Establishing an exit strategy isn’t something owners of PR firms and advertising agencies typically think about as part of their business plan. However, when it comes time to leave, it’s important to have a plan in place to protect accumulated wealth, as well as to smoothly transition the business to the new owner, and to take into account your employees and clients.
6 Steps to Creating a Business Exit Strategy
Whether you want to retire or leave your agency in pursuit of new goals, these six steps will help you develop a proper exit strategy.
1. Knowing Your Worth
The first step in a successful exit strategy is to prepare your finances and conduct a business valuation of your PR firm or creative services agency. In addition to understanding what your agency is worth, you’ll also want to define your personal and/or professional financial goals.
2. Considering Your Options
Once you have a clear understanding of your agency’s worth and your own financial goals, you can use this information to decide how you want to exit your business. In the most basic terms, your options are to close or sell. However, there are several strategies from which to choose within each of those options. The most common exit strategies include:
• Selling your equity to an existing partner, employee or family member, or executing a management buyout.
• Merging or being acquired by another PR agency or creative services firm.
• Selling outright to a third-party i.e. individual or Private Equity Firm.
3. Informing Your Creditors or Investors
Once you’ve chosen an exit strategy, you’ll need to consider what will happen to any investors in your business, as well as your debt. Your business plan exit strategy should include the details of how you will approach stakeholders to share your intent to exit the business, as well as how creditors and investors will be repaid.
4. Transferring Ownership
If you are transferring ownership your exit strategy should also include details about how you will transition out of the day-to-day operations of the business, and how your successor firm will transfer into their role. For example, for how long do you want to remain active- 3 years, 5 years, indefinitely?
5. Sharing the News with Employees
Once your succession plans are in place and you have a signed Letter of Intent (LOI) you’ll need a detailed strategy for informing your employees, as well as how you will answer their questions. Keep in mind that, if your exit strategy is a merger or acquisition, layoffs are a concern that you’ll need to be prepared to address. The reality is few staff are ever laid off in a transaction.
6. Communicating with Clients
The final step in your exit strategy involves determining how you will communicate the news to your clients. If your business will continue with new leadership, you’ll want a plan for introducing them to your clients.
Get Help with Your Business Plan Exit Strategy
The decision to leave your PR firm or marketing agency is not one taken lightly. Likewise a proper exit strategy requires diligence, time and care. It also helps to have an exit strategy expert to help you along the way.
When it’s time for ownership to transition away from a creative service agency or PR firm, the team at Gould+Partners offers the expert guidance clients rely on to construct an expedient exit strategy. We specialize in conducting accurate business valuations and tap into our experience in mergers & acquisitions to formulate an exit plan based on intelligently weighed options.
If you’re ready to start the conversation, give us a call at 212.896.1909 or 917-783-4500.