Five Main Questions for Your Five-Year Exit Plan

sellWhen communication pros either launch or acquire a PR agency, the questions related to the business come fast and furious. Some of the preliminary questions are the obvious ones: How do we maintain continuity with clients? What added value can we bring to the table? What are the most effective ways to grow our clientele?

All valid questions, and the answers are crucial for running a successful PR agency. But those are not necessarily the sorts of questions you need to ask if you eventually want to sell out.
To prepare for an exit plan—and boost your valuation and profitability—PR pros have to ask some questions that they tend not to ask.

With that in mind, here are five key questions that agency owners need to ask—throughout a five-year period—to brace for a sale and maximize valuations.

> Year One: Have you conducted an operations review?
This is the maiden voyage for what you hope will ultimately be a successful sale. An operations review begins with asking for a benchmark audit. The next logical questions to follow are: Do you need to retain an M&A consulting firm? Do you need to retain a quality CPA firm?

> Year Two:  Are you building the agency “as if” to sell?
This is where the rubber meets the road, in terms of whether potential suitors will even give your portfolio a legitimate look once you’re ready> Questions to ask in this bucket include: What is your profitability maximization plan? What is your value-building plan? What is your business/strategic plan?

> Year Three: What does your staffing architecture look like?
No successful PR sale went through without proper succession planning and cueing things up, staff-wise, for the eventual buyer. To make sure your staffing is prepared for an eventual sale, PR agency owners need to ask themselves: Is there a second tier of management in place? Have we created a solid staffing pyramid, with management at the top, followed by staff and then support staff? Do you have a top-notch admin exec to help manage the transition?

> Year Four: Have you started to think about your search?
It’s coming down to the wire, so now you have to start delving into the market for potential suitors. Questions that accompany this phase of the sales process include: Have you consulted an M+A consulting firm to prepare “the book” on the business? Have you started to package the firm for a sale? Have you teased a potential sale?

> Year Five: What is your outreach strategy?
You have made the commitment to a sale and you’re starting to think about relocating to your summer home permanently. It’s time for an event. You have followed a five-year plan closely, so be gingerly during the endgame. Ask yourself: What’s your criterion for meeting buyers? Have you performed a culture audit? How do you intend to narrow the field of buyers?

In order to maximize a sale, don’t give any of the questions short shrift. Most every question is part of the larger strategy to win big multiples.

Think we’re missing anything? What questions would you add to the list?

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