Is Selling Your PR Firm an Eventual Goal? 10 Easy Tips to Sucessfully Prepare

By Rick Gould, CPA, JD

Every PR business is ultimately for sale. The fact that we are still in a downturn makes it even more challenging. Banks aren’t lending. There are multiples more sellers than buyers. Buyers that are active and manage to obtain credit are buying quality firms strategically- for specialty, for location, or for intellectual capital.

So what can you do NOW if selling your firm is even remotely an eventual goal? Follow these 10 tips and you will be able to successfully prepare end enter negotiations from a position of strength.

1. Start planning early.
Get outside counsel to learn the process and what you will ultimately need to do prior to discussions with a buyer.

2. Get your financials in order.
Be sure to use a reputable CPA firm and request they do a review report. This is short of an expensive audit but at a higher level than a basic compilation. Never believe you can ever substitute your business tax returns for a signed-off CPA report. A buyer will politely walk away.

3. Be realistic as to price expectations.
There are many perceived formulas circulating in the industry, but there are only a handful that are industry specific and acceptable. Get a professional valuation of your business.

4. Have a strong second tier of management.
This is critical in supporting value. If a firm is just an owner and a bunch of AE’s it substantially reduces value. Buyers always look beyond the top tier of management, beyond the CEO, beyond the principals.

5. Have systems in place.
Accounting, time management and workflow utilization systems are imperative for maximizing efficiency and profitability. They also adds “perception points.”

6. Expect an “earnout period”.
Be prepared to be paid out over 3-5 years based on agreed-to targets and goals. This earnout method is widely used and is equitable to both buyer and seller.

7. Have non-compete, non-solicitation agreements in place with key staff.
Include them in the sale- as you get a check they get a check. Thin is very incentivizing.

8. Have an integration plan.
Show how you would divide tasks post-sale, integrating your staff and those staff members and technologies of the buyer.

9. Be mindful of your lease.
Don’t renew your lease, or worst case renew it for a short-term. Try to go to month to month if your lease expires.

10. Write a business plan.
A business plan is a mission-critical, challenging project. You may need professional help preparing one. Show how you would use your staff and resources after the sale. It will always add “perception points” with a buyer. To do a thorough business plan you are required to think about the future. It makes you think about staffing, technology and the competition. It is a roadmap. It is truly an art to write a quality business plan. If you already have one for your firm, just a little updating will do the trick. Do so and watch a potential buyer light up and want to further discussions to buy your firm.