get to that point the more closer you are to that the more value there is for a buyer I'll leave it at that other guys probably have other ideas as well I guess that's my point though I just answered your question like no the company does not run without me if I won the lottery tomorrow I would walk away and I would probably buy property in France and never come back to the United States, number one.

4:48But, and yeah, I'm not, I'm just not set up for that. I have, I, you know, I have a degree from an art school. I graduated with a branding and visual communications degree. I do a lot of marketing strategy and creative strategy, a lot of media buying for really large companies. And so I'm not, I'm like, if you ever think of a, if you ever think of a, I don't know if you're familiar with the branding world, but companies like Landor, which I'm not at that level, but like, that's the kind of work that I do. Right. The type Landor or Pentagram, things like that. I'm really, I'm really, you know, a creative agency that happens to have a very high competency in the digital marketing space.

5:27Got it. Yeah. So I guess, I guess that's what my question is. I'm not understanding why these people are interested in putting my company up for market because I'm not, I'm not digital marketing. And maybe there's just confusion in terms of what digital marketing is versus creative marketing? I don't know. I'm sure everybody here is getting the same emails, but I get six, seven a month. People just throwing out there, do you want to, are you, Hey Kevin, are you open to selling your business? Are you open to doing this? So it's definitely a hot thing right now. It seems like a lot of brokers going after agencies.

6:02They might not know what you do. They haven't done their due diligence many times to get you on the phone. They haven't done due diligence. Okay. Yeah. So due diligence, that's another thing you're going to want to do to prep for selling is to have a book or like a virtual book, if you will, that has all your financials, all your, you know, everything's kind of there that you could hand to somebody digitally or physically that would allow them to do due diligence. That's going to increase. Yeah, I have that. Yeah, I appreciate that. I do. I do have that. I have, I have all that, which is again, why I'm still, you know, I guess I'm just, you know i mean am i ready to sell maybe i have a i have three other companies you know like i don't i'm an entrepreneur i don't need this company you know really so and that's my second piece is if i if i'm not interested in monthly recurring revenue because i'm really not i'm not interested in setting up my company like that what would i do to make it you know so somebody would want it like why would you know what i mean that's like what would you what would you

7:08I think it would probably take longer than what we have on here to kind of brainstorm with you, but I'm sure we would love to do that. I got to take a minute to tell you about the Agency Owners Association. This is a peer group for agency owners, think YPO or EO, but for agency owners. And I just wanted to read you a couple of testimonials. So this first one comes from Carrie and we asked her, what do you like most about the group? She said, having a group of people to discuss and bounce ideas. The leads are great too. Yes, we share leads in this group as well. This one from Alian, he says, the ability to really post whatever I want and need and the group responds.

7:41Great experienced members, getting a lot of insights from conversations with other members, getting a lot of value from sessions from Eric, getting advice from others as well. And so if you want to grow your agency faster and you want a peer group to do so, just go to marketingschool.io slash agency. This is a group that both Neil and I created. And our hope here is to create a vibrant community of agency owners and do a lot more with it in the future. So again, marketingschool.io slash agency and we'll see you inside. Go ahead, Adam. Yeah. How do you know if they really have a buyer who's asked them about your brand or they're just scraping as you say?

8:16How do you get them to reveal if they're actually the real deal or trying to find like random deals out there? Who is that to, Adam? That's to you, Kevin, because you've done this a few times. Yeah. So, um, to, I have no idea. That's a good question. Yeah. So, um, to address your question, Adam, the, um, I think the key is knowing what your, how you place in the marketplace of your competitors and stuff, the more, you know, the more, like if people are just inquiring, it's just like spam. Like, you know, you get those SEO emails. if you don't know what SEO is and stuff, it says your site sucks.

9:00It makes you feel vulnerable. And so they know how to, you know, hit you with those points. Like, hey, your business is highly regarded right now. You got a marketing agency. We're looking at, you know, we're working on behalf of buyers for agency. They say all the right things. The key is, is to know what multiple you can probably get for your business. If you're doing a million a year, let's say you have a 50 % profit margin, you're probably going to get three to five times multiple for your business. You want to know some financial aspects of the business, how much of that's reoccurring, how much of that's kind of one-off, things like that.

9:42But at a high level, you could say, hey, my company's worth about$3 million right now on the low end. I just want to know if they're full of shit or not. That's really what I'm like. Is this just like, do they have someone who asked about our company or is it just them just - No, this is them. I'll tell you what they're trying to do. They get paid very well from businesses for doing all the knocking on the door and finding the deals. What they do is they kind of pull you out of the water like a fish and they see if you're big enough, basically. And if you're big enough, they throw you in the boat.

10:14So they don't really have, I mean, they have people who are buying things, but they don't have if they probably have high level criteria right i mean look you gotta like this take this statistic into account right i heard something like 54 000 agencies are launched in the u.s every year in the uh like 10 of them will be gone in the first year 90 of them will be gone in five years so at a high level you can look for an agency that an agency that's just lasted five years and you know that that agency's made it they've made it a long ways right and so they might be someone that you want to pull them out of the water and measure them, right?

10:51But that's all they really know is high level, right? Like, okay, you've got a certain number of employees, you've lasted five to 10 years, or Adam, you've been in business a lot longer than that, right? But, you know, so I think that's really it, right? They're just canvassers, they're looking for, they're looking for deals, right? For them to do a deal, Adam, on the bottom, you know, I would say low seven figures, you know, 1 million or above is really, they'll say high six figures, but you got to really be on the profitable side and the systems. You got to have a lot of good systems and it's not a niche that, or it could be very niched and that's what they're looking for.

11:30Sometimes their buyers are just looking to plug a hole in their agency. So you could be worth on that end. It's worth talking to a few of these brokers and seeing what they're looking for, but just don't have a lot of expectations. All right, quick note. This is about my company. It's called Single Grain and Single Grain is an ad agency where we're focused on driving innovation. We'll talk about a couple of new strategies and if you need help with marketing, great. If not, here are a couple of new strategies that you should try out. One is programmatic CRO. So we are doing programmatic conversion rate optimization on our site.

12:00So it's building products that will automatically optimize your site to increase conversion rates. We're also auto optimizing, auto updating from an SEO standpoint. And we're constantly thinking about what else we can do in terms of enriching the visitors that are hitting your website and also tailoring custom messages for them using AI. And so there's a handful of things that we're doing from a marketing standpoint. And our mission is just to drive more innovation. So if you wanna learn more, just go to singlegrain.com, grain like rice. So singlegrain.com to learn more and we'll see you inside.

12:28I like it. You seem very definitive, very knowledgeable about it. And it's kind of, it's interesting. So I do appreciate that information and I'll just kind of think a little bit more about it. The Black Friday Cyber Monday weekend is where systems get stress tested. Traffic surges, inventory moves fast, and every second counts. You need a platform built for the moment. That's Shopify, the commerce platform behind millions of businesses and 10 % of all U.S. e-commerce. With Shopify, you can launch fast with thousands of templates and tools that make your site not just beautiful, but conversion ready.

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13:34Go to shopify.com slash marketing school and make this Black Friday one to remember. One of the things I recommend is, so I'm on a couple of newsletters for a couple of these brokerage firms. There's a few that specialize specifically in marketing agencies, right? And like you can get on their newsletter and I get like daily, they'll show me these agencies that are for sale and they give me some high level statistics or high level metrics about the agency. And then like, if you want to know a little bit more, you can sign an NDA and learn a little bit more, but it's a good way to just kind of keep tabs on the market and what agencies are trying to sell for, you know, the metrics that they're looking at and things like that.

14:11So just, just an idea. I'd love to know more about that. Do you have links that you could email me with that or send it up to the, to the school, to our marketing group website? Email me through that portal. That would be awesome. Sure. Yeah. Yeah. I have a friend in Chicago, you know, she sold her company, her branding company as well. And she didn't have any returning revenue. I mean, she didn't have that. She did have contracts, which I have. You know, the hope is that your contracts allow you to, you know, transfer the contract, you know, over to another whatever.

14:52So that's what she had. I don't know that she had, like, I've got some, you know, government contracts, which is a little different. I don't know if they're transferable or not. So it's just something to think about. Yeah. Thanks, Ginger. Thank you.