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Cashing Out – 5 Steps to a Better Deal

Many of you know I sold my agency a few years ago and in June went into semi-retirement.  As I tell people this they often pepper me with a bunch of questions on how they can get in on that game.   The most frequently asked questions I have received over the past few months are:

How do I get ready to sell my company?

What are the things I need to focus on to get the best deal possible?

Most of these tips offered below come from significant experience selling a few companies and participating in the due diligence for acquisitions or investment in numerous companies over the past fifteen years.

Why are companies acquired?
If we start our thinking by “why” companies are acquired – it is never out of the goodness of anyone’s heart – it is to fill some sort of purpose.  When we analyze the reasons for acquiring a company the steps you must take to prepare make a lot of sense.

There are essentially 2 reasons companies are acquired:

Growth & Market Share

Now is about the time that search companies will be acquired to help growth of larger digital companies or to move a well-funded mid-tier company into the top three.  The large holding companies are buying search companies for their revenue, client base or most recently, dominance in an overseas market.

I most cases, it is hard sourcing talent and building a book of case studies it is easier to just buy a local player and empower them to grow to the next level.

Competitive Advantage or Skills

This was popular a few years ago where big ad groups were buying mid-sized shops in order to have a search capability that allowed them to keep business or gain business over a key competitor.

For example, WPP bought Catalyst Online for their experience with pharmaceutical companies.  They were and are still the dominant pharma search agency and this fit in perfectly with Gray Healthcare and Ogilvy Healthworld since they have so much pharma & healthcare business. WPP bought GSI because we had the Fortune 100 clients and are the marekt leaders in enterprise and global search marketing.

Other acquisitions were around tools, Doubleclick buying Performics since they had great search tools that added that degree of technology and skills to Doubleclick’s portfolio.

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