Death sentence… Why selling your agency is unequivocally the end for the company you knew.

Jules Ehrhardt
6 min readSep 8, 2016

This an extract from a wider piece on the state of the digital industry originally published on the Marvel Blog, now available here. In light of the widespread coverage of the Barbarian Group’s malaise I thought it would be timely to publish an extract which speaks to the motivations and perils of selling your agency.


CONGRATULATIONS!!! Your firm with a global footprint and a few hundred staff, which would have fetched upwards of $75M USD in 2013, will now command closer to $100M in 2016. There is no better time than now to sell your agency with so many well heeled suitors. In fact the market is so hot right now that agencies are being sold based on multiples of between 3x, 4x and in some cases even 5x revenue (not EBIT). Factors such as size, numbers of studios in key markets and client list dictate where in that threshold you sit. Here you go, dream a little…

Buyer (and seller) Beware!

Selling one’s company is of course completely OK and is any owner’s right. The true motivation for a large majority of the aforementioned deals is no-doubt cashing out with retirement on the far horizon. When confronted by the reality of a repetitive Greek tragedy of a professional life in its closing cycles, a handsome offer for one’s life’s work is surely hard to resist. Certainly, scanning the Microsoft Word acquisition template press releases… “wider, scale, expand, access, yada yada yada” from the range of the companies who have sold in the last few years it is hard to discern any authentic non-financial motives (of course money is never mentioned).

All good right? Except the vision they sold to their people along the journey certainly didn’t include being sold. Despite their declarations, they did not start out in the design industry dreaming of selling to a management consultancy, a global accounting firm, or a credit card company. They know it and their people know it. As such telling the world and more crucially their people how great this is going to be for ‘us’ is not all good.

Adaptive Path gave an incredulous spiel following their sale to the credit card company Capital One, declaring “It kind of feels like where we were headed all along.” 19 months on it would be interesting to see how many of those souls are still vibrating.

Keeping It Real

I’d personally love to read a from-the-heart announcement…

“Hey folks, As many of you will be aware someone came in with a great offer for our life’s work. We reflected long and hard and came to the conclusion that this is the right time, that we’ve taken this thing as far as it can go. We fought for the best possible deal for our people, so if most of us stick it out and get stuck in for a few years everyone will be looked after (and to be transparent we will maintain our earn out). Things are going to be different moving forwards. It will become something new. So we’d like to acknowledge and celebrate the end of an era and all the hard work you put into making this happen. Let’s accept it for what it is, make the best of it and all earn our keep as we ride this one out.” — said no one. ever.

Teehan+Lax went well beyond this standard not just in word but also in action by opting for a dignified dissolution of the company rather than a sale. The partners and the employees that would and could moved on to Facebook. This path uniquely preserved the T+L legacy. Exhibiting great self-awareness and honesty, they spoke of failing to break their cycle…

“If Teehan+Lax was to be successful going forward, we would need to find, what Geoffrey Moore calls, Escape Velocity. Escape Velocity is the work and investment required for established companies to break patterns in their business to find new levels of growth and sustainability.” T+L 2014

Agencies Scattered On Dawn’s Highway Bleeding

The truth Teehan+Lax recognised is that selling your agency is unequivocally the end for the company you knew. You are no longer master of your own destiny. It’s death by spreadsheet. Once assimilated, your company is now a cell in another company’s spreadsheet in which there are no columns for culture. Most crucially the collective spell, which kept the talent that makes up the sum of the parts doggedly committed to the cause beyond all reason through hell and back, is broken. You’re culturally holed below the waterline. If the agency is lucky they will feature in the following well worn conversation for a generation or two before being forgotten.

A: “do you remember <insert agency name>?”

B: “yeah, they were great weren’t they. What happened to them?”.

The tragic thing about the denial, the self-delusion or worse the outright lie to your people — telling them that selling is not the end but the great next step in the journey — is that no one gets a closure experience. When someone dies you hold a funeral or a wake for people to come together. They mark the occasion, reflect, cry, laugh, celebrate, and commiserate. It is a fundamental human need that allows us to honor what has been and begin the process of moving forward properly. I suspect the Teehan+Lax closing party was just that and the bond between their family, wherever they scatter, will consequently endure.

By not marking the end of what things were, the passing of an era, the company slowly dies. The earnout incentive and timeline is to all intents and purposes a march towards a desert mirage. One by one the people, its very life force, fall away as does its legacy. The founder of Fjord, who sold to Accenture in 2013, recently wrote an article on ‘Can Corporate and And Creative Cultures Ever Truly Merge?’. It speaks of protecting culture, open-space studios and design methodologies in a sale, yet is tellingly thin on the protection of its people. If a company is its people, then what’s the point if virtually no one you took the journey with arrives at the destination with you? It’s like scoring the Presidential suite at the Bellagio… on your own. It has to feel somehow empty.

We’ve seen death by acquisition over and over. You’ll see nearly all the companies who have sold in the shopping list at the top of this piece wrestle with their predicament, bleed talent, fade, and end up as zombies — mere facsimiles of their former selves.

Ship of Theseus

“This old brooms had 17 new heads and 14 new handles in its time” — Trigger

What will all the ad holding firms and management consultancies end up with from their shopping spree a few years down the line? If an agency is acquired and 70+% of the people, the very soul of that company, leave in the months and years that follow, does the buyer actually end up with what they paid for? It’s a brain teaser Greek philosophers (See ‘Ship of Theseus’) and cockneys have wrestled with over millennia.

In this red hot market, agency valuations have never been higher. But the truth is that selling is the death of the company you know whilst the buyer ends up with a mere facsimile of what they paid good money for. Despite the consolidation and growing trend of in-house teams, there will always be a market for great consultancies as long as they are prepared for a new reality. It is incumbent upon us to forge new and iterative agency models that both avoid the inevitable outcome of a ‘sale’ as well as vest the interests of the talent.

If you want to read the piece where this came from, check out ‘State of the Digital Nation 2016’. Grab yourself a flask of coffee and a few packets of smokes as it’s a good old fashioned ‘long read’. Peace.



Jules Ehrhardt

First Human @fktry / former owner @ustwo / founder @pledgepl . Design / tech / startup / crypto / life. |