This is episode 1/4 in a mini-series on beginning with the end in mind. As we’ll find, building for your exit from the start helps create a thriving agency that delivers great value for you, your team, and your clients.

In this episode I’m talking to Jonathan Baker of Punctuation about exit preparedness. Only a small percentage of firms are successfully sold. But you can better the odds, as Jonathan will share.

His journey includes business school, marketing strategy for Fortune 500 CPGs, and co-founding and growing a craft brewery into one of the nation’s largest. Now, Jonathan leads the M&A practice at Punctuation, bringing his experience from dozens of deals inside and outside the industry. 


Key Insights:

• Building a buyer-friendly firm builds a thriving firm for you too (2:10)
• Focus on fundamentals long before an intended exit: profitability, healthy client concentration, using accrual accounting, etc … addressing fundamentals can’t be done overnight when you want to exit (3:27)
• The best habit to be well-prepared for an exit is a monthly review of your financials, not as primarily a CFO presentation, but with your leaders coming prepared to raise and discuss any issues, present solutions, and then take action (8:40).
• Many of our preconceived ideas about selling an agency can be wrong: how much effort and time it takes, how hard it is to find a buyer, the size we have to be to sell, what we need to do to be ready. It’s worth talking to an expert and getting ahead of something so important (12:22).
• If your fundamentals are strong, expect the selling process to take 3-4 years to produce the best outcomes for you: a year to sell and 2-3 years continuing to work with the new owners to maximize your earnout (12:45).
• Some of the most important factors to work on to minimize difficulty selling and maximize valuation:
  • Profit (EBITA)
  • Client concentration
  • Recurring revenue (good, but not essential)
  • Tight positioning (vertical or horizontal can work)
  • A repeatable business development process, not too owner reliant
  • A strong leadership team

Episode Resources:

• Book: Selling Your Professional Service Firm (By David C. Baker), also available on Amazon and Audible
• Passive Sellers List by Punctuation
• Valuation Service by Punctuation

Coming up in this series on beginning with the end in mind are:

1. An agency founder 25 years in
2. An agency coach and founder with 2 successful exits
3. A co-founder of multiple agencies and an agency holding company

If you have questions or comments about this episode, a topic you’d like covered, or an agency owner or relevant expert we should invite as a guest, we’d like to hear from you! Email [email protected]

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Thank you for listening!