Baby Boomer Burnout or Just Smart Business

Reasons to Consider Selling Your PR Agency Now
by Rick Gould, CPA, JD

Jeffrey Lyons, an operating director of Chicago based investment bank City Capital, says in INC. Magazine November 2010 Page 111. “Economists estimate that as many as 70% of privately held businesses will be put up for sale within the next 10 years, as more baby boomers retire” (or maybe just want to monetize their asset, their sweat equity). “That mounting supply could put more downward pressure on valuations for years to come- a sobering message to entrepreneurs nervously waiting for the market to bounce back.”

Lyons adds, “five years from now multiples for small business’ will go down because the supply of businesses (for sale) will be up.”

It is already a factor that sellers far outweigh niche buyers & buyers are no longer buying to add critical mass, to increase net revenues. Buyers are buying strategically, looking for a specialty as digital, public affairs, consumer, crisis etc. And they are certainly much more edgy when it comes to age of owners, strong second tier management, mix of clients and potential for cross referrals and growth. And tightening SEC regulations on acquisitions will only increase the amount and extent of financial reporting and due diligence.

The reality is many sellers of small & mid-size PR agencies will have no one to sell to. They will have NO choice but to sell their firms to key staff for multiples less than they can potentially receive from an outside buyer, a buyer that accumulated a war chest for acquisition during the past couple of years.

Those are reasons to consider selling now or at the minimum begin packaging your firm for a sale. Worst case will be you will have a better managed, more profitable firm, which in itself will add to value.