Resources

We talk with agency owners every day and the vast majority of the direct selling agencies in the space continue to report solid business results as they help their clients migrate to the new norm of remote enablement. A common concern, however, is the ongoing security of their existing bases of customers. What will happen to commission streams as the pandemic stretches into the last half of 2020 and possibly beyond?

Agency acquisitions are becoming more common. For any agency, the key to valuation is anticipated cash flow. However, the value (or lack thereof) of an agency's provider contracts is equally important. Thus, it is very important that agents protect their income - and their potential exit value - by investing the necessary amount of resources into properly negotiating their provider agreements.

So, you’ve gone through the evaluation process and have decided, for whatever reasons, that you’re not going to sell your agency. No you must either prepare for a declining revenue stream over short and mid-term future OR be ready to invest more and work harder than you’ve ever done before,

Unless you’ve already been on the journey, it’s impossible to understand the emotions an agency seller will experience during the sales process. Think about other major events in your life – raising children, selling your house, going through a major medical crisis, losing a family member or close friend, getting divorced -and the impact your actions have had on them and you’ll begin to understand what goes on in a seller’s mind.

Cash is considered King in the transaction world, but there are certainly times when the best structure for both the buyer and the seller is stock or another form of equity. Essentially what we’re referring to is a deal structure where the stock or assets of the seller are transferred to the buyer in return for stock in the buyer’s company. This blog post discusses Pros and Cons on each, from the buyer’s perspective.

How can an owner determine a fair price for his/her company, and how can potential purchasers know that they are paying the right amount for a telecom agency?  Unlike many other businesses, an agency’s assets are fundamentally limited to future cash flow of a residual commission stream.  And that cash flow can be severely impacted by a number of factors outside the control of the owner. 

The due diligence process is a two-way street and any potential seller should have a clear understanding of the items that must be satisfactorily vetted in order for the seller to move to a transaction.  This checklist list 47 items that sellers need to be aware as they prepare to explore a sale.

Sales model, customer base attributes, strategic product penetration and financial track records are just some of the factors that affect the valuation of an agency. This graphic provides a comprehensive range of common attributes, and what factors can ultimately result in higher, or lower valuation multiples.

In the telecom agency M&A space there are three traditional ways to structure a deal: stock purchase, asset purchase and a merger.  These structures aren’t mutually exclusive, as they can be creatively combined to achieve a more flexible end result. This article discusses the pros and cons of each, including examples of deal formulas and process timelines for each.

Nearly every entrepreneur and investor who has sold their business says there are crucial ingredients to any exit plan. Potential sellers should always have their end-game in mind. A successful sale all comes down to building a company that's smartly run and transparent--like every business should be.  Here are some rules to follow to fine-tune your exit strategy.