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 concentrationRecurring revenue (good, but not essential)Tight positioning (vertical or horizontal can work)A repeatable business development process, not too owner reliantA strong leadership teamEpisode Resources:Book: Selling Your Professional Service Firm (By David C. Baker), also available on Amazon and AudiblePassive Sellers List by PunctuationValuation Service by PunctuationComing up in this series on beginning with the end in mind are:An agency founder 25 years inAn agency coach and founder with 2 successful exitsA co-founder of multiple agencies and an agency holding companyIf 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] to our newsletter to stay in touch or follow Arlen on LinkedIn.Thank you for listening!

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