Selling
Selling an agency: how the process works
Founders who know what is coming negotiate better and sleep better. This guide walks through the stages of selling an agency, which ones overlap, where the real decisions sit and what you will be asked to do at each point.
In short: A sale runs from objectives and preparation, through buyer selection and approach, information release and management meetings, to offers, heads of terms and exclusivity, then diligence, documentation, signing and completion. The stages overlap more than diagrams suggest. The decisions that matter most are made early: who to approach, how to position the business and which offer to take into exclusivity. After that, the work is protecting the agreed terms through diligence and keeping the business performing until the money arrives.
The stages, and what overlaps
| Stage | What happens | What the founder does |
|---|---|---|
| Objectives and preparation | Shareholder objectives agreed, numbers defined, bridge reconciled, data room started. See preparing your agency for sale. | Decides what a good outcome is; owns the information |
| Buyer selection and positioning | Long list of strategic, group, investor and overseas buyers; positioning for each; short list agreed | Vetoes, adds names, sets confidentiality rules |
| Approach and NDA | Anonymous or named approach, NDAs signed, teaser and then information memorandum released | Approves what is shared and when |
| Management meetings | Buyers meet the founders and, later, the second tier; questions answered on a consistent basis | Tells the story; keeps the business running |
| Offers and comparison | Indicative offers received and compared on value, structure, certainty and fit. See choosing the right buyer. | Chooses who to take forward |
| Heads of terms and exclusivity | Principal terms agreed in writing; exclusivity granted for a defined period | Decides the terms worth protecting |
| Due diligence | Financial, commercial, legal, tax, people and technology review. See due diligence. | Answers questions; manages disclosure |
| Documentation | Share purchase agreement, disclosure letter, employment and shareholder documents negotiated | Approves warranties, covenants and role |
| Signing and completion | Contracts signed; conditions satisfied; funds flow; announcement | Signs; communicates to staff and clients |
| Transition | Handover of relationships, integration, earnout period begins where relevant | Delivers the plan agreed |
Preparation continues through buyer selection; management meetings and offers overlap; diligence and documentation run in parallel and feed each other. The table is a sequence of decisions; it is no calendar.
How information is released
Information reaches buyers in layers, each tied to a step in commitment. A short anonymous teaser describes the business without naming it and tests appetite. Buyers who want more sign a non-disclosure agreement and receive the information memorandum, which tells the story of the business with its history, clients, people, financials and plan, on the defined basis set in preparation. Management meetings and a management presentation follow for buyers who are serious, and this is where buyers form a view of whether they believe the founders. The data room opens in full to the buyer, or buyers, taken into the final stage.
Each layer is a chance to withdraw a buyer who is not credible or whose interest is really intelligence. Consistency across the layers matters more than polish: a figure in the teaser that does not match the information memorandum, or an answer in a meeting that does not match the data room, costs more trust than the point itself.
The decisions that shape the outcome sit early in this sequence: which buyers to approach and in what order, how to position the business to each, what to disclose at each layer and which offer to take into exclusivity. Later stages are about protecting what has been agreed.
Bilateral or competitive
A bilateral process, with one buyer, is faster, quieter and demands less of the management team. It suits a strong strategic fit, a buyer who has already shown its hand, or a founder for whom confidentiality outweighs competitive tension. Its weakness is that value is tested against one party’s view, so the seller’s footing depends on alternatives that exist outside the discussion.
Those alternatives do not have to be manufactured. The credible ones are real: the option of continuing to run the business and selling later, a small number of other buyers already identified and understood, an investor route, or simply pausing. A seller who knows what it would do if the discussion ended, and has prepared for it, negotiates differently from one who has not, and buyers can tell the difference. Inventing competing interest that does not exist damages trust when it is discovered and is poor practice.
A competitive process, with several buyers moving in parallel, creates a reference point for value, keeps every buyer honest on terms and timetable, and gives the seller alternatives. It costs more management time, carries more confidentiality risk and can deter buyers who will not compete. Neither is always right. The choice depends on how many credible buyers exist, how sensitive the information is and what the shareholders value most.
Who does what
- The M&A advisor runs the process: positioning, buyer identification and approach, managing information and meetings, negotiating value and structure, coordinating the other advisors and keeping the timetable. In our case that is a founding partner throughout.
- Lawyers draft and negotiate the heads of terms, the sale agreement, the disclosure letter, warranties, indemnities and any employment or shareholder documents.
- Accountants and tax advisors support the financial information, the vendor side of diligence and the tax structuring of the deal and the proceeds.
- Management keeps the business performing, tells the story in meetings and answers diligence questions accurately and promptly.
Signing, completion and timing
Signing is the point at which the contract becomes binding. Completion is when ownership and money change hands. They happen together when there is nothing left to satisfy. They are separated when a condition sits in between: a regulatory consent, a client consent under a change of control clause, a funding condition or a reorganisation. Between the two, the seller runs the business in the ordinary course and the price mechanism, locked box or completion accounts, governs what happens to value in the gap.
Timetables vary with preparation, the buyer’s approvals and funding, the depth of diligence and how quickly both sides make decisions. Workstreams overlap: diligence runs while the documents are drafted, and buyer conversations continue while the data room is built. Things that shorten a process: information that is ready and reconciled, a buyer with funding and approvals in hand, decisions made by the people in the room, and a disclosure exercise that runs alongside diligence. Things that lengthen it: numbers that need restating, approvals that sit above the person negotiating, regulatory or client consents, financing that has to be raised, trading that moves during the process, and holiday periods on either side.
We do not quote a standard timetable, because the answer depends on those factors. As an illustration only, assuming a prepared seller, a buyer with committed funding and delegated approval, a competitive first round and a single buyer in exclusivity with no external consents: preparation and buyer approach might take two to three months, offers and heads of terms one to two, and diligence, documentation and completion two to four. Change any assumption and the figures move, in either direction.
Protecting the deal
Confidentiality and communication. Agree who knows, when staff and clients are told and what they are told. A leak reaches clients before it reaches the buyer.
Distraction. Decide which founder fronts the process and shield the rest of the team. The business has to hit its numbers while being sold.
Negotiating position. It is strongest before exclusivity and weakest just before signing. Settle the terms you care about in heads of terms, in writing, before granting exclusivity.
Retrading. Buyers revise offers when diligence finds something the information did not show, when trading falls short or when they sense the seller has no alternative. Good preparation removes the first reason, performance the second and a credible fallback the third. It does not remove the possibility.
Motion’s view
In our experience founders give away the most at two points in a process: granting exclusivity before the terms that matter are written down, and accepting that a difficult point will be “dealt with in the documents”. Anything left open at heads of terms is negotiated later from a weaker position. The time spent getting heads of terms right, with your advisors, is the best spent time in the whole process.
What to do next
If you are more than a year from a sale, start with building value and preparation. If you are closer, or an approach has arrived, the useful first step is a conversation about objectives, buyers and timing. Our sell your agency page describes how we run a process.
Thinking about a sale?
A confidential conversation with a founding partner about objectives, buyers and timing. Speak to us.
Written by Rick Palmer and Rob Reid, founding partners of Motion Advisory Partners. General guidance, not advice on any specific business or transaction. Legal and tax points vary by jurisdiction and should be checked with appropriate advisors.