How to Handle an Agency Partner Buyout Without Impacting Growth

By Jason Swenk on October 2, 2019

What happens when an agency outgrows a partner? Do you sell the agency and part ways? Can you negotiate an agency partner buyout? It happens – partners drift apart or sometimes people simply want out. Dealing with a partner break-up doesn’t have to impact your agency’s growth if you don’t want it to. In fact, you can negotiate a fair buyout by facing it head-on or by being proactive. It’s a tough conversation but definitely one to have earlier than later.

In today’s episode, we’ll cover:

  • #1 source of marketing agency leads.
  • The best way to approach a bad partnership.
  • 4 steps to an agency partner buyout.

Today, I talked with Dan Altenbernd, Managing Partner of H2M, in Fargo, ND. Dan has over 18 years of experience in the industry, and he’s been building brands in his hometown for years. Not only is Dan’s agency booming, but he started it with one more partner than he has now. When his partner didn’t have the same goals as him, they negotiated a buyout and he’s on the show to share that wisdom.

#1 Source of Marketing Agency Leads

We all know agency growth is both the biggest goal and the biggest barrier for most agencies. We all want to grow. And how do you grow? With a lead generation system that keeps your pipeline full. The lead war always seems to be between outbound and inbound. Should you be reaching out to them or should they be coming to you? And actually, I don’t think there is one right answer — in fact, I preached a 3-channel approach to lead generation. I’ve seen agencies win with outbound. And I’ve seen agencies win with inbound. Your agency needs both, as well as strategic partnerships, in order to stay successful.

But, here’s the thing — neither inbound nor outbound is the easiest source of leads. You know all of those relationships that you’ve been cultivating throughout your career? Those are an amazing source of leads. Former colleagues and co-workers are all low-hanging fruit. Many agency owners think they need 1,000 leads a day to grow big. You don’t. You really only need a few. And your network can be those few leads that end up catapulting your agency into 7 figures.

Dan says this is especially important for newer agencies with lean budgets. Rather than spending a ton on Facebook ads, get out there and leverage the connections you already have. Once you have your first few clients, you can start implementing other killer inbound strategies you’ve been thinking about.

The Best Way to Approach a Bad Partnership

There are plenty of agencies that have amazing partnerships that just work. But, let’s be real. No one will always want exactly the same things as you at exactly the same time as you, right? Eventually, you or your partner will outgrow each other or the business. Maybe your partner doesn’t have the same ambitions as you, has different views, or simply wants out. Then what?

I always say, you either know the bad partner or you are the bad partner. But as Dan explained, it doesn’t have to be an ugly break-up. You just need to have an honest conversation with your business partner. If you think you’re headed in the wrong direction, let them know. Don’t be scared to start the conversation. If a change needs to happen, rip off the band-aid, and get it done sooner than later for the sake of your business and your own well-being.

4 Steps to an Agency Partner Buyout

  1. Put it out there. Be upfront and honest with them. If you avoid the conversation for too long, it will be too difficult. It’s better to face the confrontation and try to move forward. You might be surprised at the result! Dan simply pulled his partner into a room and told him it wasn’t working – and his partner understood.

  2. Once it comes time to actually create the exit plan for your partner, hire an outside consultant to help mediate conversations and negotiations. Emotions and egos can get in the way of an agency partner buyout. You’re both entrepreneurs and you’re both going to want to win the negotiations. Allowing a third-party to make the deal is the best way to keep things amicable.

  3. Give your agency team time to process. Don’t let your partnership break-up impact the team or get in the way of the great work you’re doing. Communicate the new vision for the agency so the team knows and understands the direction and what things will look like without the partner.

  4. While you want to be direct with the conversation, don’t be hasting with the exit plan. That way, there’s plenty of time to phase one partner out without impacting agency processes. Dan’s entire buyout took place over the course of 5 years!

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