Building Your Firm’s Value “The Right Way”

There is a right way to build a firm’s value. There is a formal process that works. The hardest step for most firms is the first and most critical one: shifting the owner’s mind-set to manage the firm as if it were to be sold tomorrow to an outside buyer. This mind-set shift is critical. It gives the agency owner or owners the highest-valued endgame to work toward. Without this mind-set, owners don’t plan realistically for their exit strategy—and every owner has an endgame in mind. Selling to an outside firm, selling internally to employees, or running the firm in perpetuity through management succession—all of these methods leave unrealized goodwill value on the table. You need to quantify that value.

The mind-set of managing your PR/advertising firm as if you were to sell it maximizes not only profitability but also value. This mind-set forces an owner to put his or her best foot forward each day and believe that an external sale is imminent. Firms become more disciplined with profitability building from a day-to-day operational perspective, and they also become more disciplined with financial and managerial controls when they imagine someone on the outside is watching. These levels of accountability don’t usually happen without this as if mind-set. Whether your intention is to sell in five years, fifteen years, or not at all, the process is the same: build profitability, build value, build as if to sell.