In this episode, Chip and Gini discuss the frequent occurrence of receiving offers to buy agencies and how to handle these communications.

They share their own experiences of receiving such emails, including the prevalence of fraudulent or unserious offers. Gini describes her method of vetting these emails, such as examining URLs and LinkedIn profiles, and emphasizes the importance of legitimate connections within the industry.

Chip provides further insights into the credibility of business brokers and the typical behaviors to watch out for. Both caution against making emotional decisions and underscore the necessity of due diligence, patient decision-making, and listening to one’s gut feelings.

They conclude by highlighting the importance of proper advice and support for making sound decisions in the agency selling process.

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to their episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And Gini, I’ve got a buyer for your agency. I’d like to have a conversation about it.

Gini Dietrich: Yes. Okay.

Chip Griffin: This is, this is an email that, that a lot of us get. Frankly, I’ve gotten it for all my business agencies, oh my gosh, software companies, everything.

That steady flow. It’s, it’s sort of like, I dunno about you, but these days I get a steady stream of, of emails, trying to sell me janitorial services. I don’t really understand

Gini Dietrich: janitorial services?

Chip Griffin: Yeah. I don’t understand it because I don’t have any actual offices, so.

Gini Dietrich: Right. What are they gonna janitor?

Chip Griffin: So who knows? But in any case, it is very common for agency owners to receive emails from someone who says that they either have a buyer for their agency they’re interested in, in buying the agency. They have some, some potential opportunities to explore all these kinds of things. And, and I think that it would be helpful for us to have a conversation around this so that, that we can share our experiences and hopefully people can have some perspective on these when they come in.

When should you reply? When shouldn’t you, how should you handle those conversations if you do decide to proceed with them? Because it, it certainly… Most agency owners I know have at least explored the idea in their own minds of selling someday. Sure, sure. And so it can be very appealing, particularly if it hits you on the right day when you have just that right level of frustration with clients or employees or whatever to say, ah, okay.

Gini Dietrich: Alright. Yeah, yeah. Let’s do this.

Chip Griffin: So what, what do you do when you get one of these emails? And I’m assuming that you get a lot of them.

Gini Dietrich: I get so many. I usually just delete them. Every once in a while I’ll take the email address and just look up the website. And I would say a good majority of them are emailing from fake accounts.

So the websites that they’re quote unquote emailing from don’t even exist. So I get a lot of 404s or that is for sale on Go Daddy or whatever it happens to be. A lot of them, and I’ve seen this in practice on the lead generation side where, you know, a lead gen company will say to you, oh, we can get you, and we’ve talked about this 15 to 20 qualified conversations every month.

And what they do is they mirror your email platform and your, like spinsucks.com for us. They mirror it in a different platform for better software, for lack of a better term. And it’s not actually coming from spinsucks.com. It’s not actually coming from your URL, but it, it’s coming from this fake duplicate mirrored URL, right? So that when that happens, you can tell that it’s a lead generation company, that they’re just trying to, you know, mass emails to see who, who they can, that they can catch.

So I always take the URL and I or the email, and I look at the URL and I look, I put it in to see, and I would say eight times out of 10 it’s a, it’s a URL that doesn’t exist. So then I just delete those.

For the ones that look interesting, I’ll actually look the company up to see like, have they done other agencies? Are they legit? And I would say eight times out of 10, they’re not legit. So you kind of just, if you’re, if it hits you at the right time, just do your due diligence. You can find out pretty quickly if they’re legit or not. You know, there are probably five or six companies in the agency space that do really nice job with mergers and acquisitions and just like you would hire people, hire you based on your trust and how people feel about you and your reputations.

I would say the same thing with our businesses, that we really should be looking for organizations that have experience in our industry and have a reputation already.

Chip Griffin: Yeah. I mean, I think, I think all of those are good points. You know, certainly, like you, I’ve deleted most of the ones that I’ve seen over the years because they just, they don’t feel right.

And I, and I would say if someone is, is legitimately reaching out to you for this kind of thing, it should be a very personalized email. If there’s no indication that they know anything at all about you. Probably a good reason to just hit delete. Yep. Because at, at that point it is probably just, you know, trying to see if the account’s alive or, you know, just some intern trying to, you know, generate leads for a business broker that’s trying to get you to pay a retainer or something like that.

So, yep. So, so I think that’s a great reminder, to not worry, not think too much about them unless it, it really grabs your attention for some reason. If it does, I agree with you. Start by trying to find out whatever you can. That means looking up the domain of the email address. The other thing I will frequently do is put the person’s name until LinkedIn, and see, because if, if it doesn’t come up associated with that company assuming that the website is alive. You know, that tells me that, that they’re probably not legit. They’re probably, they’re an outsourced sales rep, and so therefore not a serious person for me to be having a conversation with. Sometimes you’ll do it and it turns out they are an intern. And it just says, intern on it.

Okay, well, I’m not having a conversation with an intern about selling my business. If they’re really interested, they can find someone more senior to reach out to me. But let’s let, let’s assume that we clear these hurdles. Let’s assume we haven’t deleted it. We Google ’em, they look more or less legit.

Let’s start with, they’re from a business brokerage kind of organization. I usually try to find out if they are focused on the agency space or if they are generic. There are a lot of business brokerages out there. You go to their website and they show 75 different industries that they quote unquote, specialize in. Manufacturing is very different from being a PR agency.

Gini Dietrich: Right.

Chip Griffin: The way you sell those businesses is wildly different.

Gini Dietrich: Wildly different.

Chip Griffin: Yes. Can one firm rep both? Yes. Is it likely to be the best experience? Not so much.

Gini Dietrich: Yeah. You know, I will say this, that it’s flattering of course, to have people reach out to say that they’re interested in purchasing your business or rolling you up into a larger agency umbrella model or something like that.

It’s flattering. And there are days, of course, that you feel like you don’t wanna do this anymore, and that would be nice. When I have sat on boards where we have sold the organization and I’ve done this many times. We’re always the ones that reach out first, and we have a short list of brokers that we would work with.

And we base it on, you know, certainly the relationships that I’ve made over the years, because I’ve done this several times, and the relationships that the co-founder or founder has, and then the relationships that the other board members have, we do it based on that, and then we let the brokers come back to us with proposals.

So just like a client would come to you and say, this is what we’re looking for, and you would write a proposal and come back to them. It’s the same kind of, I would say, business development way. So responding to somebody who’s emailing you is probably almost never going to work because to your point earlier, it’s usually the, if it’s, if they’re legit, it’s usually these business brokers who are gonna charge you 15, 20, a hundred grand to go find someone to buy, to buy your agency.

They don’t usually have somebody in mind, and they don’t usually have somebody who has said to them, look at these agencies. We’re considering buying. Usually it’s just we’re trying to generate leads.

Chip Griffin: Right. And, and as you said before, there are some, you know, really, really well regarded M&A firms that deal specifically with this space.

Yeah. Yep. I don’t know any of them that do cold outreach to drum up business. You know, certainly they, they will work their relationships to build their own networks. If they are representing someone who is looking to do some acquisitions, they will reach out. But generally. At least in my experience, they don’t do so completely cold.

They look for an introduction or the email itself will be very clear that they’ve done their homework in advance, right? And so if, if it’s something outside of that, that’s where you need to be really careful. And, and one of the first questions to ask when you’re talking, if you do decide to proceed, Hey, let’s just see what happens.

Let’s, I mean there, there is some value in just having some of these conversations periodically just to see who’s on the other end, to see whether Chip and Gini are telling you the truth. To see what it’s like to be talking about the idea, because it’s low risk, right? So, sure, yeah. There’s some value in periodically having these conversations as long as they don’t consume you.

But one of the first questions to ask in those cases is, you know, what is your fee structure like? Because if it is all about upfront payment, then chances are you’re just being sold to. If it is, it’s a percentage of the deal. Then there may be something more to that. It’s, I mean, it’s still, you know, sometimes they just wanna have a large roster of people that, that they can claim to be repping and that helps them sell to other people.

But nevertheless, if, if you’re being asked for cash upfront, that’s when you wanna be the most cautious, obviously.

Gini Dietrich: Absolutely. Yeah. Yeah, yeah, yeah. I mean, I would never. Just like you do with a, when, when you’re selling or buying a home, you would never give the real estate agent money up front because you want them invested in getting you the very best price for your home, right?

So it’s the same kind of thing, like you would never invest that money up front because they’re then, they’re not invested in getting you the very best valuation and sell price. So please be cautious if they’re asking you for an upfront, upfront retainer.

Chip Griffin: Yeah, I mean, and, and I would say that specifically applies to cold outreach.

If you are dealing with an established M&A person in that space, a fixed fee can actually be a good option to consider, at least because there are pros and cons to working on a commission basis. Yeah, sure. When you’re, when you’re being repped in a sale. But, but if it’s someone’s just reaching out to you and, and they jump in with, that’s their first option, that is a, a red flag, certainly that you wanna be careful of.

But let, so let’s assume that, that maybe it’s not a broker who’s reached out, maybe it’s another agency or it’s, it’s one of these what seem to be now proliferating smaller agency holding company type things. So, so there is some legitimacy to it, but, but they’re reaching out. How do you handle those?

Because that’s, that’s a little bit different than the broker who’s clearly trying to sell you. These people may have an interest. But I think it can be sometimes hard to gauge are they just hitting everybody that they can find, to find the few that maybe meet their criteria? Or do they have genuine interest? Because how you handle it on your end is gonna be different in each case.

Gini Dietrich: Yeah, I don’t know about that, simply because I haven’t been down that road, but, you know, my probably what I would, what I would personally do is see who that agency, who the agency founders or leaders have… Where we have mutual connections because I’m fairly well connected in this industry. So I would want to see if I have friends who also know them.

If I don’t, it’s probably not something I’m gonna follow up with. If I do have mutual connections, then I would say like, Hey, I see you’re connected to this agency or to this leader at this agency. What can you tell me? And either they’ll, they would be like, meh, not really a thing. Or actually, yeah, this is.

This is real, and they wanted specifically to reach out to you so you can get a lot of information with your similar connections. And that’s probably how I would approach it, but I’ve never actually gone through that path, so I would have to think about it a little bit more.

Chip Griffin: Yeah, I, I, I mean, I, I have advised a number of agencies who have gone down this path, so, you know, what I can tell you is that, you know, I, I think it’s my mindset is it, it’s almost always worth a phone call to see.

You know, just to listen. And I think that’s the key. The, you know, if you look at it, they appear to be legit. They know the space, they know you a little bit, at least. Have the call. Limit it to like 30 minutes and focus on listening. Don’t, if, if they come in with an interrogation and they just wanna know what are your numbers and all that kind of stuff.

Gini Dietrich: No, no.

Chip Griffin: Pump. Pump the brakes.

Gini Dietrich: Yeah.

Chip Griffin: I mean, I think we all guard on our numbers too much. Like there’s some, you know, sacred formula, they’re not, but it, it tells me something if they just want to pepper me with questions. Because maybe they’re just doing market research or something like that. Mm-hmm. And, and what I want to do is figure out, you know…

why did you reach out? What is your vision, what, you know, how does this work? You know, if you’re, if you’re trying to roll up agencies or you invest in a bunch of agencies, tell me more about that process so that you can learn and, and basically put them in the position of selling you on continuing the conversation.

Gini Dietrich: Yeah, absolutely.

Chip Griffin: Rather than you selling them on being interested in you. And I know that can be hard, particularly if you’ve ever been interested in selling your business. You kind of wanna make it all sound as good as possible and that sort of thing. But I, I would try to get that information out of them first, and then I would do, as you say.

Start working your network to try to figure out who knows them, you know, who have they acquired before, those kinds of things. Because that will tell you a lot and, and certainly you can learn a lot from talking with anyone who’s already part of that network or been through those conversations who can say, oh yeah, this was a good thing, or no, this didn’t quite work out the way I had hoped.

Gini Dietrich: Yeah, I mean, work your connections just like you do anything else. This isn’t any different than, you know, how you would do your own business development, how you would do your own hiring. You know, we always ask for references, but then we look to see if we know anybody else who’s connected with the people that we’re hiring.

Like, that’s how we do our hiring. So don’t treat it any differently just because you’re excited about the idea of selling your agency.

Chip Griffin: Right. And I, I think that’s, that’s advice that, that works throughout the process. Even, even if it appears to be a serious inquiry. You want to continue with it.

Always be cautious about how enthusiastic you become about the idea of selling because it will cause you to do things and make decisions that aren’t smart. And, and so you need to be thinking about how you’re communicating. First of all, make sure that you’re never fluffing anything up in those early conversations because the truth will always come out.

Gini Dietrich: They will find out.

Chip Griffin: So, so if you’re, yes, if they say, you know, we’re, you know, we’re looking for $2 million plus a year agencies, and you are not a $2 million plus a year agency, please don’t pretend that you are.

Gini Dietrich: Yeah. Just tell them you’re not. Right. Just tell, tell them you’re not because they’ll find out.

Chip Griffin: They’ll find out and don’t, don’t say, well, you know, I’m at one five, so rounding up. No, that’s two. No, no. I mean, just in that case, just be honest, we’re not quite there. We’re at one five. Right? Yeah. And, and if that’s still good enough for them, you know, maybe two million was sort of an arbitrary number.

Maybe they want to continue, but if not, they’re going to find out eventually. And so anytime you’re in these kinds of conversations with potential acquirers, it’s better to get the stuff out there. And if you’ve got some, you know, not necessarily dirty laundry, but you know, some warts that you, that you’ve been, you know covering up, just share it. Like if, if 80% of your revenue is from one client, be upfront about that so they don’t find that out and waste a lot of your time and theirs because that’s gonna sour the relationship. And maybe somewhere down the road, something could have worked out, but they’ll remember, oh no Chip’s the guy who, you know, led me on and then we couldn’t do a deal because you know, he had 80% of his revenue tied up in one client.

Gini Dietrich: Absolutely. I’ll say that like I said, I’ve done this several times with other organizations having served on their boards. And the one big mistake that I have seen organizations make, and you’re gonna laugh at this, but it’s it’s true, is wanting to close something by the end of the year, which on paper, in theory, sounds great.

You’re done at the end of the year. You go into the holidays and you’re done. What really happens is that you work all the way through the holidays. To get it done by the end of the year. And it’s a miserable experience for you and everybody involved. And I have seen it happen where people are like, okay, but we’ll be done by the end of the year, and it’s just this year and we’ll be, like it won’t happen again. And what happens instead is your family’s upset, your spouse is upset, your partners are upset, your kids are upset. And so you start to make decisions based on emotion instead of ration, you know, logical, rational decisions. And, so I always caution like if you wanna have something closed by the end of the year, you really should have it closed by Thanksgiving in November.

And if you can’t do that, then be okay with pushing it into the the new year, because I promise you, you’re gonna make decisions that you will regret later because you’re trying to get it wrapped up and still enjoy your holidays.

Chip Griffin: Well, and not only that, but, but a lot of times I’ve seen it where it doesn’t even succeed and it ends up closing on like January 3rd, in which case you put all that effort in for nothing.

Because you’ve still, you know, ticked over into the next calendar year. Yep. So all of the paperwork that you thought you were gonna be able to not have to deal with, you still have to deal with.

Gini Dietrich: Still have to do.

Chip Griffin: Yep. And can I just tell you that in the whole scheme of things, if you’re selling your business, the added paperwork of, of closing on February 1 versus December 31, who cares?

Correct. Is it gonna cost you a little more, you have to sign some more documents? You bet. Sure it is. There are remarkably few instances for privately held businesses where that matters at all.

Gini Dietrich: Yep.

Chip Griffin: And so totally agree. You need to close, you need to, to try to move things along, but they need to close on the timetable that is right for you and right for the acquirer.

Anything artificial that comes into the mix is likely to lead to bad decisions and therefore bad outcomes.

Gini Dietrich: That’s right. Yep. And I’ve seen that, I’ve seen that multiple times. So I only leave that as if you’re selling your agency and that is something you should be thinking about. That is one of the biggest mistakes I see companies make.

Chip Griffin: You, you are absolutely a hundred percent correct and, and I would say, I mean emotion at all stages of the process is not helpful. Right. I mean, it’s, and it’s difficult, right? It’s, it’s, it’s your baby, it’s your business, you’ve built it, you know, a lot of blood, sweat, tears, toil, all that kind of stuff.

Yes. And it’s, it is really tough to take yourself out of it. And, and this goes in a lot of different directions because sellers will often be pretty blunt about the flaws that they see in the business, in part because it helps to drive the price down, but in part because they’re helping, they want to try to educate you about why maybe the offer isn’t as you know, robust as you thought it might be. And I will tell you, most agency owners have a sense of evaluation for their business that is wildly out of whack with what the market is actually willing to pay. And part of that is because they look at articles talking about other industries and what those businesses sell for.

Part of it is because, as we’ve talked about here many times before, agency P and Ls are in awful shape and do not fairly represent what the actual profit of the business is. So if you apply a multiple on the wrong profit number, you’re gonna get the wrong valuation. So there’s a lot of these things and, and if you take those negative things that come through in the process.

Too much to heart, that’s going to cause you to, to walk away from something that maybe is really a good deal when you look at it less emotionally. Yep. At the same time, that emotion, that excitement, can cause you to, to rush things along, make decisions that are bad. Frankly, I can tell you in my case, I’ve had instances where I was so enthusiastic about a deal, thought it was gonna close.

I made bad decisions about the business, and then the deal didn’t close. Oh. Look at that now. Now I’ve gotta try to undo some of those things that I, you know, some of those decisions that I made that were bad one, and sometimes they’re not. You can’t fix them, even if it’s only been a few months, sometimes you’re like, yeah, I can’t undo that decision and so I’m stuck with it and it can have lasting damage.

So you, you’ve really got to be thinking about all of those things and trying to think as analytically as possible, which is why it is helpful if you have an advisor who can help you through this process.

Gini Dietrich: Yes, someone who can help you.

Chip Griffin: Certainly you can go alone in selling, whether it’s a lawyer, an accountant, or an M and A advisor or something like that who can help guide you through can be extraordinarily helpful in walking you back from the highs and lows that lead to bad decisions.

Gini Dietrich: Yeah. And the last thing I’ll leave you with is this, obey your gut because if something feels off, it probably is. A couple of years ago I got really, really close, like almost down to the wire of selling my business. And it was a lot of money. It was really hard to walk away from. But something felt off about the leadership and come to find out my gut was right.

And every, almost every week I look at something they’ve done and think man, I dodged a bullet. So obey your gut because it will never steer you wrong.

Chip Griffin: That is, I think, the best point to end this on. So that is what we will do. That will bring this episode of the Agency Leadership Podcast to a close. I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich,

Chip Griffin: and it depends.