Why you should know the value of your agency even if you're not ready to sell.

AGENCY VALUATIONS BY AGENCY EXPERTS. INSIGHTS FOR AGENCY OWNERS. (BY JERRY GIBBONS, PARTNER)

If you're planning to sell all or part of your agency, you would (of course) need to determine its value to establish a sale price. But would you want to have an agency valuation even if you aren’t getting ready to sell?  Well, yes. For a couple of reasons.
 
First, to determine the true value of your agency, you must take a close, critical look at not only financial performance but other key factors which affect the valuation including agency differentiation, quality of clients (reputation, size, tenure, concentration), quality of management team (experience, ability to lead, tenure, collaboration), new business development, creative work, client service, website,  systems/procedures and controls, working environment and culture, growth potential and business risks. 
 
These factors are important not only in determining the value of your agency for a sale tomorrow but also in objectively assessing its overall health right now. Knowing how your agency measures up in these areas will identify those activities, functions and departments which need to be improved to make your agency the best it can be. In today's ferociously competitive and unforgiving environment, shouldn't that be the goal of every agency?
 
Second, your agency is probably your largest financial investment. Knowing the current and potential value of that investment is critical to being able to make the best decisions regarding your and your family’s personal financial future.
 
So maybe today is in fact a very good time to take that close, critical look at the value of your agency.

(Jerry Gibbons has been President/CEO of two agencies bearing his name and President of the San Francisco offices of DDB and N.W. Ayer. He has also been Executive Vice President of the American Association of Advertising Agencies.)

At AGENCY VALUATIONS (www.adagencyvaluations.com), we help agency principals to better understand and effectively use key metrics and other tools to build agency value, identify areas of vulnerability and leverage their strengths. Our three partners have been President of six agencies (and CEO of three), CFO of three more and include a CPA. Collectively, we've developed 30 valuations for a wide range of marketing communications agencies across the United States.

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