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Your agency represents a lifelong investment of time, labor, blood, sweat, and tears. You’ve ridden out the highs and lows of running your own agency. Now, you may be thinking about how to monetize that lifelong investment for retirement.

The first and most important step in contemplating a future sale of your agency is to understand the value of your agency within the current market conditions and environment. As you have heard many, many times over the years, an agency’s most valuable asset is its people… and particularly the owner(s). You own a service business whose primary assets are intellectual capital (your staff and owners) and the client relationships you have nurtured over the years. But how do you really value these intangible assets? Especially if you may be looking for an exit strategy?

Eric Kercheval & Associates knows and understands the agency business. With 27 years of experience, we know how an agency works… internally (with staff) and externally (with clients). We clearly understand that your agency is a creatively driven service business. Very importantly, we understand that your agency culture and brand most often reflect the owner’s personality and vision. This understanding is vital in determining your agency’s valuation. Most traditional company evaluators (typically CPA firms) lack this level of “cultural sensitivity” and marketplace knowledge in performing their valuations.

ValueScope is a valuation process that takes into consideration not only the past and future financial performance of the agency, but, as importantly, the key, intangible assets of the agency: staff, senior leadership, client relationships/contracts, marketplace reputation, and the owner’s anticipated post-purchase relationship with the agency and its clients.

These nontangible assets have a major impact on an agency’s valuation. Careful evaluation of the nontangible assets is vital in order to establish a meaningful valuation of the agency.

ValueScope also keeps a pulse on the agency market environment. Who is selling and for what price, what terms and type of valuations? Who is buying and why?

ValueScope engagements build on the financial data you already have on hand. Also, part of the engagement process is to discern low-cost ways to increase your agency’s valuation. Part of the process also provides a strong understanding of what is required to prepar your agency for a sale and the most common types of sale scenarios currently being executed in the marketplace.

When participating in a ValueScope engagement, we encourage you to invite other professional advisory team members (legal, accounting, etc.) to participate in order to maximize your advisory team’s value and knowledge base.

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