What to Expect from a Website Design Agency Sale: Cash Sale, Earn Out, or Revenue Share?

When selling your website design agency, one of the most important decisions you’ll make is the structure of the sale agreement. The right deal structure can significantly impact your financial outcome and your post-sale involvement with the business. There are several types of sale agreements commonly used when selling a business, each offering unique advantages and trade-offs.



In this post, we’ll explain the three main types of sale agreements—cash sales, earn outs, and revenue share deals—and how each one affects the agency owner after the sale. We’ll also offer advice on which type of agreement might be best for different scenarios.

1. Cash Sale: The Clean Exit


A cash sale is the most straightforward type of sale agreement. In a cash sale, you transfer ownership of your business in exchange for a lump sum payment. The buyer acquires your agency and assumes full control, while you walk away with the agreed-upon payment.


Pros of a Cash Sale:


  • Immediate Payment: The biggest advantage of a cash sale is that you receive your full payment upfront. This provides you with immediate financial security and the freedom to move on to new ventures or retirement.
  • No Future Ties to the Business: Once the sale is completed, you have no ongoing involvement with the business. This is ideal if you’re looking for a clean break with no future obligations or responsibilities.
  • Simplicity: Cash sales are relatively simple compared to more complex deal structures like earn outs or revenue shares. The terms are straightforward, and the transaction is typically completed quickly.


Cons of a Cash Sale:


  • Potentially Lower Sale Price: Buyers may be less willing to pay a premium for a cash sale because they’re taking on the full risk of the business’s future performance. As a result, you might receive a lower overall sale price compared to other deal structures.
  • Buyer Financing Risk: In some cases, the buyer may need to secure financing to pay the full lump sum. If the buyer struggles to obtain financing, it could delay or even jeopardise the sale.


When is a Cash Sale Ideal?



A cash sale is ideal if you’re looking for a quick, clean exit from your business. It’s also a good option if you’re nearing retirement or want to shift focus to a new opportunity and prefer to have no ongoing involvement with your agency post-sale.

2. Earn Out: Tying Payment to Future Performance


In an earn out, part of the payment for your agency is deferred and contingent on the business’s future performance after the sale. Typically, the buyer will pay an initial sum upfront, with additional payments made over time based on specific performance targets, such as revenue or profit milestones.


Pros of an Earn Out:


  • Potential for a Higher Sale Price: An earn out can result in a higher total sale price if your business performs well post-sale. Buyers may be willing to offer more since they’re not shouldering the full risk upfront.
  • Incentive for Strong Performance: Earn outs align the interests of both the buyer and seller, as both parties benefit from the continued success of the business. If you stay involved during the earn out period, you have a vested interest in ensuring the agency’s growth.
  • Smoother Transition: With an earn out, the seller often stays on in some capacity to help with the transition. This ensures continuity for clients and employees and allows the buyer to benefit from the seller’s knowledge and experience.


Cons of an Earn Out:


  • Uncertainty of Future Payments: One of the major downsides of an earn out is that the deferred payments are not guaranteed. If the business underperforms or fails to meet the agreed-upon targets, you may receive less than expected.
  • Ongoing Involvement: Earn outs typically require the seller to remain involved in the business for a period of time, which may not be appealing if you’re looking for a full exit. You’ll need to continue working to ensure the business hits its performance goals.
  • Disagreements on Metrics: The success of an earn out depends on the performance metrics that are set in the sale agreement. Disagreements over how those metrics are measured can lead to disputes between the buyer and seller.


When is an Earn Out Ideal?


An earn out is ideal if you believe your agency has strong growth potential and are confident in its future performance. It’s also a good option if you’re open to remaining involved in the business for a period of time after the sale. Earn outs are commonly used when the buyer wants to mitigate risk, or when the seller wants to maximise the potential sale price.

3. Revenue Share: A Long-Term Income Stream


A revenue share agreement is another common deal structure for agency sales. In a revenue share, the buyer agrees to pay the seller a percentage of the agency’s future revenues for a specified period of time. Unlike an earn out, a revenue share deal is typically not tied to specific performance milestones, but rather to the agency’s overall revenue generation.


Pros of a Revenue Share:


  • Ongoing Income: Revenue share deals provide the seller with an ongoing income stream after the sale, which can be beneficial if you’re looking for long-term financial security rather than a lump sum payment.
  • Less Involvement Than Earn Outs: Revenue share agreements don’t typically require the seller to remain involved in the business. The buyer takes over operations, while the seller continues to earn based on the agency’s performance.
  • Flexibility: Revenue share deals can be structured in a variety of ways, giving both the buyer and seller flexibility in determining the percentage and duration of the payments.


Cons of a Revenue Share:


  • Risk of Revenue Decline: The main risk with a revenue share agreement is that future revenues may decline. If the buyer struggles to maintain the agency’s client base or revenue stream, the seller’s payments will decrease accordingly.
  • Delayed Payments: Unlike a cash sale, where you receive your payment upfront, revenue share deals spread payments over a longer period of time. If you’re looking for immediate financial liquidity, this might not be the best option.


When is a Revenue Share Ideal?



A revenue share deal is ideal for sellers who want to maintain a long-term income stream without the pressure of performance-based targets. It’s also a good fit if you trust the buyer to maintain the agency’s success but don’t want to remain involved in the day-to-day operations.

Choosing the Right Sale Agreement for Your Situation


The best sale agreement for your website design agency depends on your personal and financial goals. If you’re looking for a quick exit and immediate payment, a cash sale may be the best option. If you want to maximise the potential value of your agency and are willing to remain involved post-sale, an earn out offers the potential for a higher return. For those who prefer a more passive, long-term income stream, a revenue share agreement can provide financial security over time.



Regardless of the deal structure, it’s important to work with experienced advisors to ensure the terms of the sale align with your objectives.

Ready to explore your options for selling your website design agency?
Click below to contact us and learn how Marcell Media can help you structure the perfect deal for your business.

Learn more

How to Prepare Your Website Design Business for Sale: A Step-by-Step Guide

September 12, 2024
Selling your website design business is a significant decision, and preparing for it can make the difference between securing a good deal and leaving money on the table. To maximise the value of your business and attract the right buyers, it’s essential to get your agency in order before the sale process begins.  In this step-by-step guide, we’ll walk you through the key areas to focus on—financial preparation, client retention, streamlining operations, and more—so that your business is in its best shape when it hits the market.

Why Now Might Be the Best Time to Sell Your Website Design and Hosting Business

September 12, 2024
As a website design and hosting business owner, you’ve likely experienced the fast pace at which the digital landscape evolves. New technologies, changing customer expectations, and economic shifts all play a role in shaping the future of your business. While these changes create opportunities for growth, they also make now an ideal time to consider selling your website design and hosting agency.  In this post, we’ll explore the industry trends, market conditions, and technological shifts that make selling your business a timely and potentially profitable decision. By understanding why now might be the best moment to exit, you can capitalise on current opportunities and avoid potential risks as the market changes.

Sell Your Website Hosting Clients: A Guide to Maximising Value

September 12, 2024
Selling your website hosting clients can be one of the most lucrative parts of exiting the website design business. Hosting clients often bring in reliable, recurring revenue, which is extremely appealing to potential buyers. The predictable income stream associated with website hosting makes these clients valuable assets, ensuring continued cash flow even after a business transition.  In this guide, we’ll explore why selling website hosting clients can be a strategic move, and outline key steps to maximise the value of your hosting portfolio before selling.

How Much is My Website Design Agency Worth?

September 12, 2024
One of the first questions that arise when considering selling a website design agency is, "How much is my business worth?" Valuing a website design agency can be complex, as it involves a number of factors, from financial performance to intangible assets like reputation and client relationships. Understanding the key components that influence your agency's value is essential for setting realistic expectations and negotiating a fair sale. In this post, we’ll explore the factors that affect the value of your website design agency and the common methods used to calculate its worth, helping you gain a clearer picture of what you can expect when selling.

Thinking of Selling Your Website Design Business? Here's What You Need to Know

September 12, 2024
Selling your website design business is a significant decision. Whether you’ve built the company from scratch or acquired it along the way, letting go of a business you’ve nurtured can be both emotionally and financially complex. It’s not just about finding a buyer; it’s about ensuring your legacy continues, your clients are cared for, and that you receive fair compensation for the years of hard work you’ve invested. If you’re thinking about selling your website design business, here’s what you need to know about the process, key factors to consider, and how to prepare for the transition.

The Benefits of a Professional Website for Businesses

By Marcus Elliott • February 3, 2023
A professional website is a critical tool for businesses that want to establish an online presence and reach a wider audience. With the rise of technology and the increasing use of the internet, a well-designed and functional website can be a powerful asset to a business, providing numerous benefits that can help drive success and growth. Increased Visibility One of the key benefits of having a professional website is increased visibility. A well-designed website provides businesses with the opportunity to reach a large and diverse audience and showcase their products or services in the best possible light. By having a professional website, businesses can expand their reach, reach new customers, and increase their overall visibility online. Credibility Another important benefit of having a professional website is that it can help establish credibility for a business. Customers are more likely to trust a business with a polished and well-designed website than one with a poorly designed or outdated site. This can lead to increased sales, as well as customer loyalty and repeat business.

Why Every Business Needs a Responsive Website in 2023

By Marcus Elliott • January 26, 2023
Every business needs a responsive website in 2023 to stay competitive and provide an optimal user experience for customers. A responsive website adjusts its layout and design to fit the screen size of any device, making it easy for users to browse and access information on the go. In today’s fast-paced digital world, people rely heavily on their smartphones and other mobile devices to access information, make purchases, and connect with businesses. In fact, mobile devices now account for over half of all internet traffic. This means that if your website is not optimized for mobile devices, you risk losing potential customers and negatively impacting your brand reputation. A responsive website helps ensure that your customers have a positive user experience, regardless of the device they are using. It offers a seamless browsing experience and makes it easy for users to navigate your site, find the information they need, and complete tasks like making purchases. This, in turn, can increase customer satisfaction and loyalty.

The Importance of Branding in Business Website Design

By Marcus Elliott • January 19, 2023
Branding is an essential aspect of any business and it can make or break your company's success. In today's digital age, a business website is the face of a company and represents its brand to the world. Therefore, it's crucial to pay close attention to the design and messaging of a business website to ensure it accurately represents the brand. A well-designed website helps to create a strong first impression, establish credibility, and communicate the company's values, mission, and products or services to the audience. A consistent brand image across all platforms and media, including a website, can help build brand recognition and loyalty. The design of a website should be visually appealing, easy to navigate and provide a positive user experience. The colour scheme, typography, and imagery should align with the company's brand guidelines and visually represent the brand's personality. The website's layout should be organized and intuitive, allowing visitors to easily find the information they are looking for.
user experience uk

How a Simple Website Design Can Improve User Experience for Businesses

By Marcus Elliott • January 12, 2023
A well-designed website can have a significant impact on user experience for businesses. A simple and intuitive website design can lead to increased engagement, better customer satisfaction, and ultimately drive sales. Here are some ways that a simple website design can improve user experience for businesses. Easy Navigation: A simple website design with clear navigation makes it easy for users to find what they are looking for. This improves the user experience and reduces the frustration of trying to find information on a cluttered and confusing site. Mobile-Friendly Design: With the increasing use of mobile devices to access the internet, it is essential to have a website that is optimized for mobile. A simple website design that is mobile-friendly provides a seamless user experience, regardless of the device used.

The Advantages of Working with a Local Web Design Agency for Businesses

By Marcus Elliott • January 5, 2023
As a business owner, you understand the importance of having an online presence. With the rise of e-commerce and digital marketing, it’s crucial to have a website that is professional, easy to navigate, and effectively showcases your brand and products or services. That’s where a local web design agency comes in. In this blog post, we’ll explore the advantages of working with a local web design agency for your business. Personalized Attention and Communication: One of the main advantages of working with a local web design agency is the level of personalized attention and communication you receive. When working with a local agency, you have the opportunity to meet with your web designer in person, discuss your vision and goals, and get feedback and suggestions in real-time. This level of personalized attention helps ensure that your website is tailored to meet your specific needs and is in line with your brand image. Local Expertise: Another advantage of working with a local web design agency is the local expertise they bring to the table. A local agency will have a deep understanding of the local market and can incorporate that knowledge into the design and development of your website. This helps ensure that your website is optimized for your target audience and effectively reaches the right people. Cost-Effective: Working with a local web design agency can also be more cost-effective than working with a larger, national agency. Local agencies often have lower overhead costs and can offer more competitive pricing. Additionally, when working with a local agency, you can avoid the hidden fees and extra charges that often come with working with a larger agency.
More Posts