Getting Your PR Firm “Sale Ready”, Even Before You’re Ready to Sell
By Don McIver
We frequently tell our clients that they should manage their firm as if they’re getting ready to sell, even when a sale is not in their short-term plans. A well-managed firm shows revenue growth and strong profitability, thereby increasing purchase value. Obviously, these are the key elements in determining purchase price. A well-run firm is more attractive to potential buyers because there are fewer transition and integration challenges. Without having to fix a lot of issues, the integration can be much smoother.
Many agency owners enjoy being scrappy and lean, and tend to eschew process and procedures for fear of becoming bureaucratic, and fear of losing their entrepreneurial edge. But the absence of proper policies and procedures can have much greater impact on the firm’s value, than any perceived damage done by having appropriate policies and procedures in place to be “sale ready”. And an optimum balance can be achieved!
There are many operational areas that need to be closely examined to determine readiness for sale, including:
- Accounting and Finance
- Human Resources and Compliance
- Client Engagement and Management
- New Business Development and Marketing
Accounting and Finance – are the firm’s financials well maintained, and prepared by a reputable accounting firm? Doing so alleviates many questions from potential buyers, and demonstrates that your financial house is in order. We recommend a “Review Report” at year-end.
Human Resources and Compliance – does the firm have any key employees, whom if they left the firm, would have dramatic impact on client and employee retention? Assuming non-solicitation provisions are in place, are there clients that would leave simply because that person(s) was no longer with the firm? Would employees leave because that person(s) was no longer with the firm? If the answer to either of these is “yes”, you need to immediately work on a succession plan to minimize the adverse impact of these types of departures. This is accomplished by identifying existing staff, which if given the proper development plan, could become a successor. If those people don’t exist, hiring new talent to be groomed as a successor, and putting a development plan in place to get them ready, can also accomplish it.
Also, is the firm fully compliant with federal and state regulations for managing its workforce, thereby avoiding potential hurdles for an acquirer? The cost of non-compliance can be very high, but compliance issues can be addressed proactively at relatively low cost.
Client Engagement and Management – Are your client contracts well written, with defined terms and durations? Are there protections for early cancellations and solicitation of employees? The tighter your client agreements are, the more value you’ll receive from an acquirer.
New Business Development and Marketing – How strong is your new business development engine? Very often, the firm’s owner is the rainmaker, yet few others in the firm attract business. Making new business development everyone’s responsibility is key, as well as hiring staff with new business development experience. Having a strong marketing campaign covering social and traditional media is also essential.
These are just some of the issues that need to be addressed to run your firm “sale ready”. The team at Gould+Partners has the expertise and resources to help you assess your readiness for sale, and develop recommendations to address these and other crucial areas.
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