Imagine getting an unexpected call or email from someone saying they want to buy your agency. You’ve casually considered selling someday, but hadn’t planned on it happening right now. The inquiry catches you off guard. Do you entertain the offer? Or do you politely decline?
How to Handle an Unsolicited Offer to Sell Your Agency
Before you get carried away by the excitement—or anxiety—of the moment, it’s crucial to pause and assess the situation strategically. The wrong move can easily cost you six or even seven figures. While a sudden windfall might be tempting, selling an agency is not just a business transaction; it’s a significant life decision that requires careful consideration.
This article won’t delve into the legal and technical aspects of selling your agency—that’s where your lawyer and an M&A advisor come in. And I won’t cover the process of actively “shopping” your agency around, which would require a business broker or other M&A specialist.
Instead, we’ll focus on the critical initial steps and considerations when a potential buyer comes knocking out of the blue. For further help—including if you decline this offer but want to find someone else—check out my Control (and Maximize) Your Agency Exit workshop. During three sessions in October 2024, you’ll get tips on valuation, insights from a panel of sellers sharing what they wish they’d known, and more.
Step 1: Do You Actually Want to Sell?
The first question to ask yourself is whether you want to sell your agency—now or ever. It might sound simple—or even obvious—but it’s a key decision. When I consult with agency owners, many tell me they’re not actively looking to sell—yet they entertain the “unsolicited offer” conversation out of curiosity or a vague sense of future possibility. But remember, not every opportunity is worth exploring.
Consider your long-term vision for your agency. Are you ready to step away, or do you still have goals you want to achieve? If you have a business partner or two, this is a discussion you need to have with them as well. Their goals might align with yours, or they might have a different perspective on the timing of a potential sale. For instance, they might want to sell soon while you plan to work another 20+ years.
Consider your family, too. How much must you collect from the exit to reach your short- and long-term goals? You can sell some or all of the business, among other exit options. But once you sell it, the asset is gone. Do you want—or need—to wait longer, to get a bigger exit? Or are you at risk of burnout, and it’s time to move on before the value potentially drops? Also, do you need access to the employee benefits from the agency, or can you access health insurance via a spouse’s plan?
Do you have an exit strategy yet? If not, now’s a good time! The exit strategy helps you make decisions faster, since you’re focused on your long-term goals instead of quick cash. Here’s a step-by-step process for creating an exit strategy.
If you’d prefer to hire a CEO to run the agency—where you step back to become the chair—don’t get too deep into discussions about selling. For instance, you might do an initial meeting or two, but I wouldn’t sign an NDA or proceed to a Letter of Intent (LOI). It’s better to be “the one that got away” than “the one that wasted our time.”
Step 2: Define Your Ideal and Minimum Acceptable Outcomes
Before you proceed, it’s essential to define your ideal outcome, your minimum acceptable outcome, and the worst-case scenario. What’s the ideal outcome for you? What’s the least you’re willing to accept? And is there a worst-case scenario you’re trying to avoid?
These benchmarks will guide your decision-making process and prevent you from getting swept up in the excitement of a potential deal.
Keep in mind that these outcomes may evolve as negotiations progress, but having a clear starting point is crucial. For instance, your ideal outcome might involve a significant cash payout, a smooth transition for your employees, and walking away within 1-2 years. On the other hand, your minimum acceptable outcome might simply be a fair market value for your business, and where you can fully walk away within 2-3 years.
For example, if you want to walk away ASAP, and the acquirer says they expect you to join their management team… it might not be a match. On the other hand, a merger-ish acquisition might be just the ticket if you’re tired of being the boss but want an ongoing salary and employee benefits.
Nail down your ideal, minimum acceptable, and worst-case ASAP. If someone says they want to pay you millions of dollars, it’s easy to get distracted from your broader goals.
Step 3: Understand Your Personal “Why”
It’s also important to dig deep and understand your “why.” Why are you considering selling? Is it financial security? A desire for a new challenge? A need for a break after years of hard work? Or is there something else driving your decision?
Moreover, be sure to identify your secret “why”—the unspoken reason you might hesitate to acknowledge, even to yourself. Maybe you’re burned out but afraid to admit it, or perhaps you’re tempted by the prospect of a big payout but unsure of what you’d do afterward. Being honest with yourself about your motivations will help you navigate the process more effectively.
An exit can be a long, exhausting process. It’s important to have a “North Star” to help you get through the pain of due diligence—or of a buyer who drops out.
If you have a business partner, consider their “why”—this needs to be a win/win. And consider others in your life, too.
Step 4: Investigate the Buyer’s Financial Position
When a potential buyer approaches you, it’s easy to get caught up in the possibility of a deal without fully understanding the buyer’s financial position. Where is their money coming from? Do they have the capital to make a serious offer, or are they relying on loans, investors, or other less-certain funding sources?
It’s important to investigate this before you invest too much time and energy into negotiations. If the buyer’s financial backing is shaky, the deal could fall through at the last minute, leaving you back at square one—or worse, in a compromised position after sharing sensitive information.
If your own financials are solid, an unsolicited offer is likely to be lower than if you sold on the open market. But if your finances are shaky, you might not get a better offer in public.
Beware surprise stakeholders
Once you get a verbal “yes”—and then the LOI—is someone else going to show up with a “Swoop & Poop” that kills the deal?
This includes identifying what other stakeholders are involved. If they’re getting an SBA loan, do they have enough cash to put at least 10% down? Is their credit score good enough to get a loan in the first place? If they’re bringing in an outside investor, how soon can you meet them for a “chemistry check”?
Step 5: Assess Cultural Compatibility
We can define company culture as “what behaviors are rewarded versus punished”? That is, what does the company explicitly and implicitly want more of versus less of?
Cultural compatibility is one of the most overlooked aspects of a potential acquisition. Yet, it can be the biggest headache later on. Even if the financials align, a mismatch in company cultures can lead to major challenges post-acquisition.
To avoid such scenarios, take the time to understand the buyer’s company culture. Do their values, work practices, and leadership styles align with yours? If not, it’s worth reconsidering whether this is the right buyer for your agency.
Culture mismatches can torpedo the deal… or make you wish you’d never sold the agency
I had a client who received a cold email from a potential buyer. After initial conversations, they signed an NDA and discussed a possible deal. However, as talks progressed, my client began feeling “iffy” about the buyer. The reason? A fundamental misalignment in company culture. My client’s agency was marketing and relationship oriented, while the potential acquirer was heavily focused on transactional sales. The earlier deal fell apart, and my client eventually sold their agency to a better match—one that aligned with their values and work style.
Another client ran into this in their exit, too. The acquirer was—again—very sales-oriented. The offer was good, but the acquirer was not a fun place to be an employee—and my former client left as soon as their earnout was up.
A potential shortcut? Read their Glassdoor reviews. As you’ve seen, reviews tend to be posted by especially happy or unhappy employees. But something like a 10% CEO approval rating is a bigger problem than one or two disgruntled employees. Likewise, what do clients publicly say about the agency? Consider the context, too—if the acquirer has been in business for 20 years but only has a few Google reviews, weigh whether to dig deeper.
Step 6: Gauge the Buyer’s Transparency
Transparency is key in any negotiation, especially in a potential acquisition. You want buyers to be open about their intentions, financials, and expectations. If the buyer is vague or evasive, that’s a red flag.
On the other hand, you also need to be strategic about how much information you share. For instance, in the early stages, it’s wise to be cautious about sharing detailed financial data or proprietary information. Instead, focus on learning as much as you can about the buyer’s background, business objectives, and reasons for acquiring your agency.
Even if you eventually stop working, you’re entering into a “business marriage.” What do you know about their character? If the acquirer is someone you’ve known for years—and you’ve done business together before, that’s different from someone you’ve just met.
Character counts
Have you seen opportunities where the buyer could have taken advantage of you, yet they chose not to? If not, you’ll have a longer “vetting” process.
For instance, my freelance WordPress developer is someone I met almost 15 years ago. My then-agency hired him to evaluate a client opportunity—and he advised against using the platform the client wanted. If he’d said “Yes,” he’d have personally made (adjusted for inflation) at least $70,000. Yet he put us—and the end client—first.
Step 7: Take Your Time
Finally, remember that you have the power in this situation. Just because someone expresses interest in buying your agency doesn’t mean you’re obligated to make a quick decision. Take your time to evaluate the offer, consult with your advisors, and reflect on what’s best for you and your agency.
Selling an agency is a major life decision, and it’s important not to rush it. If you feel pressured to make a quick decision, that’s another red flag. A reputable buyer will understand the significance of the decision and give you the time you need to make an informed choice.
But don’t wait too long
That said, be careful about waiting too long. Even an interested buyer won’t stay interested forever.
A client received a strong offer that valued the agency at 7X EBITDA. They declined. A year later—after I started advising them—they mentioned the acquirer reappeared and now offered 8X EBITDA. Based on their goals, I strongly suggested they take it. However, one partner didn’t want to sell yet, and they declined the 8X offer. Then, the market turned. Although the agency has grown its EBITDA, it’ll likely be a while before they get an offer like that again.
If you’re not interested, bow out early. I recommended a client do this when they wanted to keep building the agency. The acquirer showed up two years later—and the agency was the subject of a two-way bidding war.
Meet the potential acquirer in-person
Even if you handle most things remotely, I believe in meeting the acquirer in person. This is less critical if you’ve worked with them already—for instance, they’re one of your clients, or a strategic partner agency. But I’d definitely meet if you haven’t worked with them before, or if you only know them tangentially.
Pay attention to how you feel around them. It’s a cliche about watching out for people who are rude to the server—but if they’re rude to the server, despite “everyone” knowing it looks bad—that’s pretty telling. Pay attention to their team, too—if they seem like jackasses, it may be a sign that the acquirer has poor judgment.
Should you go to them, or will they come to you? There are pros and cons to both. Their coming to you for the first meeting shows their interest. But your going to them lets you see the full picture. After a client received an unsolicited offer for their agency, I did some digging. My client had a nice office and a focus on high production standards. The acquirer’s website was OK but unpolished. When I found the acquirer on Google Maps, their office turned out to be a dumpy-looking building. I mentioned this to my client, and they noted other mismatches, too—and bowed out early.
Conclusion: Be Strategic and Intentional
Receiving an unsolicited offer to buy your agency can be exciting and overwhelming. By approaching the situation with a strategic and intentional mindset, you can navigate the process effectively and avoid costly mistakes. Remember to ask yourself the critical questions: Do you want to sell? What are your ideal and minimum acceptable outcomes? Why are you considering the offer? Is the buyer financially sound? Do their company culture and values align with yours? Are they being transparent?
By taking the time to carefully evaluate the offer and consult with your advisors, you can make the best decision for yourself, your agency, and your future.
Bonus: How to be even more prepared for an unsolicited offer
Want to be even more ready when someone comes knocking? Get a ticket to my workshop in October: Control (and Maximize) Your Agency Exit. You’ll learn how to get the best deal possible, hear tips from four agency sellers on what they wish they’d known, and get templates and advice on how you can add $1 million to your exit valuation. Plus, you can get answers to your burning questions during live Q&A with all nine speakers. Get your ticket now, before prices go up.
Question: What’s your reaction to someone making an unsolicited offer to buy your agency?
