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The agency exit guide

Stage 2 of 5

Prepare

Fix what buyers would discount, and get your house in order.

Preparation is where most of the value is made. Every risk you remove before going to market is one a buyer can't use to lower the price or push more of it into an earn-out.

Typically 3–18 months · 5 steps

  1. 2.1 Clean up the books
  2. 2.2 Reduce owner dependency
  3. 2.3 Spread client concentration
  4. 2.4 Build recurring revenue
  5. 2.5 Tidy contracts and document operations

Step 2.1

Clean up the books

Buyers trust monthly, accrual-basis, reconciled financials. Anything less gets discounted.

What to do

  1. 1Move to accrual accounting if you're on cash basis.
  2. 2Close the books monthly and reconcile every account.
  3. 3Separate personal and business spending completely.
  4. 4Ideally, have an accountant review or compile the last full year.

When it's done, you have

  • 24–36 months of monthly accrual P&Ls
  • Balance sheets and reconciled bank statements

Typically 1–3 months

Common pitfall

Mixing personal expenses into the business right up to the sale. It muddies every number a buyer looks at.

Step 2.2

Reduce owner dependency

If clients, sales, or delivery run through you, a buyer is buying your job. That's the single biggest discount on agency value.

What to do

  1. 1Hand key client relationships to named account leads, and introduce them properly.
  2. 2Build a sales process someone else can run, with a pipeline that isn't just your network.
  3. 3Delegate delivery sign-off and hiring decisions to senior staff.
  4. 4Test it: take a month away and see what breaks.

When it's done, you have

  • An org chart where you're not a bottleneck
  • Client relationships owned by your team

Typically 6–12 months

Common pitfall

Starting this after signing a letter of intent. Buyers notice, and it becomes a longer earn-out.

Step 2.3

Spread client concentration

When one client is a big share of revenue, a buyer prices in the risk of losing them.

What to do

  1. 1Calculate each client's share of the last 12 months' revenue.
  2. 2Aim for no single client above about 15% and the top five well under half.
  3. 3Grow other accounts and win new ones rather than shrinking the big one.
  4. 4Put your largest clients on longer contracts with notice periods.

When it's done, you have

  • A client revenue breakdown by year
  • Signed contracts for your top clients

Typically 6–18 months

Common pitfall

Hiding a concentrated client. It always comes out in diligence and damages trust in everything else.

Step 2.4

Build recurring revenue

Retainers are worth more than projects because the next year's revenue is already visible.

What to do

  1. 1Move project clients onto retainers or multi-month scopes where it fits.
  2. 2Productise services with a monthly fee.
  3. 3Track retention and renewal rates; buyers will ask.

When it's done, you have

  • Retainer share of revenue and its trend
  • Client retention rate for the last two years

Typically 3–12 months

Common pitfall

Counting rolling month-to-month projects as retainers. Buyers check the contracts.

Step 2.5

Tidy contracts and document operations

A buyer needs to see that the business is legally clean and can run without tribal knowledge.

What to do

  1. 1Make sure every client has a signed contract with clear terms and assignment rights.
  2. 2Confirm IP assignment and confidentiality agreements with staff and contractors.
  3. 3Document core processes: onboarding, delivery, reporting, billing.
  4. 4Fix any open issues: disputes, licences, unpaid taxes.

When it's done, you have

  • A folder of signed client, staff, and contractor agreements
  • Written SOPs for core processes

Typically 1–3 months

Common pitfall

Client contracts that can't be assigned to a new owner. These can derail a deal late.

General guidance only, not legal, tax, or financial advice. Every deal is different.

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