First impressions matter. And they matter to a great extent when you’re meeting a company owner for the first time who may be interested in acquiring your agency.
In my experience working closely with hundreds of PR agencies over the last 18 years, I've participated in all initial meetings between prospective sellers and buyers. I prep the seller and buyer in advance, which includes sharing basic information on both parties as well as the right attitude to have in order to gain trust from the other.
For example, when a seller and buyer initially meet, it must be within a carefully crafted environment—whether in-person or virtually—involving a reciprocal exchange of information and attention to chemistry, style and personalities between the two organizations. The purpose of an acquisition is to combine forces with a firm that can help both the seller and buyer grow and prosper—a positive blending of both capabilities and talents.
To get started on the right track, the goal should be to create a foundation for a business discussion that will extend beyond the initial meeting. This is why that initial meeting is so vital.
To a large extent, the initial meeting may be the most important a seller and buyer will have. If all goes well, each party will continue the discussions with greater trust, confidence and optimism.
Best practices for success
All sellers want to be sure they will match up with the right buyer. It will be the buyer’s responsibility to present a scenario that includes a positive outcome for the seller and a continuation of quality-of-life criteria that will appeal to the seller as well as to their employees. Selling a PR agency is a monumental decision in the life of a PR agency CEO and they want to be sure they get it right.
So, what can you do to boost your chances of a successful initial meeting and prevent common M&A deal snags?
Here are some best practices to consider ahead of your first big meet-up:
Do the heavy lifting ahead of time. It’s the buyer’s responsibility to dive deeply into your firm. Before the first meet-up, they should do their homework and understand the seller as both a business owner and someone they can discuss their passions, life or any other topics they may want to explore during the initial get-together. I typically suggest writing down any questions that come to mind that you’d like the interested buyer to answer. The buyer should present their vision of what the combined operation would bring to the marketplace and how the seller and their agency fit into that vision.
Show interest. Don’t be distant or cold-shouldered or you’ll likely turn a seller off right away. Reflect with your voice and body language that you’re interested in what the seller has to say and that you’ve done your research. Remember, you’re building rapport with a business owner, so first impressions mean everything at this point.
Prepare, prepare and prepare some more. The buyer should have questions lined up in advance. Sample topics might include: Do you have the kind of niche we have? Why would you want to be acquired? How do you see your role going forward? In the future? What type of deal structure would you be interested in? Is it based on earn-out? Or will it be an up-front payment and an earn-out? What has been your growth pattern over the past handful of years? How has the pandemic affected your company? How do you market your services? How would you characterize your second-tier management? And if you’re a seller, ask the buyer if you could speak to the CEOs of other acquisitions the buyer has made.
Talk about the process. Be sure to ask the seller about the timing of a transaction. Does the seller want to do it quickly or not? By when will the seller decide which buyer—if there are more—they’d like to focus on, and what the process would look like?
Ask why. Find out why the seller is interested in a deal. Ask them what their long-term plans are: do they want to continue working or retire? I often urge my clients to envision potential synergies to grow each organization and what each can bring to the table to help enhance overall business.
Discuss organizational details. To whom will the seller report and will the agency be integrated into the parent company quickly? Which other executives within the buyer’s organization will the seller work with? Over the years, I’ve seen great value in the brand that a seller can bring to the relationship. And I often recommend that the seller keep that brand for a reasonable amount of time. With this approach, the autonomous unit can ultimately be transitioned and absorbed more seamlessly into the parent agency.
Show you care by listening. You don’t want to come across as an aggressive, hungry acquirer who wants to take over, but rather a supportive, caring and thoughtful business partner who can bring mutual success to both companies.
Tread carefully. Show empathy and be genuinely interested and present during the meeting. This strategy can help make you stand out from a crowd of competition and other prospective buyers.
The bottom line
The M&A process can be overwhelming and tedious as well as time-consuming. With so many considerations and steps to take before, during and after an acquisition—and unanticipated obstacles along the way—it’s crucial to have the right support.
Enlisting the guidance of an experienced facilitator can help make the process go smoothly, protect the seller and get everything done collaboratively and the right way the first time around.
Finally, keep in mind that a deal isn’t purely about money. Assessing how a buyer can take an agency post-sale to the next level and whether a seller can hardly wait to get the day started with a new owner are vital considerations.
At the end of the day, the best initial meetings that I’ve attended between would-be buyers and sellers are those where the two parties are almost tripping over each other’s words. They exhibit a collective hope, passion and shared vision for what each firm can bring to the table and do for each other down the road.
Art Stevens is Managing Partner of The Stevens Group.