Carl Smith of the Bureau of Digital has been talking on his podcast recently about the flood of pitches from agency brokers that he is seeing. At the same time, many owners are tired after two crazy years and thinking about throwing in the towel and selling.
In this episode of the Small Agency Talk Show, Carl joins Chip Griffin of SAGA to talk about what to consider before you decide that selling is the right thing to do — as well as what to expect after your broker finds what you think is the ideal match.
Be sure to check out the two episodes of the Bureau of Digital podcast that we reference in this discussion:
* Beware of the Broker Feeding Frenzy
* How to find a good broker to sell your shop
Carl Smith: “If we sell and end up in three to five years connected and have to work for somebody, we will have a boss. Most of us are not employable. There’s a reason we started our own thing because we don’t like taking orders.”
Chip Griffin: “The thing I will say about valuations is you’re worth whatever the buyer is willing to pay and you’re willing to accept.”
Carl Smith: “As the person selling, you’re not in charge. It is definitely a buyer’s market.”
Chip Griffin: “What you do to help make your business better to sell will make it better for you to run and vice versa. So just build a good business.”
The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Chip Griffin: Hello, and welcome to another episode of the Small Agency Talk Show. I’m Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance. And I’m sure we’re in for a show today. If the green room has any indication of what we’re up for for the next 30 minutes, it’s going to be interesting. My panelist today is Carl Smith of the Bureau of Digital, one of my favorite people to have on the show because he’s just so lively, interesting, and actually has good information too. So you can have fun and learn at the same time.
Carl Smith: I’m still getting over the countdown, man. I wasn’t, you told me my mic was hot, so I couldn’t go 10, 9, 8. I was like, ready to go. What are we doing? Chip, let’s go.
Chip Griffin: We are, we are diving in to a topic that you have been exploring, which is the sale of your agency.
And, and so you on your own show over the last couple of episodes have been looking at the broker process and there’s all sorts of good information that you have there about brokers reaching out to you and the process of working with a broker and all that kind of stuff. And so I will encourage people to go and listen to those episodes.
We’re not going to rehash the whole conversation you had with Carl. That’s not necessary that content is already there, but we are going to talk about leading up to the decision to sell your agency and kind of a little bit about what it looks like on the backend, because that may influence your decision to even engage with a broker.
But before we do that, if someone does not know who Carl Smith is and who the Bureau of Digital is, can you just share a brief bit before we get started?
Carl Smith: Well, first of all, welcome to the majority of the world who does not know who I am.
Chip Griffin: But not on this show because…
Carl Smith: on this show, you know me. You better be brand new first time you ever logged in, if you don’t know who I am.
Um, my name’s Carl. Theater major who went into advertising, stayed in advertising for about 14 years. Launched my own shop called Engine Works, had a great run and then a not so great run, and ended up over at the Bureau. The Bureau of Digital is a collection of great web shops and digital agencies and providers for those agencies.
We recently hit a thousand members. So that’s like a really bizarro thing. I’m sure one person just quit now. So we’re at 999 again, but regardless, basically we’re getting together every day to support each other, to lift each other up sometimes just to whine about stuff. But overall the Bureau just exists to provide support for people who are kind of leading that digital services charge.
Chip Griffin: Excellent. Well, it’s a great resource. I would encourage folks to check it out. You also host all sorts of really interesting events. And so it’s a, it’s a great way for agency leaders to level themselves up. And that’s what we’re all about here. So, but we’re going to talk about when you’re ready to, to throw in the towel and move on to the next stage of things by selling your agency.
And Carl, I know you talked about this a little bit when you were talking about brokers, but a lot of agencies right now are thinking about, or agency owners are thinking about selling. It’s been a rough couple of years and it doesn’t matter whether you’re a digital shop, a marketing shop, a PR shop, everybody has sort of had a rough go of it in one form or another.
And so, and folks are sitting there saying, and I know they come to me and they say, Hey, I, you know, I’ve had enough of this. I’m ready to move on. I’m ready to do something else. I’m ready to retire, whatever it is. And so now they’re thinking about how do I go about doing this? And so you cover that nicely in the broker conversation, but my question is, should they all be doing that?
Should, is that really the right solution for most of them?
Carl Smith: No, I don’t think so. I think for some, it really is. Right. Like some people have gotten to this point where they’re ready to do something else. They’ve got their shop humming along. They care about their team. They don’t want to just turn it off.
It’s also got value. They’ve put a lot of themselves into it. And if they’re really just not enjoying it anymore, if it’s just not something they want to be a part of, but they also want to take care of themselves and, you know, get paid for some of the work they’ve put in. Then I think those people should absolutely consider it, look at it, see what it is. But if it is just, I want out, right.
If it’s just I’m done, I can’t do this anymore. If you are in that phase where you’re burned out, and you just want it to stop. That’s not when you should be selling your shop. Right. That, just, that just feels like a bad idea. And if you are going to do it, it’s probably a better idea to just unwind it somehow, or find a way to let somebody on the team take over, something of that nature to kind of pass the torch versus contacting somebody to help you sell it.
Chip Griffin: Yeah. And I think, I mean, that’s a great advice. I think the other thing is you need to think about what it is that you don’t like about the business. What is it that’s driving this frustration? Yeah, because I think it’s worth trying to figure out how to solve those problems first, before you throw in the towel.
And there’s two reasons for that. One is you might find that you actually build something that you want to and enjoy owning at the end of that process, or two you’ve actually done things that will help increase the value. Cause if there, if you don’t like running the business, that likely means there are some flaws in how it’s operating today that’s going to cause a seller to, or a buyer rather to discount the price they’re willing to pay. Right. Because they’re going to spot these problems. It’s not like you get to go into the process with them and paper over all of the problems. And they’ll say, this is fantastic. Great. I’m just going to run out and write a check.
Carl Smith: Don’t open that door! Like selling your house – don’t go in the backyard!
Chip Griffin: Yeah, exactly. No, no, no, no need to go back there. And you know, those things that look like burial plots back there, they’re not really. I’m not a serial killer,
Carl Smith: Just former people who were looking to buy the house, but didn’t. It’s fine.
Chip Griffin: Yeah. They just, you know, it is what it is. So, so you need to, I think, think those things through, I think that the time to sell is, is when things are going well, when you have an opportunity to perhaps retire or move on to something entirely different. You know, you’ve got a side passion that you want to indulge, as your full-time avocation instead. That’s fine. But if it’s, if you’re trying to sell because you’re just fed up with it, the likelihood is you’re not going to get what you want.
And oh, by the way, we’re also going to talk about some of the gotchas that come with it because throwing in the towel doesn’t happen immediately.
Carl Smith: No. I love what you just said about what is it you don’t like, what is it you don’t want to do? This is funny, but when I was running Engine, which was my shop, it was one of the Charlie Sheen stuff blew up.
You remember when Charlie Sheen just went way batshit crazy, right? Winning, tiger blood, all that stuff. I ignored all of it until one Saturday when my family was out, nobody was doing anything and I had this delicious six pack of Ballast Point grapefruit Sculpin. I remember this day very well, and I said, I’m going to Sheen out.
I’m going to go in there and learn all these things about Charlie Sheen. And there was one thing he said that really was kind of brilliant, and that was having a to don’t list. I’m not going to do these things. And so I sat down and I looked at Engine and I said, what is it that I love about running the shop? And what is it that I hate about running the shop?
And then I said, okay, the things I hate is now my to don’t list. I need somebody else to do these things. You know what I fell in love again, like I, I did think that I was done. I was burnt out, but it was because I was having to answer the same questions 12 times a week. It was, you know, that the chief repeating officers, what a lot of people who are running a shop think of themselves as, I’m constantly saying the same stuff to a new client, to a new hire, to whatever.
But we found other people who wanted to do those things I didn’t want to do. We didn’t even have to hire anyone. Right. I basically just went out and said, Hey, these are some things. If anybody’s interested and people gravitated towards them, right. They’re people who do want to work in HR, people who do want to think through pricing strategies and all that sort of stuff.
Me, I want to solve the problems, but I don’t want to get into the mess that comes with all of the people on the team and all that sort of stuff. So I think there’s something really brilliant there. I think also your shop doesn’t have to keep doing what it’s been doing. Like we get this…
Chip Griffin: What? We can change things?
Carl Smith: I know! We can change things.
Here’s the craziest part Chip. And you know this, if we sell and end up in three to five years connected and have to work for somebody, we will have a boss. Most of us are not employable. There’s a reason we started our own thing because we don’t like taking orders. We don’t like people telling us what to do.
And we like to try things. So. This idea that right now, and I’ve seen some shops doing this. They can’t get enough talented people or they can’t hold on to enough talented people to do the amount of work that’s coming in. I don’t even hear them talk about changing the amount of work. It took forever for people to talk about raising rates.
And now I see people that are actually in their annual contracts they’re starting to put in that there will be an annual adjustment for cost of living. Raise rates one and a half to 2% a year. That’s never anything we would have done before. Right? So it’s like now people are kind of planning that this is going to be an ongoing thing, but there’s no reason why you can’t change the services.
There’s no reason why you can’t change what it is you’re actually delivering. If there’s one part of what you do, that you can’t get done find a way around it. A lot of people are getting into business automation inside their companies, not just marketing automation, but actually figuring out ways to move projects forward without humans having to kick it quite so much.
A lot of people are talking about client portals again, like welcome back to 10 years ago. Right?
Chip Griffin: Right. What’s old is new again. Right. Always, always it’s the story of life. But you know, the problem is that owners, I think sometimes forget that they’re the ones who are in charge. And agency owners tend to run their days based on what’s in their email inbox.
What’s, what’s showing up in slack from their team or from clients. And so they’re just there, they’re constantly fighting fires and they don’t take the time to step back and say, timeout, this is my business. I can run this how I want. And so you need to start with understanding what you want from the business.
And so you need to be honest with yourself. I want to make this much money. I want to work this many hours and I want to do this kind of work. And if you can’t enunciate what those things are for you, you’re never going to be able to make good decisions. And you are going to be frustrated. You are going to want to throw in the towel.
So start there and then start shaping your own role. As I like to say, write your own job description first. Yes. It’s you got to go hire all these, you know, seats on the bus in order to get the work done for clients. But before you do that write your own job description. Not what it is today, what you want it to be. So that you can figure out those things because you’ll be a lot happier.
And I guarantee you, if you sell, once you become an employee of someone else, they’re not going to let you write your own job description. They’re going to tell you what you’re doing. So it may actually get worse before it gets better.
Carl Smith: Yeah. And then once you are out of that, what are you going to do? And the thing that I see so many people do, and I think some people do it well, some people just don’t know what to do.
They hang up a shingle and say, I’m now a coach. They hang up a shingle and say, I’m now consulting to do these things. I think it’s a halfway house kind of situation while they’re trying to figure out what they’re going to do. Again, some of them do great, right? Like David Baker notoriously was horrible at running a shop.
He’ll be the first one to tell you, you know, mainly because he doesn’t like people that much. And so he had to manage people.
Chip Griffin: No, come on. He always comes across so warm and fuzzy, Carl.
Carl Smith: I know. Right. And so it’s funny because part of this conversation, David and I had a call and we were just talking about how many shops were for sale. And we’d never, I mean, I’ve been sort of in this space for 20 years, I guess.
Right? So, or even longer than that, I guess, late nineties. It’s crazy to see how many shops are for sale. And if you sign up for any of these broker lists and you get the emails, when they put a new one up, it feels like the housing market, it feels like a Zillow where things are popping up every other day only, they don’t seem to sell as fast.
Right. So it was just funny talking to him. He’s been in this market a long time. I’ve been in this market a long time. There’s never been anything like this, which also means you have to realize as the person selling, you’re not in charge. It is definitely a buyer’s market.
Chip Griffin: Right. And it always is because most people, when they are selling their agencies have a desire to get out.
Yeah. And it’s because there’s something wrong with the business. Not necessarily fundamentally wrong where it’s gonna fail, but wrong enough that they’re, they’re tired of it and want to get out. And so that makes the, that really puts the leverage in the hands of the acquirer, because they know that you want to sell.
Now, here’s the other thing as the further, the deeper you get into the process of selling, the more it becomes almost a self fulfilling prophecy. And you’re going to agree to all sorts of stuff that six months ago, you might’ve said I’ll never do that. I’ll never sell for that amount. I’ll never agree to that kind of a, an earn-out percentage. I’ll never agree to go work for the buyer. But you get deeper and deeper into those negotiations and those objections start falling. Cause you just want to get the deal. Yeah. And it’s, and that puts you in a really bad position. And it’s, it’s one of the reasons why you ought to be reading a lot of the stuff that David C. Baker and others put out, because they will talk to you about a lot of these details in ways that will help you to better understand the process.
Carl Smith: Yeah. I mean, so much of what you just said is triggering conversations I’ve had with other people and a few that I just had with myself. I think that’s fine.
I can talk to myself. One of the ones that, that I’m thinking about is Will Reynolds. Will runs Sierra Interactive. Will got offered like $20 million to sell. Right. And this was an acquisition offer with a dollar amount, this was not any kind of going through, scoping it, figuring out, you know, what’s the real valuation, this sort of thing.
But he did say no. And I totally believe like this is the way that everything went down. Because he didn’t know what else he would do. And he was making plenty of money and he really wasn’t running the shop anymore. And so to that point, he had hired a president. He had hired a CEO. I’m not sure what Will’s actual title is, but I know other people in their companies who… well, you’ve heard this before.
Like a founder can get you to this level. But they might not be able to get you to that next level. Like their amount of love and determination and hustle, which isn’t always a negative word. And, you know, they put that passion in and they did all that work to build something to a point, but then maybe their energy’s depleted or they’ve gotten to where they want. Hire somebody else to take over.
Sit back, do the things you love. Somebody asked me where I want to be in five years and I said, I want to be right here. I still want to be at the Bureau. I just don’t necessarily want to have to worry about financial projections anymore. I don’t want to worry about, you know, how is membership retention?
How is this, how is that? These types of conversations don’t interest me at all. I want to be in the mix. I want to be in there having those conversations, hearing what’s going on. I haven’t run a shop in 12 years. So for me to even feel relevant at all, it’s only because I’m in the mix with all these people talking about what’s going on.
So that’s another thing, right? To your point, you don’t have to sell if you want to bring in somebody to take over. Now, be careful because I really got in a lot of trouble trying to do that. Because just like if you’re looking for a broker, if you’re in a situation where you’re tired… I mean, I had this visual of you when you said you you’re already kind of, you’re already kind of, under the gun when you get into the ring with a broker, because you show up with two black eyes, right.
You’ve already been in a fight and they’re in there just fresh, ready to go. So, but when you do look to even have somebody take over for you. You still have to have a lot of conversations. You still have to make sure you understand what that person’s vision would be, where they would want to take it, where they see the problems.
But I think passing the torch to somebody else, but maintaining ownership. How is that not a good idea if you get the right people?
Chip Griffin: Yeah. And, and that’s part of the trick, right? Because a lot of people, if they decide not to sell and they decide to bring someone else in, they often view that as a silver bullet too, right where they can just, they just go out, they just hire either a strong number two or someone to run the business and it’s all going to be okay. It takes a lot more than that. I mean, you’ve got to find the right person, but you also have to spend time with them. It’s, you know, make sure that you’re, you’re growing and grooming them into what you want them to be. And oh, by the way, don’t just give them equity when they walk into the door.
That’s, that’s a huge mistake that I see. Maybe once I get this person, I have to give them a piece of the business. Okay, well, now you’re in a whole different conversation. Probably a good conversation for another day. We’re not going to go there because we’ve talked now about sort of leading into the broker discussion that, that you had on your show.
I’d like to now talk about the backend. So the broker you’ve engaged, the broker you’ve found the right one they’ve had you have some conversations with some potential acquires and now you’ve got the deal that you think is the right one. And so I think this is a place where a lot of agency owners haven’t fully thought it out cause they haven’t been through it and they haven’t seen the details. And there’s not a lot written about this piece of it, frankly. You know, a lot of the books out there just end with the sale happens. Right. We were talking in the pre-show about Built to Sell. Fantastic book, lots of great advice on processizing, your agency and that kind of stuff.
But it ends with the owner collecting his check and walking off into the sunset. That’s not exactly what happens. And so let’s say that you’ve you found Acme agency is going to buy your agency. And so you’re sitting down with Acme’s CEO and you’re breaking bread and having a drink and you agree on, yes, we’re going to sell for $5 million.
Great. All done right? Now we just, you know next week I’ll get my check from them and it’s all over, right?
Carl Smith: Yeah, not so fast, my friend.
Chip Griffin: Not at all.
Carl Smith: First we’re going to whittle down that number. First we’re going to take a look and start to find different issues, challenges, things that are going to make it not quite what we said, and you’re going to get exhausted. Because you just want it to end.
And that’s in my personal opinion, the second you feel exhausted is when you should walk away.
Chip Griffin: Or at least call timeout. Right? And this is also where it’s important to have good advisors in your corner, helping you. And, and like I said, I’ve been on both sides of these transactions before. This is what’s called the due diligence process.
So if you hear that term, when you’re talking about selling it, this is where they sort of do the colonoscopy on your business. And, and so they, they come in and they want to know everything. Who are all your clients, what are all your bills? What are your bank accounts look like? Tell me about all your employees.
And it’s a really, if it’s done right, and it should be done right. If the buyer doesn’t want to do that kind of stuff, that’s a red flag too. So they’re going to come in and they’re going to be really invasive and, and they are going to find things, I guarantee you. Usually it starts with how you comp yourself because most agency owners do not pay themselves a fair salary because from a tax perspective, it’s often – at least here in the U S -advantageous to take a lot of your compensation out of the profit pool. But they’re going to remove that from the profit pool when they are assessing your business. Now, hopefully they’ve asked for this before they’ve made an offer for a sales price.
Yeah. You’re still probably going to find more details. So they’re going to take that 5 million and start whittling it down based on all of these things they find. They’re going to find a contract that has a clause that they don’t like in it, you know, and it makes the business at risk. Okay. We’re going to knock a little bit more.
And so you’re, you’re now not even talking the same number and you still have a long ways to go.
Carl Smith: And what happens is, to your point, even if they haven’t made an offer and this is what a lot of brokers will do – and by a lot, I mean, three or four bigger ones, they will say shops of your size and your service mix normally sell for_. They anchor a number in your brain.
Right. And that number is the one that’s going to get whittled down. I don’t know if this exists and maybe you even do this, Chip. But I really think there should be third party valuators. Just like you get somebody to come in and create an estimate for your house before you sell it. Like, I think it would really behoove everyone to have that number ahead of time and say, we’ve been through the process.
These are things we shored up. Hey, we upgraded the bathrooms. Right. These are things that we shored up because we knew they were an issue. Boom.
Chip Griffin: Right. Yeah. And there absolutely are business valuators. There’s a whole field.
Carl Smith: In our space, though?
Chip Griffin: Well, yeah, actually David C. Baker has that as one of his services that he will come in and, and he will do a valuation on your business.
Carl Smith: He’s gonna call your baby ugly.
Chip Griffin: In the PR industry there’s a guy named Rick Gould, who does these regularly. So there are absolutely ones with expertise in agencies who will come in and give you that third-party valuation. And I think those in certain instances, those can be helpful. The thing I will say though, about valuations is at the end of the day, you’re worth whatever the buyer is willing to pay and you’re willing to accept.
And so, so these are nice. It’s not bad that you have some general idea what your business is worth, but at the end of the day, it really comes down to what the two parties agree on. And so you can use it as leverage, but I wouldn’t necessarily count on that figure as what I’m going to get for the business.
Carl Smith: And I wouldn’t even say use it as leverage. I would say, use it to deflect. Right. Because if somebody comes in and starts saying, well, this, this, this, and you say, well, actually we had this already taken. They took a look already. Third-party, this is what they saw. I don’t know. I mean, I haven’t been through the process.
So for me to even be talking about it, not having been through it, but only living vicariously through a few dozen conversations, it feels like it’s one of those things, because you go in as an owner only knowing about your shop. Even having a little confidence that somebody else showed you. I think we need to acknowledge the best time to get ready to sell your shop is five years ago. Right.
Chip Griffin: Absolutely. Well a buyer is going to look back typically three years at, at all of your financials for three years. And so if you were doing things to manipulate for tax purposes, that kind of stuff that can hurt how your business looks. So really need to be thinking ahead if you’re going to be in a position to sell for the most that you can sell for.
Carl Smith: Yeah. Two years to clean it up and get it going the way it should and three years to look pristine. Exactly. You’ve been doing it right. And that’s where like a summit CPA or a Matchstick Legal or some of these groups. There are legal things you need to make sure are in place, based on how your agreements, especially any kind of recurring stuff, and then also obviously your finances, making sure that you’ve got all of that buttoned up. And that’s the other thing, like a lot of these specialists in digital services who have these, you know, legal or finance or other types of companies, they know. They know what they get asked to do all the time for their companies, for their clients who are looking to sell.
So they can help you get that stuff tightened up. And even if you aren’t looking to sell, should probably go ahead and do that stuff anyway, because it’ll make your company better. Right?
Chip Griffin: Well, that’s the thing that, you know, what you do to help make your business better to sell will help it, make it better for you to run and vice versa.
Right? So just build a good business at the end of the day. And you know, if you like your business, if it’s running well, chances are someone else is going to be interested in it. But you make a great point about CPAs and lawyers and that kind of thing. You really need people who are experienced in working with agencies to help guide you through this process, particularly when you’re going to sell, because the terms of the deal are at least as important as the actual dollar figure.
And so, so let’s say that the due diligence comes up clean and that $5 million price tag actually sticks. Well, now you have to get into the payment terms and, and these days, very few agencies are being sold for substantial amounts of cash upfront. Usually there’s a down payment and then you’re paid out over three to five years with earn outs and how those are structured – and I don’t mean how they’re structured based on how you and I discuss it, but how lawyers put it onto paper. It matters. And it’s not because buyers necessarily are intending to screw you. Although some, frankly do. It’s because those, that, it’s what you’re going to rely on when you have to do the calculations down the road to say, do I get this or not?
And if it’s in a legal document, it’s a black and white decision, it can come out in your favor or not. So you really need to get those correct. The tax treatment of the money that you’re paid – really important. So you’ve got to have an accountant who helps you understand because you’ll put in the actual purchase agreement, how the tax treatment should be handled, because what’s good for you as the seller may not be good for the buyer.
So typically there’s some give and take on how some of those calculations are done in the contract. And so all of this matters and finally what you have to do post sale. What is your job and what protections do you have? You’re probably going to want an actual employment contract in addition to the purchase agreement, right.
That’s going to matter. And you want the terms of it to be clear so that you know what you’re getting into because too often, even when I’ve seen an agency sold for life-changing amounts, I see owners, they’ve sold, they walk away before they collect all their cash because they just can’t stand being an employee.
Carl Smith: They can’t take it anymore!
We’re not employable. I had a friend who sold the front half of his shop to Twitter and he had a four-year buyout. And at the end of the third year, he left and he left a lot of money on the table, but he was just like, I, there are other things I’d rather do with my life right now than sit here and watch you ruin the people that I brought in.
Right. So, but there’s one other thing and I know we’re getting close on time. So tell me if we got to call it, but, when you were just, you were going through all that, it reminded me to be really careful about tax liabilities. When I, I bought three companies. One was just buying out partners for my existing company and I unintentionally they get carried a much higher tax burden based on the way we bought them out.
And, we actually…I felt really bad about it. Right? It’s, it’s one of those things where they were still having to pay the tax liability because the deal wasn’t completed until the final purchase. So they still had their stock. Right. And so they had that liability. The, the other part of that is, and I love this, friends of mine who recently sold.
And I think this is a common thing. I had never heard of it, but it was a five-year buyout. And the first four years were based on the valuation when they signed the deal. The fifth year was going to be a new valuation based on the same percentage or same formula, but based on the value then, so that everybody for those four years had, you know, the most incentive to get the company more profitable.
Chip Griffin: Right. And those deals, you can get as creative as you want with some of these things, but you also have to keep in mind though, is whatever you agree to, you want to make sure that you as the seller have some control over it, right? Because part of the problem is that businesses change. I mean, if we look back three years, nobody saw the pandemic coming, all the changes that would bring.
So if I sold right before that, and I was just assuming that the business would kind of continue on as it had, and I no longer have a role in it, well, that’s a problem, right? And so it’s the problem for agency owners who do want to walk away, because if I walk away and I’m not an employee, but I’m tied to an earn-out, I have no control over that.
And so I’m just sitting there hoping that I collect these checks, that I’m anticipating that if I’m not actually running that business, I mean, I can’t work a little bit harder to make sure it happens. And so there’s trade offs to all of this and you need to make sure that you’ve got the advisors who are helping you through this process, which may or may not be the broker, right.
Because brokers have their own interests, particularly if they’re getting a percentage of the deal. But you also need to make sure that you’re going through a what if process. You always, anytime you’re working on any contract, whether it’s with a client and employee, a buyer of your agency, you need to ask yourself what happens in the worst case scenario.
What happens if we don’t hit these revenue targets? What happens if I don’t stick around? And so you can see what those scenarios are and be okay with them. You may not like them. You may not want them, but you have to sit there and say, okay, if I got none of my earn-out payments, if we hit none of the targets, would I still be okay?
Carl Smith: What does that look like? Yeah.
Chip Griffin: Right. Cause if I’m, if I’m relying on it, then I’ve got a huge problem. And too often, People aren’t thinking those things through, and it’s why professional advisors can help you avoid stepping in those potholes like you did. And it’s very easy to do. Do not mess with stock in your business without talking to lawyers and accountants.
Don’t give it to employees because that, that can be a huge tax liability for them if you’re not careful. Just don’t, don’t. Make sure that you’re talking to professionals before you make these decisions.
Carl Smith: And acknowledge that you may even need help finding that right professional. Right. Because there are so many people out there with great websites and lack of experience. You have been warned.
Chip Griffin: And, and if you can talk to people who’ve been through the process right. Before you sell your agency, talk to someone who sold their own agency. Cause they’ll tell you the good, the bad and the ugly. Particularly if it’s not in a forum like this, right. If you’re able to have a private conversation, they will share lots of details that perhaps didn’t make the trade press when they sold their business.
Carl Smith: And I’ll just say for everybody listening,feel free to get in touch with me.
It’s just Smith. I hate that it’s my last name. Smith@bureauofdigital.com. And I’ll help you connect to somebody who sold their shop. Like, I, I am happy to provide that service of conduit so that you can talk to somebody who’s been through it.
Chip Griffin: And you’re also welcome to reach out to me too. I can share some, some real horror stories of some deals that didn’t go through too, which are also interesting.
So some are deals that I was involved with directly and some are just ones that, that have been shared with me over the years. So lots of horror stories to be told.
Carl Smith: That smile – you enjoy these horror stories. That smile on your face.
Chip Griffin: You know you learn more from failure than anything else. And so I’m, I’m fortunate to have made a lot of mistakes because it gives me more to advise people on.
Carl Smith: If that’s true, I am one of the smartest people on the planet. I’m just going to say it. Cause my failures have been epic, sir.
Chip Griffin: Well, Carl, you are one of the smartest people on the planet, which is why I have you on the show. And it’s as if you’ve done these before, cause you’ve already shared with people how they can reach you.
Where is the Bureau of Digital? Where can they find the Bureau?
Carl Smith: So bureauofdigital.com, you can go there and find us easy enough. And also, I mean, our social is pretty much that same thing on Twitter and LinkedIn, I would look at the LinkedIn these days. What’s happened, right? The only difference between LinkedIn and Twitter is that people don’t share Wordle scores on LinkedIn.
That’s a whole nother episode, but it’s reality TV. So if you want to hear about the hard time somebody is going through and how it’s rallied their business find us on LinkedIn.
Chip Griffin: And if you want Carl to come back so we can talk about Twitter and Wordle and all sorts of other things, let me know. Either way I’m going to have you back Carl.
Cause it’s been a great conversation. I know we’ve offered lots of things for people to think about. It’s Friday as well.
Carl Smith: I wore my Friday Launch shirt. Don’t launch on a Friday, kids. Okay.
Chip Griffin: Why not? Who wants a weekend? Well, actually I hope everybody enjoys their weekend. If you want to see previous episodes of this show, just go to smallagency.tv.
And if you want to learn more about SAGA, just go to smallagencygrowth.com. With that, we will wrap this up. You can go enjoy your weekends and we will be back with you with another show next week.
Carl Smith: Thanks everybody.