How to Buy a Talent Agency

Buying a business is a challenging enough enterprise but buying a talent agency can be even more challenging due to it's unique nature and its competitive industry. Talent agencies are private businesses that manage actors, musicians and artists. This means you have to deal with the personality issues of both the owners and the talent as they can all help or hinder your buyout of their agency. Care must be taken in the valuation process most of all because the value of the talent is in constant flux due to changing popular tastes.

Instructions

1. Obtain the talent roster of the agency you are thinking about buying. You need to see who they have on contract to know what the agency is actually worth. You need to analyze what the talent's past sales have been like, and gauge what the likely prospects are for their continued sales success. Talent that have not had major hits in more than a few years may not be worth the investment while talent that has just starred in a major motion picture could be worth more than the rest of the talent roster combined. If possible, obtain how long the talent's contract is with the agency; this is sometimes kept confidential but is also sometimes shouted out in press releases as a way to drum up work for both the talent and the agency.

2. Ask current and past talent who have worked with that agency how they liked it. If the talents are unhappy over how they are treated, then it may not be advisable to buy that agency unless you are willing to replace the staff and work hard at improving its image. You can also use unhappy talent as a bargaining tool by implying that you could just start your own agency and steal their talent through individual contract buyouts. If the talents are happy then you should keep the talent-agency staff in order to keep the talent happy.

3. Find out what other talent agencies of the same size have gone for in the past. Most of the time this information is kept confidential, but is also sometimes broadcast, to garner attention for the agency.

4. Contact the talent agency owners and make an offer that is ten percent less than what a similar talent agency went for, if the talent is happy. If the talent is unhappy then offer only twenty percent of what a past talent agency went for. When the owner scoffs at this price, tell him you know about how unhappy the talent is and how they are unlikely to renew their contracts. If the owner scoffs again, tell him you are more than capable of starting your own agency from scratch (even if you are not). That you would seek to buy out the individual contracts of his star talent, leaving him with only poor performers. Either way, the owner will counter with a higher offer and it is up to you to decide what is a good price to counter with. Do not exceed past buyout prices, figuring in inflation, unless you know the talent is on the verge of major success

References

• Score: Buying Businesses
• Business Sale: Buying or Selling a Private Business
• Blackbaud: Private Company Valuation and the Prospect Researcher