The soft issues decide whether the deal works

By Tim Sutton, senior reputational adviser and PR-agency M&A counsel · June 2026

A deal is agreed in a room full of numbers. It succeeds, or quietly fails, somewhere else entirely.

I have spent three decades building and running PR agencies, and, with my partners, I have sold a company and bought others. So I have sat on both sides of the table, as the principal and not only the counsel. And the longer I do this, the more I am convinced of something that does not show up on any spreadsheet. The headline price and the legal terms are not what decide whether an agency sale actually works. The soft issues do. And they are the ones almost everyone underweights until it is too late.

Well, yes, the price matters. Of course it does. Nobody sells the firm they built for less than it is worth if they can help it, and no buyer overpays on purpose. But here is the uncomfortable truth. The deals I have watched come apart did not come apart over the multiple. They came apart over people, over culture, over who actually owned the client relationship, over what happened to the second tier in the eighteen months after completion. The money was the easy part. The money was agreed in week three. Everything that decided whether it held together was settled, or fatally left unsettled, long after the lawyers had gone home.

Why does cultural fit decide more than the multiple?

Start with culture, because it is the one buyers say they care about and then forget about the moment due diligence begins. Two agencies can look like a clean fit on paper. Complementary sectors, no client conflicts, sensible geographic logic. And then you put the two leadership teams in a room and watch one of them flinch. One firm runs on consensus and long lunches and a founder who knows every client by their children's names. The other runs on dashboards and quarterly targets and a holding-company reporting line. Neither is wrong. But they are not the same animal, and pretending they are is how you lose a third of the senior team in the first year.

Can you diligence culture? There are firms that will sell you a framework for it now, cultural mapping, psychometrics, structured integration workshops, and some of it is genuinely useful. But a data room will not tell you this part. You learn it the old way, by spending time, by asking awkward questions, by noticing who talks and who goes quiet when the founder leaves the room. A buyer who skips that because the numbers look good is buying a problem they have not priced. A seller who waves it through because the cheque is large is selling their people into something they have not checked. I have seen both, and I confess I find the second the harder one to watch.

What is the real risk in the second tier of management?

Then there is the second tier, the layer just below the founder, and this is where so many agency deals are quietly won or lost. A buyer is rarely just buying the founder. The founder, after all, is often the person heading for the exit once the earn-out clears. What the buyer is really acquiring is the bench. The account directors and senior managers who run the work, hold the client trust, and could, if they chose, walk out and set up across the street on a Monday morning.

So the question that actually matters is not what is the agency worth. It is who stays, why would they stay, and what have we done to make sure they do? If the answer is nothing, because all the attention went into the founder's package and the warranties, then the deal has a hole in it that no amount of price gets you out of. The strongest deals I have been part of treated the retention of the second tier as a first-order term, not an afterthought bolted on once the headline was agreed.

Who actually owns the client relationship?

Client continuity is the next soft issue, and it hides in plain sight. Every seller will tell you the relationships sit with the firm. Some are even right. But in a founder-led agency, the relationships very often sit with the founder, personally, built over years of dinners and difficult moments and being the person the client phones at ten on a Sunday night. That is wonderful for the firm right up until the moment the founder is selling it.

The honest question is whether the clients are loyal to the agency or loyal to a person. A buyer needs to know before completion, not after the first renewal cycle when two of the top five accounts drift away with a polite note about a change of direction. A seller who has spent years deliberately building the firm's relationships rather than only their own is worth more, and sleeps better, than one who has made themselves the single point of failure. Most of the value-building work I do with owners, long before any sale, is exactly this. Making the firm matter more than the founder.

How do earn-outs interact with all of this?

Now the earn-out, which is where the soft issues and the hard numbers collide. An earn-out is meant to bridge the gap between what a seller believes the firm is worth and what a buyer will pay today. Sensible in theory. But notice what it does to everything above. It keeps the founder in place, which is good for continuity but bad if the plan was a clean handover to the second tier. It ties the price to performance, which sharpens the founder's focus on the numbers and, sometimes, dulls their attention to the very people whose retention the earn-out depends on. It can quietly set the old leadership and the new owner against each other at precisely the moment they most need to be aligned.

A well-structured earn-out reckons with all of this. A badly structured one assumes the soft issues will sort themselves out because the incentives point the right way. They will not. Incentives are not culture. A spreadsheet that models three years of margin does not model the senior hire who leaves in month seven because nobody told her where she fitted in the new structure.

Why do good-looking deals fall apart a year later?

Which brings me to the thing I most want an owner to take away. A deal that looks good on the spreadsheet can come apart a year after completion, and when it does, the cause is almost never the thing that dominated the negotiation. It is the culture nobody stress-tested, the second tier nobody secured, the clients who turned out to be loyal to a person, the earn-out that pulled people apart instead of together. A signed deal is not a successful deal. The signature is the beginning of the test, not the end of it.

None of this is an argument against selling. I help owners sell, and I help acquirers buy, and good deals are good things. It is an argument for taking the soft issues as seriously as the hard ones, ideally years before there is a deal to do at all. The numbers will get the attention in the room. Make sure the things that actually decide the outcome have had yours, long before you get there.

If you are an agency owner weighing a sale, the soft issues are worth thinking about now, not at the term sheet. Take the short self-assessment to see how your firm would look to a buyer, or send me a confidential note and we can think it through privately.

This is the work I do with owners long before a sale, which is the subject of how I work with agency owners. If you are still weighing whether this is the year to sell at all, start with what buyers actually price, and when to start.

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Tim Sutton is a senior reputational adviser to boards in their hardest moments and counsel to PR-agency principals on both sides of a transaction. timsuttonpr.com · LinkedIn