Buyers purchase agencies for all sorts of reasons — to expand geographic reach, extend capabilities, grow revenue, or pad profits. Since it’s a talent-based industry, the other reason that agencies may be sold is for their people.
When the primary reason for an agency purchase is the team itself, it is often referred to as an “acquihire.” It’s something that has been popular for many years among tech companies in Silicon Valley who often buy small, struggling startups to quickly augment their engineering teams.
But even without a fancy name, these types of acquisitions have been taking place in the agency space for a long time, too.
Chip and Gini talk about how acquihires work, when they are a good idea, and how to structure it by looking at both sides of the transaction (buyer and seller).