How to Sell Your Agency: Everything That Happens Before, During, and After

Episode Description

Most agency founders are focused on growing their agency, not selling it. Then it happens. The founder starts to get calls from suitors. A large agency that lost a big client to the founder’s agency suddenly wants to know if they’d consider selling their business.

The agency founder is completely unprepared for these discussions. Should they even consider selling? Should they hire an investment banker? How much should the sales price be? How do they compare different offers? Should they get buy-in from the team? Will clients be OK with a sale?

Founders who navigate these concerns properly might hit the jackpot—life-changing money, happy clients, happy team members, and peace of mind. And those who don’t may end up regretting passing on a sale as the biggest mistake of their lives.

In this episode of PPC Town Hall, I spoke to David Rodnitzky, Founder of Agentic Shift. David shared his story of selling his former agency, 3Q Digital during our conversation along with answers to all of the above questions.

If you’re an agency founder, you do not want to miss this episode.

Tune in to learn:

- When to decide to sell your agency

- The factors that drive value for your agency

- How to generate interest from potential acquirers

and more

Episode Takeaways

When to Decide to Sell Your Agency

• Consider selling when the agency attracts buyer interest or when personal growth within the agency has peaked.
• Evaluate personal readiness and the agency’s ability to operate post-sale.

Factors Driving Agency Value

• Primary value driver is EBITDA, with higher multiples for greater earnings and stability.
• Implement sustainable practices, documented processes, and a management structure independent of the founder to boost value.

Generating Interest from Potential Acquirers

• High industry visibility through thought leadership can attract acquirers.
• For less visible agencies, employing an investment banker or brokerage can facilitate connections with potential buyers.

Additional Takeaways

• Align sale decisions with personal goals and the agency’s strategic future.
• Comprehensive due diligence is crucial to avoid post-transaction issues.

Episode Resources

Link to David’s book: https://www.amazon.com/Selling-Your-M…

Check out David’s consulting firm: https://agenticshift.com/

Episode Transcript

DAVID RODNITZKY: But the truth of the matter is that when it comes to selling your business, all that stuff about we have this special client, you know, Google’s our clients or, You know, we’re the only agency that flies everyone to Puerto Vallarta once a year for a party. That stuff is not really very relevant.

What’s relevant. Number one is the EBITDA or net profit that you make as part of the company.

FREDERICK VALLAEYS: Hello, my name is Fred Vallaeys. I’m your host for PPC Town Hall. I’m also the co founder and CEO at Optimizer, a PPC management tool and software. So for today’s conversation, we have David Rodnitsky. Him and I have been friends for a long time.

We actually started a publishing house together, modern marketing masters. It is the label under which I’ve published my books. It’s the label under which David has published his books and David has a new book about how to sell your marketing agency. So how to make money, how to sell an agency, what to do if you’re running an agency.

I think that’s a very pertinent topic. So we decided to bring in David and talk a little bit about that and see how it can help you in your life. So let’s get rolling with another episode of PPC Town Hall.

All right, David, welcome to PPC Town Hall and congratulations on becoming an author for the, what is it, second time, third time? Second time for me, yes. Thank you. I’m also two time published and we have our own label. So before we get started, tell people a little bit about your background and where you’re calling us from today.

DAVID RODNITZKY: Sure. I’m calling from beautiful San Mateo, California, and we’re just finally out of the smoke from, from Oregon. So we can go outside. My background is well, many years ago, I went to law school and decided I didn’t want to be a lawyer. So I moved out to the Bay Area basically because I had a friend living here.

And then I got lucky that a couple of lawyers were willing to hire an ex lawyer to do something other than be a lawyer at a startup. I was working at that startup back in 2000. And the head of marketing quit and they had no one to do marketing. I volunteered and they were spending 25, 000 a month on a branding agency and 25, 000 a month on a PR agency and getting absolutely no results from either.

And so then someone told me about this little company in Pasadena, California, called go to, I believe it was go to dot net. I don’t think it was even go to dot com. And that was the the company that created the whole concept of pay per click advertising. It later became Overture and then Yahoo search marketing.

And then, of course, Google. Copied them. I can say that because they settled a 1. 5 billion lawsuit admitting that they copied them, but that was the genesis of PPC. And I just happened to be there at the at the early stages. And not long after that Fred, you and I met when I was working for a lead gen company around 2004, 2005, and you were on the, I believe it was the quality score team at Google at that time.

And we had some spirited discussions about that. Yeah. Yeah. Yeah. Yeah. Way back in

FREDERICK VALLAEYS: the ring, right? We were sort of duking it out. Like me trying to keep quality score high and you’re trying to you know, get your ads to show whenever you wanted. Yeah.

DAVID RODNITZKY: Yeah. You probably had a more legitimate argument argument than I did at the time, cause I was working for a lead gen company and we were just trying to, to some degree, spam Google.

But but anyways, yeah. So I, that’s, that was my, that’s my early background. I sort of just stumbling into Google advertising at a, at, at a time when there were only a couple hundred experts in the world and from there, I, I started an agency and the rest is history.

FREDERICK VALLAEYS: Well, you certainly been doing this for a long time and certainly an expert in the space, but like you’re, let’s talk about this other thing.

So the literal Nitsky ratio you actually have a PPC metric that’s named after you, and I guess it’s your technical co founder at the agency, right? But, but tell people quickly about what is the literal Nitsky ratio?

DAVID RODNITZKY: The literal Nitsky ratio is probably is, is definitely a little dated now. But at the time.

We were going in and we were doing audits of people’s PPC accounts. And as, as you may have experience, if you’ve ever had an agency come in, agency come in and do an audit, they always tell you something’s wrong, right? No one ever comes in and says, yeah, your account’s perfect. We can’t help you. See you later.

So we thought that was just kind of a, Not a good way to do business. And so what we did is we came up with a methodology, a measurement, which was essentially the percentage of your non branded keywords were queries specifically that were, had gotten a conversion like in the last 30 days, and what we could show is we could say like, well, you were buying, you know, 50, 000 of non branded keywords that haven’t even received one conversion.

And this reduces your Lin Reynitski ratio score. So it was a way of us just being, trying to be objective and saying like, we’re not here to just sell you, you must choose our agency. Your current agency is bad. Let’s just set up a standard and then give yourself, give yourself a grade. And it was adopted by a lot of people in the industry.

The, the other thing that we invented as well was the alpha beta account structure, which maybe you’re going to get to, which was just a way of sort of controlling queries on Google and making sure that Google didn’t sort of use a broad match to match you all across the universe. And that was also something that we just kind of gave away to the industry for free.

People started creating software around it. I think maybe there’s something in Optmyzr that might, might address that.

FREDERICK VALLAEYS: Yeah, we support CAGs and alpha beta and we have a Linrod Nitsky script that will tell you what the score is. I tried to do my own version, the Valet’s Shopping Efficiency Score.

It didn’t stick quite as much, but you know and then it’s like you’re so gregarious, right? Like you gave it away to the industry for free. But look, people knew who you are. People are talking about your thing. And it’s like, Oh yeah, David, he invented alpha beta structure. So there’s a lot of benefit in doing these things, right?

And so ultimately. You got to this great point where so I want to show the book here, but selling your marketing agency. So you use all of these techniques, you build a great agency. And now you’re like, what do I do next? Right? So talk to people a little bit about what goes on in your mind or what’s the decision point about selling versus not selling.

DAVID RODNITZKY: Yeah, I mean, in our case you know, we had scaled the business. I started the business in 2008 with my co founder, Will Lynn, and we. scale the business to 2014, about six years after that, where we were doing, I think, I don’t remember the exact number, but 15 or 20 million of revenue. So pretty sizable. And we started getting calls from, from suitors, if you will.

And I basically had been given some advice from a friend of mine who just said, listen, when you get calls from acquirers, hire an investment bank, even though you don’t have any plans to use them in the. In the near future and let that investment banker just talk to all these parties and keep them warm, so to speak.

So that’s what we did. We had 6 or 7 people who called us private equity, holdco, strategic advice, strategic companies, and at some point around late 2014, we said, you know, there’s enough interest here that we should at least just see what happens if we Actually ask them to submit offers, and we had a number in mind.

And, you know, we obviously there were there were a lot of elements around making sure that we work with someone that we really believed in them as a partner. And it was good for clients and good for employees. But we, we ran what I call a mini process. So we didn’t do a full process, which is when you send out 50 emails to a lot of people who you’ve never even met.

This was just a, a cent, send it to six or seven people and said, look, we’re not for sale, but since you want to buy us, give us an offer. And we did that process and we ended up getting three offers. One of which was significantly outsized from the other one. And it happened to be with a company that we really liked.

And we decided to. To take the offer and see what happens, see what happened as a sold company.

FREDERICK VALLAEYS: That’s amazing. So, so you fell into an agency, not even wanting to be an agency. I think a lot of people go into agencies. Maybe wanting to sell it talk a little bit about like what creates value in an agency And if you want to sell it, like what is the main thing you should worry about?

Like is it that size of revenue the type of client? Is it the technology you build? What are the value drivers?

DAVID RODNITZKY: Yeah, I mean, there’s definitely a huge difference between Maybe what agency owners are thinking on a day to day basis about what they want out of an agency And then what it takes to sell the agency as you said, I mean, when I started the agency, I really, my main objective was to not have to work for someone else ever again.

So I was just like, I’m not good at working. I’m not good at working in a company. I don’t, whenever there’s a political battle, I lose and I’m not happy when other people make decisions that I don’t agree with. So I’m just going to start an agency and do it my way. And so I, I did Everything I want every always wanted to do, but but never did when I was at someone else’s company.

So I offered, you know, unlimited PTO and and 100 percent work from home. And that was not sort of a thing that everyone did. Initially with our clients, we had 48 hour out clauses and all of our contracts for no reason at all. So I said, look, if we’re not driving profit for us for you yesterday, fire us.

And so just build something that I thought was really great. In terms of, you know, what people were looking for when we sold the agency, you know, I think one of the sort of, I think every, there’s a you know, Tim ash, who’s a usability expert down in San Diego. He wrote a, he has a concept. He says, your baby is ugly.

When he does landing page design reviews, and I think every agency founder and also website owner thinks that their agency is beautiful and special and, and deserves to be treated, you know, ways better than the average agency. And that’s great. I mean, I think you need to have a little bravado when you’re working in and running your business.

But the truth of the matter is that when it comes to selling your business, all that stuff about, you know, We have this special client, you know, Google’s our clients, or, you know, we’re the only agency that flies everyone to Puerto Vallarta once a year for a party. That stuff is not really very relevant.

What’s relevant. Number 1 is the EBITDA or net profit that you make as part of the company and basically acquirers have a range of multiples that they all work against and they all come down to a multiple of EBITDA. So if you’re doing a million dollars of EBITDA a year. You’re probably worth something in the range of two to four or five million dollars as a, as a agency for sale.

FREDERICK VALLAEYS: Okay, so let’s pause on that, right? So as a service in business, you’re saying that you see between a two to five X multiple on the EBITDA?

DAVID RODNITZKY: No, not exactly. So the interesting thing about EBITDA ranges is the higher your EBITDA, the higher the multiple. So if you’re a million dollar business, You probably have maybe five or 10 people in the company.

Most likely the sales is done by the founder, maybe even the most of the client services done by the founder. And so acquirers don’t really see you as having a hugely sustainable business outside of the founder’s sort of sphere of influence. So you get a low multiple, so you might get two, three, four times that, that, that EBITDA number, annual EBITDA.

If you are a 10 million business, 20 million EBITDA business, now acquirers see you as. Sustainable beyond the founder you’ve built something that has enterprise value. Oftentimes,

FREDERICK VALLAEYS: what’s that? There’s a process in place. Wasn’t it you who said that if it’s an agency without like process, it’s just a bunch of people running around.

Yes.

DAVID RODNITZKY: Yes. Absolutely. Yeah. I mean, usually you can’t build a 20 million dollar even the business with just a bunch of smart people sort of doing smart things. That doesn’t work where you can do that with when you have 5 or 10 people. And it’s just kind of like, we’re. Yeah. You know, you sit down every week and you brainstorm and come up with an idea of how to make an account better.

So the bigger the, the bigger the profitability of the agency is, the bigger the EBITDA, the the higher the multiple. So if you’re at a multiples fluctuate for many, many reasons, but at this point, if you’re doing 10 million dollars of EBITDA right now, you’re probably worth something in the range of call it 80 to 120 million dollars.

So 8 to 12 times EBITDA. Versus that 2 to 4 times EBITDA for the company that’s doing a million dollars of EBITDA. So it’s, it does vary significantly.

FREDERICK VALLAEYS: Okay, cool. So, and that’s basically then the value drivers, right? So if you’re looking at what do you build in your agency, you’re saying build up your EBITDA.

But the other things that kind of come along with that is have the process, have the staffing levels, like make not everything dependent on you. And so that’s one thing I also think about in my business, right. Is there are so many things I still do, like speaking at conferences, some of the thought leadership, some of these PPC town hall episodes.

But what would happen if, you know, I got hit by a bus tomorrow, like with the business still go on. And so even though I enjoy doing these things, it’s good to have backup. And in terms of like our customer support teams. We never have a single point of failure, right? It’s not about one person being the account manager.

It’s about having a pot so that if one person gets promoted, if one person decides to take on a different role, that client still is supported, has continuity. And these are the types of things that build value. And sustainability in a business.

DAVID RODNITZKY: Yeah, I’ve always said that the job of an entrepreneur is to fire himself from jobs.

And and that actually has 2 benefits in a business. Number 1 is it helps you scale the business because, as you said, if you’re an army of 1, and you’re the person who’s responsible for sales and for client services and for product development, you just can’t scale the business. That’s that’s number 1.

But number 2, like, It gives you optionality when you do sell the business. A lot of, a lot of agency founders actually purposely spend about a year before they sell their business extricating themselves from roles. And making themselves seem as irrelevant as possible because then when it comes time to sell, you can sort of tell the found, tell the acquirer like, look, I’m, I’m the guy who founded the company, but I’m not really that relevant today.

So you should basically just pay me out and take my agency or you can sort of, if you want to stay, you can, you can certainly make the argument that it stayed, stay, stay actively involved. And so, Continue after the sale takes place.

FREDERICK VALLAEYS: I think that’s interesting, right? Because you’re basically making the point, listen, I’m not, no longer necessary as a founder, but maybe I do want to stay on, but because that’s another big question, right?

Like you’ve probably spent five years, 10 years building this agency, building it up to the point where it is. And now to, to have the thought that from one day to the next, somebody else owns it like a UA cup and yeah, maybe you have a lot of money in the bank, but like, what’s your purpose in life at that point, right?

So what do you do next? And talk a little bit about what that decision was for you and what did you do about it?

DAVID RODNITZKY: Yeah. I mean, I think that oftentimes people don’t realize that when you sell your business, you’re selling your identity and purpose for cash. And in a lot of instances, that doesn’t seem like a very good trade off.

I mean, if you have spent 10 or 20 years building an agency and and you’re really enjoying being sort of at the, At the center of this industry and you like speaking and suddenly someone buys your agency and they’re like, we don’t need you anymore. That could be challenging. So I actually think that I think that it’s something that founders have to think pretty carefully about about what, what do you do?

Do you stay with the company? You convince the fact the the acquirer that you need to be the go to person or do you sort of put yourself in a position to sort of to move on? You know, when we sold the so we actually sold 3 times, which is a little strange because the 1st time we sold I mentioned that we did this many process and we’re very excited about it.

The company that that we sold to eventually Wasn’t able to sort of figure out how to pay us what we were owed on our earn out, which is another topic we could talk about. But when we sold to that company, the first time I made it very clear to them that I wanted to continue with the business, at least while we were running, doing the earn out.

And it was great. You know, we negotiated the contract with that in mind and we basically said until we get paid our earn out we’re, we’re basically an independent company. We control HR. We can control which clients we take on. We control how much we charge. We control our margins, et cetera. So I was very much clear to them that I was not going anywhere when we sold.

Well, the 2nd time, and to some degree, the 3rd time you know, especially the 3rd time when we sold to this holding company and in Holland called depth, which is great. And it’s been a great relationship. You know, I made it very clear from the beginning that I was not interested in continuing in sort of a leadership capacity, and it was just a matter of.

Being honest with them and, and convincing them that, that the business could exist without me. So,

FREDERICK VALLAEYS: and talk about that progression, right? Because the first time you said, listen, I want to remain in this business. And part of it was to guarantee that the earn out would happen because you probably were afraid.

And then maybe it was your fear, but a legitimate fear is somebody else takes over. If there’s an earn out, then that other person, the new owner could screw it up. And that means you don’t get paid all this money that you’re owed. But you also talked about you wanted to remain in the industry and remain an influencer and have that sphere of influence, right?

But then clearly something happened between that time and now the third time that you saw that you’re like, I’m, I’m done with this. Like,

DAVID RODNITZKY: yeah.

FREDERICK VALLAEYS: Talk about what happens.

DAVID RODNITZKY: Yeah. I mean, I think there’s a couple of things. I mean, number one is I, I think that there are two types of leaders of agencies or of any business really.

They’re stage specific leaders and stage agnostic leaders. And so a stage specific leader is someone who is really good at one point in the agency’s growth, but then. Isn’t good at another point and a stage agnostic leader, someone who can take a business from 1 person in a coffee shop to, you know, an IPO, whatever.

And I sort of realized at some point that I was a stage specific leader. So I was very good. At taking the business from one to a hundred people, I was pretty good at taking the business from a hundred to 250 people, and I was not good from taking it above 250. And I, you know, I think part of that is that I’m sort of a, a guy that loves coming up with crazy ideas and strategies and, you know, creating Lynn Rudnitsky ratios and all that stuff.

That’s to me what, what I really. Enjoy less. So, you know, how do we go from 250 to 300 people? And how do we make sure that we increase our EBITDA from 16. 1 percent to 16. 3%? And I’m not saying there’s there’s nothing wrong with that sort of. That’s a very important part of a business. And we brought in a CEO after me who did a fantastic job of that.

That’s just not what I’m good at or what I like. So I kind of realized that as we grew. Well,

FREDERICK VALLAEYS: and I think most people who start an agency is because they love marketing. They love playing with PPC. And like you said, when we’re at this key ratio, should we do alpha beta structure? Should we use P max campaigns, all of these important questions, right?

And then like you’re saying, at some point it becomes about like, what’s the contract we put in place? How do we hire enough people? How do we, and nothing is about PPC and the thing that you started with. Everything is about running the business. And that’s where it makes a lot of sense that at that point you bring in, well, you have two options, right?

You’re going to bring in a professional leadership, which is, which is kind of when I was at Google, like Eric Schmidt was brought in to manage Larry and Sergei. And then eventually, of course, the company goes public and gets sold. Right. So, so those are the considerations. Very interesting how you went through and what happened the second time, by the way, that you sold.

So now the last time it’s a holding company, the first time it was another agency, it sounds like.

DAVID RODNITZKY: So the 1st time we sold, we sold to a strategic. It was a company called Hard Hanks. They’re they’re publicly traded. They’re not in Texas. They have historically, they were historically in a lot of offline marketing, like direct mail and fulfillment, and they realized they needed additional marketing presence.

And so that’s why they. They acquired us. You know, we ended up amicably deciding that we would, that myself and the founders of the company would buy the, our company back after three years a during the Earnout period. And when we brought it, what brought it back, we thought, well, this is our back independent again.

Hooray. Let’s keep doing this forever. And the same thing happened to us. That happened the first time we started getting calls from acquirers. Who are interested in, in making us an offer. And so we said, well, we might as well see what’s out there. And we did get a lot of great offers. And we ended up getting two family offices in Chicago PSP capital and Erie street capital that went in together to make us an offer that we accepted.

And you know, it was, it was great. It was it was, it’s more of a private equity model than the strategic model as before. And you know, when we signed the deal, I was like, You know, I was, I was very curious to know how private equity could sort of impact the business. And, you know, it kind of is, is what I, what I said before about, like, being a stage agnostic or state specific leader.

I mean, the private equity guys just have a much finer tuned pencil. That’s probably a really bad analogy, but it doesn’t make any sense. But they, they have the ability to look at a business and say, how can we take this from the next level. Doing, you know, X amount of profit to Y amount of profit without destroying the business and they did.

And you know, I was already sort of firing myself from jobs. But when they came in, I was able to fire myself a lot faster. As I said, we brought in a CEO, Rob Murray, who had been the CEO of my prospect. Great guy. Who also had this ability to sort of lead at a stage that I couldn’t lead at. And so the combination of of the private equity guys and.

Bringing in Rob and his team really accelerated the growth of the business substantially.

FREDERICK VALLAEYS: One thing I’m curious about, when private equity comes in, right sometimes it seems appealing that you as an agency or you as a business about to be acquired have one thing that you’re particularly weak at. So for example say that you don’t have a really strong sales team.

You’re really good at executing, but you’re not great at like selling to enterprise customers. Is that a positive or a negative in your book? The way that I sometimes think about it is like, Ooh, private equity would look at me like, Oh, well, if we just put the right person in place and fix that sales process, like that is worth so much money right there off the bat, that’s an easy fix for someone who knows how to do that.

So, so like, if you’re running an agency, is it like good to have one thing you’re not that good at, or would you recommend like everything needs to be Solid and then private equity will take it to the next level.

DAVID RODNITZKY: I mean, I think that it’s always good to do the best, the best that everything you can do.

So I don’t think you should sort of like you know, be okay with having a flaw and think, well, someone’s going to eventually fix this. So. You know, I mean, I think that the private equity companies typically have some, some sort of playbook that they’re bringing to the equation. So, when they’re doing their due diligence, they’re sort of checking things off and they’re saying, like, is this company good at sales?

Are they good at marketing? Do they have their finances in order? And if they find something that they think is an easy fix, then that probably, in a way, encourages them to To to make a bid because they can see that there’s going to be an improvement in the performance. But at the same time, I mean, if you’re a super well buttoned up company, if you have best of class across the board in every single function, functional unit there’s going to be plenty of acquirers out there who want to invest in you and who will make you sort of the the tip of the spear or the sometimes they call it like the they call it like the platform.

Where they’re going to sort of buy you and they’re going to buy 10 other agencies or technology providers. In addition, they’re called add ons that collectively will, they want you to lead and make it into a much bigger company.

FREDERICK VALLAEYS: And now you said you were fortunate, right? Like people are constantly reaching out to acquire you.

And I see the same thing. Like whether you own real estate or you own a company, like there’s always interest at some level. And you just said, Hey, fine, we’ll, we’ll see what’s up. If you don’t have that interest Why is that? Like, is something wrong with your business? Do you just need to hire that banker to generate that interest?

What are your thoughts on that?

DAVID RODNITZKY: Yeah, I mean we were fortunate I think, because in our little world of PPC agencies, there were sort of known Independent leaders. So at the time when we were selling, there were anywhere between 5 and 7 agencies that everyone sort of knew about that were the sort of fast growing independent companies.

So we were sort of in that in that world where we were just getting a lot of outbound or I’m sorry, inbound inbound interest because we were a known entity for companies that are not In that space there are a couple options. Number one is just to hire an investment banker. And to your point, you’re right.

An investment banker, you know, especially one that has experience in the industry is going to know all the usual suspects and they are going to be able to send around 10 or 15 investments. Emails very quickly and say, Hey, I don’t know if you’ve heard of this company. They’re thinking about going to the market.

Are you interested beyond those 10 or 15 companies? They can also send to 20 or 30 other companies that may not be usual buyers, but that they think there could be a connection there. That would be like a strategic. That’s like looking potentially considering acquisitions. So there’s, there’s a ton of value there to the investment banker.

If you’re smaller, the challenge with investment bankers is they usually don’t sort of quote unquote, get out of bed unless they’re going to be paid a million dollars for a transaction. So that usually means that they want to only work with companies that have, let’s say, a minimum of $3 million of ebitda.

‘cause they figure maybe $3 million times eight, let’s say is, or seven is $20 million. They get, you know, two or 3% of that. Somehow that works out to a million dollars. I’m not exactly doing the math. But for companies that are smaller than 3 million, there are companies online like we are Barney, which is probably the biggest in the space, which are brokerage firms that are don’t have the white glove service of an investment bank and are really more of a place where you can just lift, list your business online and people can search for businesses like yours and make an offer.

FREDERICK VALLAEYS: And what about if you’re one of these smaller agencies right now, would you. Go and talk to other agencies that are smaller as well and see if you can join forces to accelerate faster. And clearly, I mean, you ran really good agencies, right? Like 3Q, I think was the latest you had really flagship clients.

You guys were known as like a leader. A lot of that thought leadership that you did really helped. I mean, do you think that’s and obviously I think. You’re going to say that’s the way to go. But if you don’t have that, if you’ve tried that, should you just join forces with smaller agencies? And then if you join with smaller agencies, would you be like, Hey, we do SCM left.

Let’s find an SEO agency. Let’s find the social agency. Or would you just try to grow in like one space?

DAVID RODNITZKY: You know, you can I think that, you know, whether you’re selling your agency or you’re buying other agencies, there’s a level of expertise that you just need to. To get to to feel comfortable making the deal happen.

You know, mergers and acquisitions. There was some statistic that said something like 60 percent of mergers and acquisitions fail, at least based on the expectations of the companies involved. And I mean, I kind of relate this to, like, when you’re applying for a job. All you see is the opportunity.

And when you’re at a job, all you see is the warts. It’s kind of the same in M and A. I mean, you’re looking to join forces with another agency and you’re like, Oh, my God, they do. S. E. O. We do S. E. M. They’re in California. We’re in New York. This is peanut butter makes chocolate. It meets chocolate. It’s gonna be, you know, Reese’s peanut butter cups.

You don’t really if you’re not an expert, you don’t really see some of the challenges that could come up. So I think that you can come together with other agencies, but I think it has to be very clear. careful process. I think for starters, you need to pop if preferably really know the founders and have a track record with them and not just sort of randomly joined forces.

You know, you need to do a lot of due diligence. You need to ask a lot of questions. If possible, you need to either have an M and a advisor or an investment bank representing you when you’re looking at making that acquisition. I mean, I will tell you that We made an acquisition at three Q before we were acquired by anyone else.

And it was a very good acquisition. It was a the, one of the founders was a guy that I had known in the industry for many years. It turned out to be, you know, a really good two plus two equals five acquisition, but one of the things that I didn’t do in the due diligence, which I mean, I might’ve, I might’ve known better if I, if I’d had an expert working with me, if I’d done it a couple of times, so I didn’t realize that the company we were acquiring.

Had a domain, had a inventory of maybe 200 domains that were all adult domains, and they were basically making affiliate revenue off these adult domains from these porn sites. And so that was part of their EBITDA that I didn’t understand that when I, because I didn’t know how to do diligence. And so when we acquired them and we saw what we had, I was like, well, this is not consistent with our brand.

So we just unloaded it for pennies in the dollar. But that’s an example of like, if you don’t know what you’re doing and you’re trying to acquire another company, you know, it can be pain points along the way.

FREDERICK VALLAEYS: Yeah.

DAVID RODNITZKY: Lots

FREDERICK VALLAEYS: of pitfalls,

DAVID RODNITZKY: red flags.

FREDERICK VALLAEYS: Well, hey, this has been great. So obviously there’s a lot more information in the book.

So Go on Amazon selling your marketing agency by David Rodnitzky. Check it out. Great book. Great content. Whether you’re looking to sell right now or you think it’s an option in the future, definitely a good book to have because it’s going to help you put all the right pieces in place for when that day potentially comes.

Now, you, David, having done this three times, what’s next? How do people get a hold of you if they want to work with

DAVID RODNITZKY: you? Yeah, so what’s next is I’m launching a website or Probably launched by the time this goes live called the genetic shift dot com and it’s going to have a bunch of content related to the book and beyond the book and ultimately I’m sort of starting a consultancy where I can.

Hopefully help founders learn my on my dime. When they go to the agency sailing process. I think 1 of the things that I have realized about selling your agency is that pretty much everyone who’s involved in the process is an expert at M and a except for the founder. Who’s this for? For whom? This is the 1st and most important financial transaction of their life.

So I’m trying to be sort of a founder whisperer. That’s kind of what I’m, what I’m trying to do post agency and just work with founders and, and help them get the highest valuation and also just pick the right home for their agency and make sure that once they do sell it, that they, they leave happy and they don’t have regrets or, or sellers remorse.

That’s what I’m working on. And if anyone wants to reach out, you can reach me at david@agenticshift. com and I’d be happy to talk to them.

FREDERICK VALLAEYS: Nice. It sounds like you should be getting a lot of emails. Definitely a topic that many agency owners want to talk about. So yeah, David, thank you for sharing some of your insights and for putting it all in a book.

Sounds great that you’re building an agency around it. So we we’ll put all of this in the show notes so people can get a hold of you. But if you’ve enjoyed PPC Town Hall and want to see more of these episodes, hit the subscribe button right there at the bottom. And if you are an agency or an in house team, you’re looking for some software to find out your Linrod Nitsky ratio or some other aspects of your auditing, reporting, automation, Optmyzr will do that.

We have two week free trial. So check that out and thank you for watching. And we’ll see you for the next episode.