Sample One: A NYC Media agency hired me to assist with the acquisition proposal she received from a diversified marketing and production company. It turned out to be a good fit from the business culture POV. She knew the principals and the key management execs going in.
The overall valuation was low in the range, with the currency a combination of cash and equity. And the latter was what my client was interested in. That, and it addressed a major concern.
She felt that she was increasingly becoming a “one-woman” show in her own agency. Being completely responsible for everything, or just feeling that way, was wearing on her. On top of that, her perception is that mid-size and larger company clients are interested in finding one supplier that can provide all, or at least most of the marketing and advertising services they require.
So, she was happy to have senior colleagues to work with and share weight of many of the important decisions. In addition, she retained enough of an equity interest in the transaction to give her a sense of ownership in the business.
This agency’s circumstances are similar to many of the thousands of marketing and, or tech shops, and design firms; and not far from Outdoor and experiential marketing service companies. All of them have to determine the best way to position themselves for the future.
Sample Two: Deciding to sell now or preparing to sell aren’t the only options to choose from. Another agency client was approached to sell by a group seeking to assemble an agency network. We reviewed the offer and determined it wasn’t strong enough.
That episode led my client to decide to concentrate on generating organic growth for another year, and to make its own acquisitions in preparation for a sale in 2 or 3 years.
Sample Three: These agencies share the belief that they must get more services and skillsets under their roof in order to have the value that will attract qualified buyers. There’s one more agency that decided that their creative product and their strategic thinking are strong enough to attract larger clients. They focus now on consumer challenger brands and plan to grow that segment.
They are not thinking about a near term sale. But they believe they must grow to win larger brands. We are seeking a strong tech group that will complement their current strengths.
These are a number of viable options available. But there’s always more to consider.
Stay tuned for my next Blog on Small Cap Marketing Agencies.
Henry Corona, Financesur