From Start to 7 Figure Acquisition in Under 3 Years, with Andy Cabasso – Episode 37

In this episode, Andy walks us through how he started a digital marketing agency in 2013, and then sold it – for 7 figures – less than three years later. Yep. You read that right.

Keys to his agency’s success included…

• Finding the right niche
• Innovating their marketing strategy
• Building the right partnerships

Additionally, Andy dives into what his acquisition experience entailed.

About Andy:

Today, Andy is the co-founder of Postaga.com; an all-in-one SEO research platform – for link-building and email outreach – that helps agencies and marketers build traffic and relationships.

Aside from being a digital marketing professional, he is a speaker, lawyer, running enthusiast, and has enjoyed cooking up a storm for the family during Lockdown in New York.

Plus, he’s officiated quite a few weddings on occasions (available for bookings!)

Points of interest…

There’s more information regarding each point in our blog notes beneath the video.

• The Backstory: original agency plan pre-acquisition 1:19
• Niching down for focussed success 3:35
• How the acquisition happened 8:09
• Navigating the diligence process during acquisition 11:35
• Key Takeaway: get your books organized! 13:16

Andy’s Original Agency Plan Pre-Acquisition

Andy started his original web design agency, Duress Page, in 2013 – and then sold in 2016. It was initially geared to be a self-service page builder for businesses. However, it became more apparent that the businesses he was connecting with – by virtue of his network – were more interested in having him do the building for them.

Therefore, the focus became less about the self-service builder he was working on, and more on building an agency to productize that service for businesses.

Andy and his team then had to deduce how best to build this agency. As it turns out, the key to its growth was focusing on a niche industry.

Niching Down for Focussed Success

While there’s always a reluctance to turn down any work that comes your way, you need to focus on the potential opportunities orbiting your strengths. That way, you can build a brand focused around a specific industry.

Being a lawyer, Andy focussed specifically on legal, vertical building websites, and doing marketing for lawyers and law firms. From that, he was able to build relationships, land customers, and build a portfolio to show other potential clients. This, in turn, obviously led to significant growth.

Within that sphere, the agency’s core strengths were A) their content marketing, and B) how they openly productized their services specifically for the legal landscape.

His competitors weren’t fixing their scope. Instead, they would generalize, get a feel for what a prospective client was after, ascertain how much money they could “shake” off them, and then send them a proposal. Conversely, what catapulted Andy’s agency to success was transparency.

“What we did early on is publish our pricing. We set clear packages… We were doing websites at the low end, for $1000, telling customers ‘You will get this many pages, which you can have content on this many lawyers, bio pages, a contact page, a blog page,’ and so on. And that kind of helped us get a lot of leads early on – because we were very transparent.”

Overall, there’s greater opportunity to build your brand and reputation if you niche down and focus on your chosen market. Clients would actively seek Andy out, thanks to referrals from customers within his industry. This resulted in building industry-focused partnerships.

Fundamentally, that was among the reasons behind his eventual acquisition; because he had built a reputation within his niche industry.

How the Acquisition Happened

A combination of niching down and Andy’s content marketing expertise led to partnership development with many different companies. This instigated several collaborations on various co-marketing efforts, including:

• Webinars
• Reviewing each others’ software apps/tools within the industry
• Cultivating referral relationships through affiliate agreements

Naturally, this resulted in one of their industry cohorts, with which they had mutual clients, putting in an acquisition offer.

“They liked our marketing and they really seemed very aligned with us in terms of mission and the clients we were going after. I think the phrase they used was, like, ‘With our combined efforts, we have a 2+2=5 situation; where us working together – morphing our clients together, as well as the industry, as a whole – we can both grow more and grow faster together’.”

Another string to Andy’s proverbial bow was the ability to generate substantial recurring revenue. This made his agency a very attractive prospect.

If you’re looking to bolster your recurring baseline revenue, below are some pointers…

• Have web design clients on an ongoing hosting maintenance support plan
• Provide ongoing deliverables to clients; tech support and monthly traffic reports
• Offer basic call-tracking integrations
  

Diligence Process During Acquisition

So, how did Andy end up navigating this acquisition? Did he fly solo, or with a broker? How did it go down and how stressful was the diligence process?

Firstly, Andy was in a good position as he wasn’t looking to be acquired. This gave him more impetus to say “Nah, we’re not interested” if he wasn’t happy with certain aspects. That aside, there were certain criteria needing to be met in order for the process to go smoothly.

There is a list of items a buyer’s agent generally requires for acquisition, specifically: financials, playbooks, SOP, plus all your metrics around marketing and sales. Thankfully Andy already had many of these materials ready to go, therefore expediting this important diligence process.

Unsurprisingly, getting a lawyer is also recommended…

“Although I am a lawyer. I am not an MNA lawyer. And so hiring our own lawyer was definitely important to all of this, to make sure that everything would work out for everybody.”

Key Takeaway…

If ever there was a rallying call-to-action regarding aiding the acquisition process, it would be: it’s never too soon to get your books in order!

“If your books aren’t organized now – get your books organized, whether you’re looking to get acquired or not. Your books really need to be tidy, and make sense, to reconcile all that stuff.”

For example, you need to know your cash flow projections. To run a successful agency, you should always know how much revenue is going to be coming in next month, if you don’t make a new sale, and so on.

What else did we learn? When getting an agency from start to sale, probably the most important things are…

• Niche down; get clarity on who your perfect customer is
• Create productized services that can scale
• Hone marketing that can scale and generate leads in an efficient way
• Ensure there’s a method of recurring revenue built into the business model

When it comes to acquisition, all of the above are important factors that can improve the valuation of your company.

Want to see more of Andy? Follow him @…

• Twitter @andycabasso
• Twitter @PostagaApp
• LinkedIn

Did you learn anything new from this episode? If so, let us know in the comments below – we value your feedback! Our next installment of #APP, on July 22nd, will see us chat with James Rose. To view our previous blog with John Doherty, make your way here…

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