What Happens After You Sell Your Agency?
The day has finally arrived. After many months of decision-making and discussions that gradually morphed into due diligence, you’ve officially closed the deal. Congratulations! You might want to pop a bottle of celebratory champagne. However, you still have a few important steps ahead. So, what happens next? The handover begins once you complete the paperwork, and it doesn’t follow a one-size-fits-all model. Based on our experiences here at Merge, we most commonly see two scenarios. Let’s take a closer look at both to make sure you have a detailed answer to the question, “What happens after you sell your agency?”
Scenario 1: Signed, Sealed, & Delivered
Transitions are rarely easy, whether personal or professional. We’ve encountered numerous reasons to keep this period to a minimum, from job offers to relocations and family planning. Completing a sale quickly and transitioning within the minimum required time is often the only way to go.
However, that minimum is typically fixed at 90 days, which is included in any viable deal aiming for a successful agency sale. These 90 days are compensated by the sale of the agency. Staying on beyond this period means you’re making yourself available for additional duties, and any compensation after the standard 90 days becomes a matter of negotiation.
Generally speaking, if you want to be completely out after the 90-day transition period, you’re likely to receive less favorable terms at closing. Standard deal terms usually involve a combination of cash at close, seller financing, and a non-guaranteed earn-out based on the continued successful performance of the business. With limited assurance that the business will continue to operate successfully without you, buyers are more likely to reduce the cash at close and increase the non-guaranteed earn-out.
The market currently favors sellers. This means there’s a higher likelihood of finding a buyer who may accept an owner looking to sell without staying beyond the standard 90 days. However, if you want top dollar for your agency, consider selling it before you need to be officially out the door, which brings us to option 2.
Scenario 2: The Deal After Tomorrow
While there may be good reasons for not committing to a long-haul transition, staying on longer usually produces better results. Owners who stay involved for a full year after signing the dotted line invariably tick more of the essential boxes from a buyer’s perspective.
First, owners who stick around offer buyers a sense of security that can make all the difference. Your continued presence helps buyers manage unforeseen issues that might not all arise in the first 90 days. It also means you’re available to guide the business through seasonal fluctuations.
This full-year option also gives you time to address every detail before the handoff. Managing new internal dynamics and helping secure key client accounts can be challenging within just 90 days. A year-long commitment ensures you can support a more thorough transition.
Finally, offering your services for the full year after an agency sale attracts more potential buyers. Buyers gain peace of mind and feel less pressure to align perfectly from the start, which shortens the front-end negotiation timeline.
All Aboard
Last but not least, think of your team. An agency sale isn’t just made between an owner and a buyer. The people who helped you build the agency that is now becoming someone else’s dream will benefit from having the founding DNA around for a longer transition period, ensuring it is passed on properly. Want to discuss this further? Connect with us and let’s schedule a time to chat🙂
