Why it’s important to understand your agency’s valuation, even if you’re not planning to sell

I wanted to start this post by saying that the majority of the several hundred independent agency owners we’ve known, or worked closely with at Cactus, over the past 15 years have not focussed on maximising their eventual sale price until 12-18 months before they planned to sell. 

The vast majority of independent agency founders focus on building the best agency business they can.  Typically they consistently  work in an area they are passionate about, with a great team of people around them, creating a special culture, taking pride in delivering a range of services that help solve their clients brief and challenges and being proud of the work their agency has created.

I didn’t even know what my agency Bluhalo was worth until the point I decided to sell. We were far too busy trying to build a best in class agency. 

That said, I wish I had known earlier as it would have certainly helped me get a more complete understanding of what we were in fact doing by investing all our profits in growth, and why that was the best strategy for us in the end.   

I have reminded so many owners that, like the house they own, you must protect your asset. You wouldn't let your home run into disrepair and lower in value, you should make home improvements to add and protect your house value. You may never want to sell your home, but life’s circumstances can change. Would you want your house or your business below it’s worth? With businesses that’s a more common situation than people realise. A divorce or illness leads to a firesell of the business. 

Your business is like your home, it's an asset and it should be an appreciating one. Sure the value may go up and down like the housing market, but it’s always a smart idea to keep checking in to see how it’s value is doing, and what you could do to improve it based on current market conditions and demands. 

Despite many people's beliefs there are always agency sellers and buyers out there, and the demands of what people want to buy and sell change. Sometimes it takes 21 views of your house to get an offer, sometimes it’s just a handful of views, depending on the buoyancy of the market. 

For example 2023 has been one of the toughest economic climates for businesses since 2009, and at Cactus we have sold 4 agency businesses and completed 2 EOT’s (employee ownership trusts) this year.  Also, at the time of writing this post the team at Cactus are representing over a dozen different types of agencies for sale across Europe and the USA, ranging from as small as £200k EBITDA through to £3m EBITDA. With all these transactions we are focussed on the value we bring to maximise the sale price for our clients.

So with this in mind, we’ve created a new free very simple valuation tool to help you understand, where you are at with your agency’s value.

Whilst not designed to replace a formal business valuation or business review, it will give you a guide to ensure that you have more of an understanding of where your Agency valuation currently stands.