GEORGE SWISHER

George Swisher: Nothing but the Truth

 

In this episode of Trunk Talks we speak to George Swisher, Founder and CEO of LiiRN about his extensive digital agency acquisition experience. Throughout his career, he has been involved in 100+ acquisitions, some as an owner and many as a strategic advisor. The conversation highlights a number of important topics for agency owners, including the dangers of 50/50 ownership partnerships, the importance of using business financials to enhance enterprise value, and the key negotiating points that every agency owner needs to be armed with.

 

With over twenty years of experience, George has a proven record of successfully founding and scaling digital agencies. He specializes in building them from the ground up, guiding mergers and acqusitions and helping with turnarounds. He recently founded and launched LiiRN, a technology platform that helps agency stakeholders better understand and interpret their business.

 

Discover in this Episode

 

  • Challenges with 50/50 Partnerships
  • Business Financials VS. Tax Financials
  • Key Negotiating Points

The dangers of 50-50 ownership partnerships

The best way to structure your agency is not always a 50/50 partnerships. George discusses his experience with 50/50 partnerships and shares his view on other ways to structure a partnership. The best partnership starts with determining what the partners are looking for and finding how to align them. Depending on the needs, wants and dreams of the partners, different deals can be structured for each partner. It can be dangerous to put the same deal together for one partner looking to run a lifestyle business and the other looking to grow the agency to $100 million.

There are several factors to consider at the beginning of the process to avoid such a scenario such as who is taking the most risk, who is bringing in the most revenue, what is the exit plan and who has the most responsibility. By discussing these factors at the beginning of the deal process, an agreement can be reached that aligns all parties. In a 50/50 partnership, it can be difficult to empower a true leader of the business. The partner taking the most risk should ultimately have the final say.

The importance of using business financials to enhance enterprise value

George speaks to bringing on a financial consultant to help build your financials to sell versus using tax financials. Agencies generally have bookkeepers that structure tax prepared financials that minimizes the agency’s tax burden, but also minimizes the profit in the business. By preparing operational financials that maximize the agency’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and showcases the operating performance of the business.

Investors are looking for financial processes in place that are airtight and built to scale with the business. This brings confidence to the revenue, EBITDA, and cash flow projections that ultimately drive the sale price of the agency. 

Key negotiating points that every agency owner needs to be armed with:

Agency owners should be well prepared going into the negotiations to protect their interests and the interests of the agency. George highlights a number of points that agency owners may not know they can negotiate. Key points include:

Binders

    • Negotiating for a binder holds the acquiror to a timeline and ensures a payment should the process stretch beyond certain points without expected deliverables or fall apart all together. The acquisition process is time consuming and an agency should make sure there are measures in place to make sure the negotiation is taking place in good faith.

Payment Terms

    • This includes upfront cash, future salary, earn out structure, options for future equity. The agency should know all the aspects of the transaction they can negotiate, as the acquiror will not educate them.

Business Financials

    • Negotiating the accuracy of projected revenue and earnings increases the value of the transaction.

The Pipeline

    • Agency owners should question how the acquirer plans to assist with lead generation. If the acquiror is projecting increased growth, the agency owner should be asking what resources will be invested by the acquiror to help meet those growth targets.

Lessons From Trunk

  • Agency owners should structure agreements that align the interests, goals, and vision of all partners to create a shared roadmap incentivizing everyone to drive the company forward.
  • If the owners are committed and believe in their agency, then they can take a longer earnout to maximize the potential value.

 

This episode is sponsored by Julius, your influencer marketing software.

Julius is an influencer marketing platform that provides marketers with the data & campaign management tools required to organize a successful influencer marketing strategy

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