Articles on selling an agency: valuation multiples, earnouts, client concentration, due diligence and succession, by Felix Velarde.
Most American SEO agencies resell the same white-labelled platforms. AI has called that bluff, and buyers see thirty thousand agencies with no reason to exist.
Serious buyers no longer settle for the polished management meeting. Strategy days, secret-shopper enquiries and candid client calls inspect the team beneath.
Told his window had closed because valuations average three years, a founder started anyway. Most discount factors never reach the accounts. Offers followed.
A $3m agency with a $1m client expects $2.4m at four times profit. The buyer prices it as the $2m agency it would be without that client, at two times: $800k.
The going-rate multiple is the buyer's opening anchor and everything after it moves down. In the US, with more sellers than buyers, be clean or stay unsold.
Your multiple is not a grade for twenty years of work. It measures a buyer's confidence in cash flow after you have gone, and every visible risk lowers it.
The best deal I ever did, I left seven weeks after completion, because the agency already ran without me. The alternative is three years working for a boss.
Six out of ten agency founders do not finish their own earnout, and buyers price that in. You become most valuable at the point you become unnecessary.
A founder celebrated his sale, then reread the earnout: three years of targets under someone else's strategy. Build the agency so the buyer does not need you.
A founder admitted most clients would leave if he did. Two years building a layer of people with real authority between him and them got a far better deal.
Founders guess their biggest client is 20 per cent of revenue. It is often 55. Above 30, buyers price the risk aggressively. Know the real number first.
A founder came to me wanting help selling their agency for several million dollars. After half an hour of pointy questions, I told them flat out: give it away instead…
A detailed presentation of the mechanics of agency M&A, including the financial motivation driving agency acquisition, how to maximise your agency’s sale value, how to address discount factors and how to create a great exit.
This eye-opening article reveals the real reasons buyers pay top dollar and provides a proven framework for maximizing your exit value, drawing from Felix Velarde’s unique experience of founding, selling and acquiring agencies.
If you’re serious about building significant value, preparing for an exit, or executing a roll-up strategy, get in touch below. I’ll respond personally.
