Thinking of Selling Your Agency? Cash Out for Max Value (and Avoid the Biggest Mistakes) With Sean Hakes | Ep #827

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Are you growing your agency with the goal of selling it one day? More importantly, are you taking the right steps now to ensure it’s actually worth what you think it is?

Today’s featured guest has built and sold multiple agencies over the years, gaining hard-earned insights into the process. He shares what you need to know to prepare your agency for sale, the potential pitfalls and opportunities with non-competes and earnouts, and whether hiring a broker is really worth it.

If selling your agency is on your horizon, or even just a long-term possibility, this episode is packed with practical advice to help you maximize your valuation and avoid costly mistakes.

Sean Hakes has been building and selling digital marketing agencies since the early 2000’s back when ‘SEO’ wasn’t a household term and websites were still coded in tables.. He’s grown agencies from small side hustles into multi-million-dollar operations, navigated multiple acquisitions, and learned the hard way how to structure a deal and when to walk away.

In this episode, we’ll discuss:

• Getting savvier for his second agency sale.

• Not taking the highest bid, but picking the right buyer.

• Getting back to the game after a restrictive non-compete.

• Buying back his old agency.

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Sponsors and Resources

E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design, and development agency that has provided white-label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

How a Major Mistake Started His Agency Journey

Most agency owners start by accident, but in Sean’s case, he accidentally broke a website.

While working for another company, he took down their site and had to learn HTML on the fly to fix it. That crash course turned into a curiosity for web design, which turned into a small SEO and design shop in Denver around 2001–2002, back when keyword stuffing and white text on a white background actually worked.

Sean’s first agency wasn’t huge—three or four people, a few hundred grand in revenue—but their search visibility was strong. That alone was enough to attract an out-of-state buyer. The deal wasn’t life-changing money, and looking back he thinks (since he didn’t know anything about valuations) that he probably gave it away, but it was enough to get Sean hooked on the idea of building, growing, and eventually selling agencies.

The “Do It Better” Second Act

After dabbling in landscaping, trucking, and even diamond brokering businesses following the sale of his first agency, Sean realized marketing was still his zone of genius. This time, he teamed up with a sales-savvy partner. Sean handled operations; his partner brought in a big book of business.

That agency scaled to about $3 million in revenue before they decided to sell—but not before learning a hard truth about valuations: top-line revenue doesn’t mean much without profit.

When they first went to a broker, they were shocked to get a $100k valuation. Why so low? No recurring contracts, thin margins, and too much discretionary spending. So they spent the next year tightening up—signing contracts, cutting waste, and boosting profit.

It’s a lesson many agency owners dreaming of selling at some point have to learn. You may think that making millions in topline revenue means your business is worth a lot, and then you learn there are many factors that determine that price, and profit is a pretty big one in the agency space.

Understanding Deal Structures (and Picking the Right Buyer)

The second sale was a much more strategic process. Sean and his partner used a broker, entertained multiple offers, and discovered there are a million ways to structure a deal. The one they chose was about half cash up front, with the rest split between owner financing and an earnout.

Here’s the kicker: they didn’t take the highest bid. Instead, they picked a private equity group that specialized in their industry and cared about their team and clients. They passed on flashier offers, like one from a New York club owner, because they valued long-term success over a quick payday.

They also learned brokers are very expensive. In fact, if he could do it all over again with the knowledge he has now, Sean wouldn’t use a broker.

Playing the Earnout Game (and Winning It)

Earnouts can be a trap, designed to look great on paper but structured so you’ll never hit the target. Sean and his partner weren’t having it. They stayed on the sales team, volunteered their time, and treated the earnout like a commission plan they could win.

The trick for them was conservative projections. Instead of promising buyers a wild 50–100% growth rate (and setting themselves up to miss), they targeted a steady 10% growth. This set the earnout bar at a realistic level—and they smashed it.

They even negotiated out their broker’s cut of the earnout once they knew they’d hit it, keeping 100% of the upside.

From Restrictive Non-Competes to Freedom Deals

Sean’s second agency sale came with a brutal seven-year non-compete—likely unenforceable, but restrictive enough to stress him out. Five years in, low on reserves, he approached the buyer with a proposal: let him start another company without poaching their clients.

Instead of a fight, they offered to partner with him, gave their blessing, and even returned his old domains. That experience stood in stark contrast to another sale where the non-compete was simply, “Stay out of our 30-mile radius.”

Takeaway: Non-compete terms can vary wildly. Negotiate them up front, and remember that relationships matter long after the ink is dry.

The Cashless Merger That Led to a Full Cash Exit

In 2011, Sean started another agency, Altitude. Five years later, he merged it with another company in a cashless deal to boost revenue and valuation. Within a year, an unexpected buyer came along with a full-multiple, all-cash offer—and only wanted one person to stay on.

Sean took the deal, pocketed the money, and moved to the beach in South Carolina to run a fishing charter. “The old saying about boats, being happiest when buying and selling them, is true,” he laughs—but the experience checked a personal dream off his list.

Buying Back His Old Agency

In a very full-circle moment, the company that had bought Sean’s agency in an earlier deal came back to him in trouble. Mismanagement, bad outsourcing, and unhappy clients had turned it into a sinking ship.

Sean and his new partner jumped on the opportunity, bought it back for a fraction of what they’d sold it for, rehired many of the original team, and turned it around within months.

Sometimes the best acquisition target is one you already know inside and out—especially if you can buy it back at a discount and restore its former glory.

Sean’s Advice to Agency Owners Thinking About a Sale

Don’t take the first “decent” offer. The buyer pool is bigger than you think—negotiate.

Be strategic with brokers. Great ones exist, but remember that they get paid if you sell, so their advice may be biased.

Control your earnout terms. Conservative projections give you room to exceed expectations and actually cash in.

Relationships last longer than deals. Today’s buyer could be tomorrow’s partner — or seller.

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