Yep, it was a good run, fam. But the party is officially over.
Ad agency holding companies like Omnicom, Publicis, Accenture (what!?), and even big money tech bros like Mark Benioff have gone all in with acquisitions and investments into creator agencies.
Yep, that’s right.
Big ol’ institutional money has officially strolled into town like an Old Head sporting raggity drip. Their main goal is to trade the hopes and dreams of creators like rare MTG cards for their own personal gain.
But what happened? How did this sudden shift take place without any notable benefit to creators or their communities? Won’t all these outsiders just dilute the quality of creator partnerships and drive down the value of intimate communities?
Well, I think you know the answer to that one. But (!!!), let’s at least have a little fun as we go on a five-step journey to explore how creator agencies can grab their bag without ruining it for the rest of the creator community!
TLDR
- Stop being a “pick me”
- Your agency will never be the same once you sell (bye-bye identity!)
- Not every investment partnership is a good one
- Every agency owner deserves their bag
Step 1 – Get Over Being Flattered
Creator agencies need to look past feeling validated by institutional attention
Look, I know it feels nice to finally be recognized by the media and entertainment industries as legitimate businesses. But they don’t love you, appreciate your craft, or understand all the 3am phone calls with your talent to keep their lives from falling apart. They just want to use you for clout, and make money in the process.
It’s that simple.
Think of it this way, they aren’t coming to you because *they* are cool, they are coming because *you* are cool. Don’t undervalue your value in the equation.
Though, ego-boosting pep talks aside, the only reason institutional money is up for grabs now is because it thinks you can help them make more of it. Don’t lose sight of that either.
So, I advise you in the most gentle-parenting-kind-of-way, to be careful about being flattered. Avoid getting caught up in the idea that your hopes and dreams are finally coming true. The reality in many cases, is that the boogie-person just crawled out from under the bed and is offering a free lollipop if you just turn out the light.
Step 2 – What Are You Going To Do With All That Money?
PSA to all agency owners: You should not shop for investors until you know exactly what you want to do with all that cash money.
The reality is that institutional money can offer a lot of benefits beyond just pure, soul-corrupting cash.
But you have to think wisely about what you want before opening the front door and taking that giant check.
Just like with dating, horse racing, or even buying a sandwich, the type of people you align with can have a tremendous impact on you, your business, your staff, and your creator roster.
(Yeah, *those* people!)
Just like socket puppets or episodes of Teletubbies, no investment partnership is the same or offers the same opportunities.
For example, some partnerships will:
- Offer a big payout so you can continue building your vintage sneaker collection
- Bring in external leaders that will grow your business into something your internal team lacked the ability or vision to do (founder-led agencies, I am looking at you)
- Give access to partnerships and network connections that will draw bigger talent and bring in even more brand deals (provided you want to keep growing your business and not just take your bag and run)
- Provide an opportunity for you to join the boards of other agencies or support holding companies as advisors (you will finally feel heard and important. Right? Right!?)
I am running out of dopamine writing for this section so let’s go to the next ste…
Step 3 – Be Prepared For What Will Happen To Your Agency
Nothing can prepare you for the epic loss of control.
Yep, pretty much this.
When speaking with agency owners that have sold or been acquired, there is literally nothing that prepared them for the rapid culture shift that happened when taking investments.
Yes, the money is amazing, the recognition and higher status feels great, even the aggressive sales targets seem fine because they look achievable through the partner’s network. But once that ink is signed, nothing is ever the same again.
Attitudes get more serious. The penny-pinching gets worse. Forced growth often becomes the focus over creativity and risk-taking. The leaders who built the company lose the vibe and drift away.
But most importantly:
The wild, behind the scenes fun stops because expense reports now require receipts.
Even though things are more rigorous, they seem bearable at first. But what owners and their teams are rarely prepared for is the irreversible loss of control that comes at the first sign of trouble.
For example, the investors and agency owners agree to a joint strategy that looks good on paper, but things can shift quickly if revenue targets aren’t met. Then comes the inevitable tension of the strategic vision being questioned, the leadership’s capabilities get scrutinized, the client list goes under review, the roster is “refocused”, and all the other impersonal things that arise when profits get threatened.
That is when the relationship feels like dealing with the mob, as new board members get “suggested”, historical leaders get pressured to step down, new leaders are brought in from the outside, teams are reorganized, and all sorts of “efficiencies” are encouraged that not only kill culture, but cause people who don’t have a vested interest to just peace out.
For the vast majority of acquisitions, this is the inevitable reality many owners will face.
So, what can you do about it? Well, honestly, not much, but you can protect yourself a bit.
Step 4 – Make Your Partner Commit
Promises are great, but sometimes you really just need a piece of paper to feel safe.
Just like expensive gifts and Michelin star dinners are no replacement for a ring and a marriage certificate, I always recommend getting brutally honest with potential investors about your desires for the partnership.
For example, create an easy-to-measure plan for the partner in terms of introductions within their networks. Make it even more real by attaching KPIs, dollar figures, and timelines to their introductions so they are on the hook to make you grow. Basically, make them commit to milestones that ensure your earn out.
And make sure to set penalties if they miss their targets. You will have penalties if you miss yours!
If investors don’t want to commit to things like this contractually, then they are not worth partnering with.
Very simple!
To draw from an example saw firsthand, I knew a small, regional agency that was acquired by a global holding company. At the time of purchase, their annual revenue was around $30m. As part of the deal, the agency was told to grow the business by 30% every year. Pretty standard stuff.
From an acquisition strategy standpoint, they were going to act as the new centralized agency for an entire global network. It seemed like a dream come true.
And sure enough, through the holding company’s network effect, hitting their targets was a breeze for the first few years.
In fact, they became the fastest growing agency within the holding company for 3 years in a row. They even got to roughly 10x the revenue they were making before the acquisition.
However, when the business from the network stopped flowing in because the economy slowed down, the agency was still held accountable for the same 30% growth target. Oops.
And did they get any empathy from the holding company? Of course not. The holding company never had an incentive to replace the loss of revenue, but they still wanted their 30% year-over-year growth. When the agency missed their forecast for 3 quarters in a row, the holding company ordered a massive round of layoffs in response.
Now that is what I call a storybook ending!
And this brings us to our last point: despite all these potential challenges and life-altering issues, selling is still probably the right thing.
Step 5 – Just Take The Bag
There is nothing wrong with selling.
This may sound obvious, but I can’t stress this enough: there is absolutely nothing wrong with selling your business.
It may feel weird to put a price tag on something so personal, but if it is really time for you to get out, then just do it.
Don’t let concerns about what your staff or talent roster will do. They will be fine. And be okay with the idea that you may not feel as important anymore (I know, but you will always be special!). You earned the right to take time off, to see to yourself, your family, and discover your next horizon with the money you take from an exit.
The reality is, you built your business, you invested your blood, sweat, and tears. And you put everything you had into it.
You babysat. You played therapist, piggybank, and legal counsel. You hid the bodies and kept your mouth shut just so your staff could avoid getting real jobs, and so your talent could keep doing what they love most.
Now it is your time to take a bow and cash in.
Wrapping It Up
In the end, only you are responsible for your own happiness.
I mean look, you did it.
You built something unique and brought your vision to life. You had help, you had luck, and more than a few close calls along the way, but you did it.
Don’t feel bad about taking an exit that is complicated, takes forever, and may not be exactly as you would have preferred. Just make sure you clear your head and get these things straight first:
- Have a vision of what you would do with all that money (even if it is just pursuing personal happiness)
- Find the right buyers and negotiate a deal you can live with long-term (once that deal is signed, you need to be okay with it)
- Don’t wait for the “perfect” moment to sell, there isn’t one (there are “good” ones though)
- Get the right advisors around you to help navigate this monumental decision (people like me!)
Selling your business is an awesome decision, and I am just kidding about being a commodity. You aren’t, but your business is.
As always, if you want to speak about any of this, I am always up for fun discussions with likeminded people. Hit me up through the contact form below and let’s get crazy.
