You’ve just read ten interviews from leaders who have sold their design services companies. In addition to conducting these interviews, I’ve also had casual conversations with more than twenty other designers who have been in a management role during a sale process. And, in late 2021, my partners and I sold our design services company called Modernist Studio to a near-shore software integrator. We left in early 2023 (just 17 months later) to start Narrative; I can’t speak of any of the details of my experience, but you can draw your own conclusions about how it went based on the simple fact that I wrote this book.
With all of the information I’ve learned, I’ve come to some pretty straight-forward conclusions.
Don’t sell your company expecting that you’ll be left alone to run it the way you always have. You won’t. Matthew Robinson from Idean and Doreen Lorenzo from frog showed us that an acquirer can’t help but make operational changes that have real impact on the business. You’ll see changes in the small stuff, like time tracking and expense reporting, and you’ll encounter changes in the big stuff, like the way you sell, the way you compensate your employees, and the way you spend your money. You’ll encounter new processes and perspectives, and many times, those processes won’t be “optional” and those perspectives are directives from your new senior leadership. You have complete autonomy in your company now. You won’t once you sell it.
Don’t sell your company expecting that you’ll keep the culture of your company intact. You won’t. Max Burton saw the meaningful rituals of tea time at Matter reduced to teabags and stale cookies at Accenture. Chris Conley explained that he walked away from a potential acquisition because the acquiring company wouldn’t let them reward their employees in the way they had grown used to. Rituals and rewards are a big part of culture; it’s inevitable that the acquiring company will change them, or remove them entirely.
Don’t sell your company expecting that you’ll leverage the sales pipeline and business-development team from the acquiring company. You won’t. Christian described a completely contradictory sales process between T3 and LRW Group, where T3 leveraged relationships and LRW leaned on mass emails. Matthew Robinson explained that CapGemini used Idean’s resources as tiny bits of larger deals: the revenue benefits went in one direction, only.
Don’t sell your company and tie money to an earnout or retention agreement, expecting to control the result. You can’t. Phil Barrett described a complex formula that defined who got credit for a sale, and he explained that he still doesn’t really understand the details of the earnout—he even left early without realizing the duration he had committed to. After a terrible experience at Facebook, Maria Giudice left early, and left millions on the table. In the thrill of a sale, your future at a new company looks limitless. Reality kicks in quickly.
And don’t sell your company thinking that verbal promises made to you will be held up. They won’t. Max Burton talked about a million dollars that was allocated for brand building and to subsidize projects for his team that were less profitable but more fun. It wasn’t in writing, and it didn’t materialize. Gavin Lew expressed frustration on the lack of specification of what “counts” as recognized revenue. If it was in writing, it would have been clear. It’s unlikely that the buyer is trying to lie or trick you. More likely, a verbal promise wasn’t really thought out, wasn’t really internalized, and—while it was important to you—wasn’t important to the buyer, so they simply forgot about it.
There’s really only one reason to sell your creative services consultancy.
The one reason to sell your creative services company is to make a bunch of money.
And if that’s your goal, do it! You’ve worked hard to build something, and if you are at the point of time where you want to reap the financial benefits for you and your team, a sale is a great way to end an experience you should be extremely proud of. Sell the company, take the money, and walk away. Take some time off, write me a letter from the beach, and then—if you’re up for it—roll up your sleeves and do it all again.
I’m sure there are design entrepreneurs who exited and can claim exceptions to these sweeping generalizations, and I say with all sincerity, good for them. They managed to bridge the divide between creativity and the inertia of M&A, which is a machine that seems to inhale innovation and exhale frustration, at least for designers.
I’m also sure there are entrepreneurs who would claim this summary as overly pessimistic. I don’t think it is. I think it’s realistic. You just read stories from people who have founded, ran, and sold some of the premier agencies in the word, and I don’t feel I’m reading too much into their words in saying that many of them regret it.
As I reflected on everything I’ve learned, I kept returning to a sentiment that is better articulated by Phil Barrett, who sold his company to Accenture. This quote, which you previously read, is a wonderful summary of what it means to sell a design services company:
I learned that if you’re sure that you want the money, and you are happy to let go of the asset, and you don’t want the asset anymore… it’s like, “I have had enough of running this fucking agency, I don’t want to do it anymore, and I definitely am prepared to exchange all of that for some money and some heartache,” then fine.
But if secretly, actually, you love what you do, then chances are you’ll sell it to somebody else who doesn’t get it. Because almost by definition, if they’re trying to buy it off you, they don’t get it, because they couldn’t do it themselves. And if you love what you do, then you probably should carry on doing what you love.