Run Your Agency Like You’re Going to Sell It

You should always run your agency like you are preparing to sell it, even if you are perfectly happy maintaining it as a profitable lifestyle business.

I joined Chris DuBois on the Agency Forward podcast to discuss why so few agencies ever reach a successful exit and how founders can build a resilient company that runs without them. We break down the realities of agency valuations, the importance of replacing yourself with strong leadership, and why paying yourself what you are worth is critical.

Why Do Most Agencies Never Reach a Real Exit?

Chris DuBois: Why do most agencies never reach a real exit?

Albert Banks: Well, there's a number of reasons. Some, myself included, never even knew we could sell an agency when we first started. You just start out, work as I did with a buddy, making cool work, and you're making money at it. That was great. All of a sudden you have a team and people. But it's actually pretty striking that I think it's one percent of agencies actually reach a successful exit, which is kind of crazy if you think about it. I think one big thing is not just chasing vanity metrics or top-line revenue, but actually running a profitable business. That's something that is really critical. If you're going to scale, make sure that you can maintain that profitability as you go through the different stages. To me, that's probably the main thing—people don't focus on their agency and treat it as some sort of asset that can actually sell. It's a little bit more off the cuff because we're not looking at it that way.

Chris DuBois: I wonder how many people—one percent is a shocking number. I didn't even realize it was that low. It makes sense, though, when I look at how many agencies I talk to. When you hear of a good sale, everyone is saying, "Congratulations!" It's surprising almost that they had it. But I wonder how many people could have sold at some point, but they were just making money, going about their business, and they kind of missed the opportunity.

Albert Banks: You notice I don't use the term "lifestyle business," right? People make that out to be a bad thing. "Oh, they're just running a lifestyle business." Well, I'm pro running a lifestyle business that's profitable. Running a business that doesn't require you to work 60 hours a week. You bring home money, pay your team well, do great work. If that can provide you a lifestyle that's good for your desires—maybe if you want to work 50 hours, great; if you don't, don't. I'm all for it. But it's also about understanding it is a business and not getting too caught up in some of these other things.

Chris DuBois: I think the challenge there is then it's all on you putting money away for retirement and doing the responsible things versus getting that cash out to know you are covered for the next however many years. Because I'm running a lifestyle business right now—it's just me, a solopreneur doing my thing. I'm happy with everything. But there's no way I can sell my business. The business is me. I'm at a detriment, I feel, in a lot of ways.

Albert Banks: I can totally relate to that. Since I left the agency world, that's exactly where I am as well. I just accept that what I'm doing now is not something I would ever sell. I fully accept it, but it's what I want to do. It matches my lifestyle and how I want to help people, spend time with family, and all that. That's what I'm preaching, I guess—that you can still run an agency, be very successful, and have a great life.

How Can You Build an Agency That Works Without You?

Chris DuBois: I have seen it with agency owners. It is possible. Let's say you are running an agency and you do want to maintain optionality. I think that's probably the ultimate goal for an agency owner—to just know that when I decide I might want to sell, it's ready. What are some of the things you should be doing in order to enable that?

Albert Banks: One of the biggest things is to build something that'll work without you. If you're going to sell, then that likely means you're not going to be around for a while. At some point, that is typically a reason to get out of the situation you're in. So enabling a leadership team, bringing in a partner that can balance you, and building systems, scale, and processes that can survive you—making yourself uninvolved. You can even measure that: how often do I have to be involved in a pitch to win business? How often do I have to step in and deal with account issues? How often do I have to solve a process problem? The less time you do that, the more that means you have a great team and a great system in place so that one day, if you were to sell, there's not going to be that requirement that you stick around, or worry that it'll fall apart once you leave.

Chris DuBois: You just brought up an interesting point. I use Rise for time tracking, and it measures whatever I'm doing. It would be really interesting to see as a founder, if my goal is to step away from the business, to just be able to look at that and see the rate of change for how my tasks are shifting. Is that speeding up towards me getting out of the business?

Albert Banks: I love any tool that can make time tracking easier and get more people doing it. I was non-billable for the last decade of my agency life, and I still track time for that reason—to know what I am working on. Some of it was just checking what seasons I'm working on accounting or legal more often. But some of it was identifying where I need to dedicate more time, where we need more staff, or where I should leverage a third party. I encourage leaders to have an understanding of what they are actually working on. Does this jive with their job? Often you're a founder or owner, but you're also the revenue officer, growth officer, or CFO. How much of your time are you really spending doing different things? It is valuable information to understand.

Chris DuBois: What do you think is the biggest reason an agency owner can't get out of the business?

Albert Banks: I can think of a couple. One is—and you maybe don't experience this until after the transaction—how much your ego, personality, and identity are caught up in the thing. When you go through a sale, whether it's with a broker, an advisor, or even in due diligence, they're really poking at this thing that you built, that you probably have an appreciation and love for. People can get offended and disillusioned about how much their thing is actually worth. Understanding reality and being too close to it is a detriment for not being able to sell. The other is just that things are unexpected. Things happen. If you're not running a good business, you're going to get caught off guard. The difference between my two transactions is reflective of that. The first time I sold to Union it was more a reaction to the partner dynamic—my first partner wanted to exit the agency life and go back to Florida. We hadn't been building a profitable business with the mindset to sell, so we weren't exactly ready. We landed in a great spot with a local competitor, which had a lot of different benefits. The second time we sold, we had it in mind. We knew eventually, if we reach certain milestones and maintain certain growth and profitability, we would be good to go. So when it was time, we had that track record and were much more prepared. You may think you're not going to sell anytime soon, and then life throws something at you. I've seen agency owners deal with health issues, partner issues, or family issues, and they need to get out, but they're kind of stuck, which is so sad. Running a business where you can sell it gives you that optionality. It's probably the biggest asset you own or will ever own. Make sure you're taking care of it.

How Are Agencies Valued and Why Should You Pay Yourself?

Chris DuBois: I think there's always this kind of hopeful wish that maybe someone's just acquiring agencies and they're going to come make an offer. But obviously, you could be making more by being deliberate, building your business, and making sure you have that set up. A piece of advice I'd gotten when I was running an agency was that you should get your business valued every so often, even if you have no intention of selling, just to see what you are worth right now. Then you start factoring in that if you made certain changes, it could be worth this. What's your recommendation around that, and where do you even go to have someone do that for you?

Albert Banks: I was in the same boat; I had no idea. Thankfully, we've been a part of organizations such as SoDA, where they share education around that. At our annual get-together, there's a session that explains the different buyers and how this works. I'm sure the first couple of years I just glazed over. But there are very basic mechanics—that it is based on EBITDA, which is effectively your margin, and the fact that there are different multiples at different sizes. I'm actually an owner in a totally different type of business that's valued based on top-line revenue and not margin. Just understanding how your business is valued is helpful. There are folks that can do it for you, like Punctuation, which does an evaluation exercise. You can also ballpark it for yourself. There are common numbers out there about where those thresholds are and where multiples change. There is information on how you can adjust your EBITDA and look at the difference between owner compensation and things like that. It's a service I provide—educating around what it looks like and the factors. I do it more so they can run a better business and be better prepared. You can't look at your business one way and not realize that when someone comes in from the outside, they're going to look at it differently.

Chris DuBois: When you are educating someone on this, what is the most surprising thing for them?

Albert Banks: I think it is around owner's compensation and owner's value. Just because you pay yourself a low salary doesn't mean that the artificially high margin you've created isn't going to be adjusted for. A reasonable salary is going to be adjusted into the math. There's no real way to game the system. You just have to run a good business and all those things will get worked out because people who do these acquisitions know the math.

Chris DuBois: You hear that? Everyone listening, you should pay yourself now.

Albert Banks: 100%.

Chris DuBois: I've talked to multiple agency owners who have exited, and that was their biggest regret. "I spent 10 years not paying myself, thinking that was going to actually do something," and then realizing it didn't matter in the end.

Albert Banks: That's right. You should pay yourself what you are worth. If you can just do distributions or dividends after, that's great. But you should bring home a living wage and get the same benefits of working at your company.

Chris DuBois: One of the other things I see agency owners surprised by is expecting their multiple to be closer to a tech company's. I don't know if they just don't understand that the margins of a tech company are way better than what an agency can produce. From a business model perspective, you can't scale that much compared to software.

Albert Banks: The scalability is completely different when you're providing a people service—which is now changing, but we don't want to go down the AI conversation necessarily. Tech businesses scale because they have a digital product that scales well beyond people costs. So, of course, you have totally different margins there. There's something to multiple arbitrage, where if you can get over a certain threshold, or do what we did and join similar-size agencies together, you jump over a plateau simply by joining forces. Understanding that you could be even more valuable doing the same thing, just together with someone, is an interesting unlock.

Are Strategic Acquisitions and Mergers the New Norm?

Albert Banks: I'm honestly seeing that more and more in the market now. I thought I was going to be educating folks a lot on exiting, but I'm actually talking a lot to those doing bolt-ons and their own little acquisitions to ramp up their agency or be more viable when they do have an eventual exit themselves.

Chris DuBois: Acquisitions or merging?

Albert Banks: It's all relative, I guess, but I meant acquisitions. It's more like, "Hey, we are looking for somebody a third to half our size." We're still the primary, and they're tucking under to reduce client concentration or add to service offerings. Or maybe it is an acqui-hire. Somebody has run a nice business, but they want to exit, and because the founders of the acquiring company are staying on and there are duplicative roles, it's totally fine if the owner leaves or becomes an employee. It takes the pressure off of themselves, gets chips off the table, and they continue to do the work they enjoy.

Chris DuBois: I'm hearing about these a lot more frequently—agencies coming together. In a lot of the stories I'm seeing, it's because one of them is under a lot of pressure with lead generation starting to struggle, or AI disrupting their industry. Someone else is sweeping them up to embolden their own business. For the person being bought, they could wait and potentially have their agency die, or make something from it now. They've almost lost that optionality, but at least they get a nicer exit.

Albert Banks: Right. They're kind of distressed in that situation. In our local market, there was this weird competition amongst agencies and not a lot of collaboration. Whereas I was part of the SoDA group, where it was transparent and helpful amongst each other, even though we were mostly competitors. I'm totally of the mind to get to know your competitors or your peers. You never know—one day you could be in business together.

Chris DuBois: As a positioning coach, that's something I wish more people would do. You're not the best fit for everybody. If you can get really specific on who you're the best fit for, take them in and send everyone else to your competitors. I have other agency coaches who send referrals to me, and I send them back. Even though we do similar things, I'm really good at sub-million-dollar agencies, and they handle bigger ones. You still know the competition to know where you need to position yourself.

Albert Banks: We've had employees spin out their own thing, and we've maybe even invested in them or sent them work where we disqualified a lead from our main agency, but they were perfect for this other group. Maintaining those relationships is really valuable because you are passing leads back and forth.

What Key Decisions Drive Real Agency Growth?

Chris DuBois: In your own experience, if you had to do an 80/20 exercise and say, "What are those few decisions you made that led to the biggest results?" Where would you go?

Albert Banks: Having a more streamlined role for myself was really valuable for me, anxiety-wise. Not feeling I had to have all the balls in the air. We had real people owning certain areas. Having a more defined position in a slightly larger organization was a big decision for me. I could go deeper in the areas I had coverage on. Honestly, it's why I am where I am now, able to coach and advise others, because I spent years focused in my role versus having to understand everything going on in sales, marketing, and the technology of the work we were building. I could really focus on running the business. I know it's harder when you're a smaller agency, but getting to a point where I could wear fewer hats and go deeper made the agency better, and I was better for it.

Chris DuBois: What hat were you wearing?

Albert Banks: When I left, it was around finance and operations. We were very simple with how we looked at the agency. There was "get the work" (new business or marketing), "do the work" (the lion's share of the company), and then "everything else." I was everything else. All the non-billable stuff that just has to work and be right: HR, finance, talent acquisition, resourcing, legal, insurance, IT, office. All the things that had to be the backbone of the company to make sure everyone else could do the cool creative work without being disrupted.

Chris DuBois: How many partners did you have?

Albert Banks: Two. We started with two. We came together with another agency that had another partner that wanted to exit, so the two of us stayed.

Chris DuBois: Were they doing the work and getting the work, or did they have a more distributed front?

Albert Banks: He was a little bit more distributed, more the CEO to my CFO or COO role. He spent more time in oversight of the work and on sales. Eventually, we did have leaders in those areas as well, which got us to the point where he could exit when we exited because there were key leads in those key business areas.

How Can You Hire the Right People and Embed Core Values?

Chris DuBois: Was there a mistake or regret you have from when you were building up the agency? A decision that cost sweat or cash later?

Albert Banks: Yes. We multiple times kept people in leadership positions that we should have not kept. There was a reason to keep them—something positive gave them rope—but at the core we knew it wasn't right. We should have made a change, and putting it off had long-term ramifications for us. Making the hard decision when it comes to personnel is tough because the change is disruptive. You think, "Well, they're not perfect, but replacing them is so much work." So you live with it, and it works for a while, and then it eventually comes crashing down.

Chris DuBois: Are there things you started doing in the hiring or operations process to catch those things earlier and make sure you had the right people in the right seats?

Albert Banks: For sure. We embedded our values into as much as we could. We had core values, and this was how we wanted to operate. When we were doing interviews, we asked questions around them to see if candidates were aligned. When we did our quarterly check-ins and annual reviews, everyone was literally measured on each and every value. We were able to see, "Okay, is this person obviously performing their work? But were they doing the things that kept our culture going in the right direction?"

Chris DuBois: Values are something that bother me to no end when you look at a company website and it just says "Integrity" and "We work hard." What company is going to say, "No, we don't work hard, and we don't value integrity"? It does nothing. But when you can show people how this shows up in your business every day, it's real easy for people to step into it and know if they're taking the right actions.

Albert Banks: Absolutely. First day onboarding, it's very literal: "Not only here are our values, but here's how that plays out. Here are situations where you might see that." Literally even in conversations, we'd say, "Because we value X, we're going to do this." Having it in your vernacular is essential. Whenever I do a business assessment, I ask the leadership what the values are. If they can't rattle them off right away, that tells me this is not being used in the company.

Chris DuBois: Especially as a positioning coach, the way you're thinking about this, your opinions, everything about who you are as a team is a reason for someone to come work with you and choose you over the competition. That goes way further than just some headline on your website.

What Does the Agency Deal-Making Process Actually Look Like?

Chris DuBois: I want to get into the actual deal-making process now. When you're selling, what are the negotiations like? What were you thinking through as you went through that?

Albert Banks: I had two very different transactions. The first time was motivated by something different and I was learning along the way. The second time was a very deliberate process where we proactively went through a full-on process. It is very involved—from sourcing and determining who our advisor was going to be, to gathering the extended team (legal, tax, and accounting specialists). Going through the whole process of understanding who we could sell to—I think we started with a list of 120 potential buyers. Understanding what an LOI (Letter of Intent) was. Learning a ton about the roller coaster situations where one day you think, "This is going to be great," and the next day you think, "This deal is going to fall apart at the last hour." The even keel you have to maintain in a very emotional process is tough.

Chris DuBois: How expensive is it to bring all of these advisors into the engagement? The financial people who are going to look at your books and everything else?

Albert Banks: Typically, the broker or the advisor has a success fee—a percentage of your deal. That can vary from three, four, or five percent up to 10 or 12 percent, depending on the structure and how much they're advising. Attorneys and CPAs are usually based on a very expensive hourly rate. All those fees kind of come out once you close; you get your money after everybody gets paid. It will sound like a lot, but it will be worth it because they will save you from mistakes. They'll save you from paying too much in taxes and structuring the deal in a way that creates a risk for you.

Chris DuBois: Loosely, are we talking 10 to 20 percent?

Albert Banks: It just depends on the advisor. Maybe three to seven percent is on the high end for an advisor. If you're using a broker just to bring someone to say, "Hey, this is for sale," maybe it's on the lower end. And then it depends on how complex your deal is for your attorney and CPA—do you have real estate tied up in your business, or complex IP? How many partners are there?

Chris DuBois: If there is one piece of advice you think every agency owner should leave this conversation with, what is it?

Albert Banks: Run your business as if you're going to sell it, even if you're not. That is a financial statement, and it's a lifestyle statement. All of the above.

What Books Should Every Agency Owner Read?

Chris DuBois: I have two more questions as we wind down here. What book do you recommend every agency owner should read?

Albert Banks: I'll give you two. The first I always answer is Traction, because if you don't have a system for running your agency, you should. Assuming you have that, I really love Who Not How. It really made me think about the type of work I was doing. As a problem solver, it was easy for me to do the very tactical work that is, frankly, the low hourly rate work when I should be doing the strategic oversight work. Recognizing that I didn't have to learn how to do everything, and that there were people out there who could do it—like a bookkeeper—freed me up to wear the hat I needed to wear.

Chris DuBois: Both good recommendations. Where can people find you?

Albert Banks: You can find me on the website apertus.co or on LinkedIn under Albert Banks or Apertus.

Chris DuBois: Awesome. We'll get all those linked up in the show notes. Albert, thanks for joining.

Albert Banks: Absolutely. Thanks for having me, Chris.