Business Sales: Digital Marketing Agency Sold – And 8 Hot Buyers Waiting In The Wings!

Bonza Receives Outstanding Interest In Digital Marketing Agency Sales

Since COVID-19, online commerce has become even more important to the global economy. This means that digital marketing agencies, which support online businesses by generating more leads and sales, are indeed here to stay and will only grow in value.

The Australian online advertising market is projected to reach $15 billion in the calendar year 2022, representing a startling 40.8% increase from the year before.

How do you evaluate the worth of your digital marketing business? How do you sell it for the most money when you’re ready to walk away?

As with selling any business, owners of digital marketing agencies looking to make an exit should start to prepare for the sale. Working with a knowledgeable broker like Bonza Business and Franchise Sales, who have experience in selling agencies will ensure you leave no legal, financial, or logistical stone unturned, and will ultimately help you present a compelling opportunity to buyers.

David contacted Bonza in early 2022 because he and his business partner were interested in selling the SEO-focused marketing agency that they had been building for 4 years.

If you are looking to sell your digital marketing agency it is important to be prepared:

Focus on building profitability – A good way to enhance your sale price is to work to increase your digital agency’s profits 6 to 12 months before your intended exit. This could entail making more of an effort to land long-term contracts, upselling more expensive advertising campaigns and company growth techniques to repeat customers, recruiting new contractors, and broadening your range of services (though not at the expense of performance).

Get your financials in order – One of the main tools that buyers use to predict an agency’s viability is a profit and loss (P&L) statement. Monthly cash flow documentation must be accurate to the last detail. To make sure they’re purchasing a strong company, serious investors will also want to view more financial data, such as balance sheets.

Prepare to transfer your assets – In this context, the term “assets” include both tangible assets that your company owns, such as computers and furniture, as well as intangibles, including long-term client relationships, software licence agreements, your website, and your social media accounts. Your entire brand can also be viewed as a significant asset if you have a distinct online presence that stands out from that of other agencies and consistently attracts new visitors. All assets must be gathered, inventoried, and prepared for efficient transfer to the next owner.

Document systems and processes – Buyers can get a sense of how much “work” they’re buying into by learning about your company’s processes, which should include how daily operations are carried out, how you generate leads and close sales, how you assign tasks to employees and contractors, and how much you as the owner personally participate in daily business operations. This process will also make the transition to new ownership simple and easy if everything is outlined and there are steps to follow.

The ideal next step after preparing your business for sale is to consult with an experienced broker like the appraisal team at Bonza who can help you set an achievable, yet maximum value for your business. It is important to consider all the factors that make digital agencies valuable as well as understand the kinds of buyers drawn to this industry.

The next step before coming to market is determining your value and coming up with an achievable listing price. David spoke to the appraisal team at Bonza to get professional advice before listing the business.  

The way an agency is handled, the kind of clients it accepts, and how it makes money are only three of the elements that will affect how much your company is worth.

The appraisal team at Bonza take the following into account when determining your agency’s potential sale price:

What services do you provide – While some digital agencies focus on maintaining social media posts, email marketing, or paid digital advertising campaigns, others specialise in content marketing via SEO blog articles and content syndication. Other businesses follow the “full stack” business model, aiming to provide every type of digital marketing service accessible.

Your client base – Some digital marketing organisations deal with any kind of company in need of marketing assistance. Some, like healthcare experts, lawyers, major consumer brands, and business-to-business (B2B) industrial companies, concentrate on niches and markets with significant income potential and recurring demands. The eCommerce, health, fitness, and SaaS (software as a service) categories may be particularly profitable for agencies.

Business expenses/overheads – A small number of digital agencies have their own premises. Many people lease office space and pay the rent and utilities on a monthly basis. Some organisations might operate out of a coworking space, which has lower costs and obligations. Many of the overhead costs are simply eliminated by certain businesses by having all their employees work remotely.

Your revenue model – A popular model for digital agencies is to charge on a monthly, quarterly, or semi-annual retainer basis for their services. As long as they consistently acquire loyal retainer customers, agencies that charge in this way can ensure healthy revenue growth for a long time. However, some agencies may only charge by the project, or offer bespoke services that are custom-tailored to each client, both of which are less scalable.

Your staffing structure – Some small digital agencies just have a solitary proprietor or a few partners working for them, and they maintain a lean workforce structure. To handle order fulfilment and administrative responsibilities, they might occasionally use independent contractors and virtual assistants. Larger businesses may hire full-time employees to handle all aspects of their operations, including sales, fulfilment, customer support, and human resources, which raises overhead costs. Revenues, cash flow, and long-term profitability of a digital firm can all be impacted by these variables.

The most common valuation formula applied to digital marketing agencies is EBITDA.

Earnings Before Interest, Taxes, Depreciation, and Amortization is referred to as EBITDA. This technique produces a forecast sales price for the company by adding back regular business expenses and multiplying the result by a specific quantity, or “multiple.” Older digital marketing businesses may be able to sell for larger multiples if they have more stable operations, strong customer lists, and consistent profits.

The steps involved in preparing to sell a digital marketing agency, and actually finding a buyer who will take it on for a fair price, can be overwhelming. It makes all the difference to have an experienced broker on your side when going through the process.

David had confidence that Bonza could get the job done and that they did. In 6 short months, this business listing received a massive 99 enquires, 14 offers, 5 accepted offers, one successful settlement and hot 8 buyers waiting in the wings interested if the deal didn’t go through.

These numbers demonstrate just how much interest is in this industry right now. If you have a digital marketing business and are considering selling, then get in touch with the team at Bonza today.