The business strategy challenge

How to maximise the value of your agency #5

Media Corporate Finance Partners, Paul Winterflood and Dan Leaman, sat down with Chris Matthews, Principal at Sutherlands, to discuss how to maximise the value of your agency.

They focus on the drivers of value and how these key elements help to maximise the value of your agency to ensure it grows, increases profitability, and is ultimately in a position to sell for the maximum value in the future.

Transcript

00:00:00 Dan 

If you think about strategy, and I've sat both sides of the table, for a lot of businesses, a strategy is a to do list of actions that are very noble goals normally. And that have often even started some of those goals. 

00:00:20 Dan 

In my experience, very few of them are ever finished. And if you look at a strategy list of actions that was created four years ago for many businesses, and a strategy list that is there today - 

00:00:37 Dan 

there's probably a lot of similar items. 

00:00:39 Dan 

on that list. 

00:00:39 Dan 

And again, some of them will 

00:00:43 Dan 

even be started. 

00:00:44 Dan 

So that to me, isn't strategy. At best you could label that as a list of tactics. 

00:00:51 Dan 

What the MKS 360  (Moore Kingston Smith 360) does, that I think is pretty 

00:00:55 Dan 

special and unique, 

00:00:57 Dan 

is we don't just look at: okay, there's 36 statements of best practice here. How are we doing against them? Where are the gaps across customers, people, operations, finance and strategy? 

00:01:10 Dan 

We go further than that. And for me, strategy is as much about deciding what you're not gonna do. 

00:01:18 Dan 

That's what you are going to do. And the important thing to do is, OK, we've got a load of gaps that have come out 

00:01:25 Dan 

of this process. 

00:01:26 Dan 

We've done our diagnostic. These are all the things you could do to improve, but we also acknowledge that a management team has limited resources and the most scarce resource of all is time. 

00:01:38 Dan 

So what we try and then do. 

00:01:41 Dan 

Is work with the management team to focus on the key issues that will make the biggest impact on value. 

00:01:49 Dan 

And in my experience, it's best to keep that down to say a handful, 3 to 5 targeted 

00:01:58 Dan 

goals that we start. And we do. And that's the key thing. So we normally link it together with some other things. So we do the MKS 360, we look at the areas, we find the gaps. 

00:02:11 Dan 

But then where the real value comes, is in picking which of those gaps we're gonna focus on closing. They're gonna have the biggest impact on improving value, but also then we will work with the management team for as long as it takes to get the business in a better place. And I always say to my clients that this isn't just a pre-sale 

00:02:34 Dan 

planning tool. The things that are highlighted by an MKS 360, and the things we recommend a management team should do, are exactly the same things 

00:02:47 Dan 

that a person trying to run their business as well as they can 

00:02:51 Dan 

would agree need to be done. So, for me this is a no lose situation. We help you identify where your business can be improved. Those improvements happen to be the kind of improvements that buyers want. That's not a coincidence. 

00:03:07 Dan 

Because buyers want to buy good businesses. That are sustainable. That are 

00:03:14 Dan 

enabled to grow and maximise their potential, but have great people in who are developing. So, all the things that we recommend, are things that would be good for your business anyway, generally. And by working with the management team over a period of time, what we then try and do is something that we call 

00:03:34 Dan 

almost like a virtual non-executive role, a V Ned service, where we will make sure that management teams carve out the time on a regular basis. 

00:03:46 Dan 

To work on their business as well as in their business. Because the problem most earners have, founders, management teams, is that they're so busy servicing clients, dealing with people, 

00:04:00 Dan 

managing cash flows, invoicing, dealing with suppliers, whatever it may be. That they get sucked into the day-to-day, which is why that list of strategy desires 

00:04:13 Dan 

is partially started and never finished.