In this episode of the M&A Launchpad Podcast, hosts Feras Moussa & Casey Minshew interview Ned MacPherson, who shares his compelling journey of bootstrapping a business from scratch, scaling it rapidly, and eventually exiting to a private equity firm.
Ned, who has a background in statistics, brought these skills he gained in college and applied them to his love and desire for entrepreneurship. Ned started a few ventures after graduating, and after several attempts at building companies, he finally settled on a data analytics company. After scaling the company, Ned was able to take his first exit with a PE firm. He debunks many stereotypes that people have when talking about the troubles of working with bigger PE firms, and highlights his good experience while selling. Ned highlights the importance of focus, understanding market gaps, effective deal structuring, and maintaining a profitable growth model.
He also shares valuable advice on navigating private equity acquisitions, the significance of rolling forward equity, and the role of cultural integration in successful M&A deals. Tune in to learn from Ned’s experiences and strategies for entrepreneurial success.
In this podcast episode, we discuss:
- How Everything in Life is Data-Driven
- Tips on Exiting a Business
- Working with Private Equity in an Acquisition
Time stamp:
00:00 Introduction to Ned MacPherson’s Journey
01:24 The Importance of Quality of Earnings
01:50 Who is Ned?
12:10 Navigating Sale Process
20:57 Post-Acquisition Experience
23:24 Advice for Entrepreneurs
26:50 Rocket Round
29:48 Conclusion and Contact Information
You can connect with Ned by LinkedIn or email: https://www.linkedin.com/in/ned-macpherson or at ned@powerdigital.com
Additional Resources:
- Request a complimentary consultation with an M&A or financial expert for Quality of Earnings from O’Connell Advisory Group – https://oconnelladvisorygroup.com/contact/
- Ready to network with experts in the M&A Industry? Whether you’re looking to buy your first business, or a seasoned buyer or investor, find your M&A tribe at the M&A Launchpad Conference
- Access our archive of video interviews on YouTube
- Checkout our upcoming Conference – https://malaunchpad.com/
- Get in touch with show hosts Casey Minshew and Feras Moussa at – info@equitylaunchpad.com
- Looking to invest in M&A opportunities or partner with an advisor to acquire, scale or sell your business? Visit Equity Launchpad
Transcript
00:00 all right on today’s episode we
00:02 interviewed Ned mcferson and we talked a
00:04 lot about what it looks like to start a
00:06 company from scratch grow it rapidly
00:08 right and then ultimately what it looks
00:09 like to actually make a exit to you know
00:11 software private Equity Group and all
00:13 the things and considerations and more
00:15 importantly right one of the things that
00:16 was kind of really interesting to me was
00:17 just seeing how passionate Ned was about
00:20 getting a second bite of the apple right
00:21 and helped me how that deal went about
00:23 how they structured it and what he’s
00:24 excited about doing now yeah and I’ll
00:26 tell you you know one Ned’s energy is
00:28 incredible so just great
01:31 Hy Focus but he said something in there
01:32 I think that everybody can learn from
01:33 it’s like why would I focus on anything
01:36 else when I this is it right and so when
01:39 you see it and you know it it’s about
01:41 that focus and it’s going after it
01:43 incredible and then that passion around
01:45 you know being just you know hey look
01:47 private Equity when you work with them
01:48 and they come around there’s just things
01:50 you’re not going to know yeah he said it
01:51 perfectly I mean just assume you’re
01:53 you’re probably naive right if there’s
01:54 something that is rubbing you the wrong
01:56 way it’s probably due to your naivity
01:58 right and you got to go out there get
01:59 educated and you know keep the deal
01:01 moving forward right don’t let it just
01:03 be this blocker that terminates the deal
01:05 because you know in his case good offer
01:07 good situation didn’t even try to you
01:09 know get greedy right A lot of people
01:11 get greedy trying to negotiate deal as
01:13 much as they can no keep it moving
01:15 forward and then again don’t be naive to
01:16 kind of create those barriers that stop
01:18 the deal from happening yeah this was a
01:19 great podcast all right we’ll Dive Right
01:23 In welcome to the m&a Launchpad podcast
01:26 with your host Casey and Ferris with
01:28 Equity Launchpad on this podcast you
01:30 will gain insights on acquiring
02:31 investing in and selling profitable
02:32 businesses in the lower to Middle Market
02:34 whether you’re a business owner investor
02:36 or spying entrepreneur at Equity
02:37 Launchpad we will provide you with the
02:39 knowledge guidance and capital to
02:40 navigate the world of emerges and
02:43 Acquisitions hey guys go ahead and just
02:44 pause the podcast for a second when
02:46 you’re buying a business you need to
02:48 ensure the financial health of the
02:49 company the quality of earnings is
02:50 Mission critical it doesn’t matter what
02:52 size business you’re buying Patrick okon
02:54 Advisory Group they’re dynamic they do a
02:56 great job they’re going to look over
02:57 your shoulder they’re going to make sure
02:58 that you’re doing the right thing this
02:00 guy’s done over 200 buyers successfully
02:02 just like you so reach out to them and
02:04 it’s oconnell advisory group.com click
02:07 the link in our show notes can’t live
02:08 without this all right hey Ned welcome
02:10 to show thanks for having me you bet man
02:13 you know so something a little bit more
02:14 near and dear to my heart right really
02:16 talking about software and the journey
02:18 that you’ve been on and I know we were
02:19 talking a little bit before the show you
02:21 know would love to maybe share with the
02:22 audience a little bit as kind of you
02:23 know maybe some of the background right
02:25 how you landed with what you what you’re
02:27 currently working on and then we can
02:28 kind of dive into how that started to
03:30 and what’s going on there yeah yeah sure
03:32 so kind of give you the whole storyline
03:34 here so traditionally my education was
03:36 centered on on statistics kind of what I
03:38 fell in love with in uh kind of college
03:40 age and University age and so got out
03:42 got into the real world uh didn’t pursue
03:44 a job had the entrepreneurial bug and
03:46 started a couple little outfits uh none
03:48 of which did great to be candid to be
03:50 hon statistically if you did enough of
03:52 them one of them will work right
03:54 go the numbers game right so I I I kind
03:58 of had my breakthrough about after about
03:59 three years of doing that where I was in
03:01 actually a vistage group which is like a
03:03 network for CEOs that exist out there
03:06 and so I was in my vistage group and
03:07 talking about this data model that I had
03:09 built out just using my stats background
03:11 for my then company that I had which was
03:12 a neutraceutical brand basically you
03:14 know building out different neutral
03:16 project products and and selling it
03:18 through a uh marketing ecosystem and so
03:20 one of the other members in the vistage
03:22 group pulled me aside after and she was
03:23 like that’s super interesting like how
03:25 did you do that and so I went and did a
03:27 little free consultation for her and
03:29 then realized after doing this that
04:31 there might be a lot of businesses that
04:33 really struggle on how to synthesize
04:35 their data like what consumers are doing
04:37 what they’re not doing how you can
04:38 create predictive models and so I did a
04:41 little free project for her and it went
04:43 over really well they really appreciated
04:46 it and she introduced me to another
04:48 outfit who just straight up was like
04:50 I’ll pay you X on the side to do this
04:52 and so it was just this little side
04:54 thing that I was doing that went well
04:56 turned into two side gigs then it turned
04:58 into three and it’s like the classic
04:59 before you knew it my my side hustle so
04:02 to speak was yielding more of a personal
04:04 income than my main company was so
04:06 that’s sort of things interesting and I
04:08 closed a pretty substantial organization
04:10 uh in terms of again helping them
04:12 rebuild their analytic stack synthesize
04:14 data and show them how to convert better
04:16 on their website now I had to make a
04:18 decision so I ultimately made the
04:20 decision to exit my interest in that
04:22 business to my old partners and then I
04:24 went full-time into this model which I
04:25 didn’t even know how to call it at the
04:27 time it was just like the data guy kind
04:28 of thing so
05:30 let’s hop in really quick let’s hop in
05:32 right there just because you know it’s
05:33 always about the start right and that
05:35 first client what did you actually do
05:37 for her right was you just pulled up her
05:38 Google analytics and you said hey let’s
05:40 go talk to this and here’s some you know
05:42 if you did this this could happen here’s
05:43 how I set up what exactly were you
05:45 solving for her helped to identify the
05:47 Gap in the market you nailed it right
05:49 there which is she’s like you know I
05:50 mean this is what we S I mean there was
05:52 there was very little understanding on
05:54 her end as to the ability to affect
05:56 change in the environment in that case
05:58 the website to generate more r V her
05:00 interpretation was it’s all about the ad
05:03 and it’s all about the price and then
05:04 you put those together and you get a
05:06 sale she didn’t know that there was this
05:08 thing called a conversion rate on her
05:10 site that actually could be moved and
05:13 depending on how you move it had had
05:15 huge impacts across the ecosystem not
05:17 the least of which is like yeah the
05:18 first purchase unit economic but also
05:21 Cati LT you know customer acquisition
05:22 costs you can start now to open the
05:24 aperture and advertise to more
05:26 individuals if you can increase your
05:27 conversion rate because you have a more
05:28 effective engine which is your website
06:30 or your application or whatever it is
06:32 and so what I did quite literally there
06:34 is just found they were selling tickets
06:36 to events and I just found these massive
06:38 interfrontal drop offs at certain steps
06:40 in the ticket flow and then I literally
06:42 just went through the flow myself as a
06:44 user and I’m like this is terrible like
06:46 I hate this experience just as a user I
06:48 see why the data is weak here and then
06:51 we concentrated ideation and changes
06:53 there literally design and develop
06:55 different changes tightened the flow up
06:57 made the value propositions I think they
06:59 had these unique discount strategy that
06:01 needed more explanation and then lo and
06:03 behold conversion rates went up 20 30
06:05 40% and all of a sudden they were
06:07 unlocking all this Revenue right that
06:09 would have been there but they just
06:10 weren’t converting well so amazing I’ve
06:12 looked at Google analytics and all that
06:13 stuff myself and I’m probably like she
06:15 is it’s like huh yeah you know to be
06:17 able to look into it and drive that
06:19 information it’s like wow for sure and
06:23 and you know what’s a fun analogy to it
06:24 is if you look at like Walmarts we may
06:26 walk into like a Walmart and think it’s
06:28 arbitrary how they set those aisles up
06:30 it’s not it’s entirely data driven from
07:32 where certain products are at the
07:34 average male or female ey line to what
07:37 directions people go that’s all data
07:39 driven so a lot of times we’ll just walk
07:41 in and be like oh they just put up
07:42 aisles and whatever and it’s like no no
07:44 no no no everything is very carefully
07:46 plays it’s the same concept but in a
07:48 digital realm right so and maybe another
07:51 seg another way to think about it really
07:52 is Casey understands how to sell widgets
07:55 right but it’s really building up the
07:56 kpis on top of you know Casey’s delivery
07:60 experience and that’s really what you do
07:02 right it’s kind of like at Equity launch
07:03 pad right one of the things we like to
07:04 say is we take it from familyowned to
07:05 management Le so what are the things
07:07 that happen in that world right well I
07:09 may be a seller I own the business I’ve
07:10 had it for 40 years I know it makes
07:12 money you know I take money out I put
07:13 money in whatever it is right I know the
07:15 high level of the business but very much
07:17 can I drill down into each product and
07:19 did we profit on each one of them or not
07:21 and really build out the kpis to give us
07:23 the the discipline and the Acumen to
07:25 make good business decisions right yeah
07:27 it’s another data driven way to scale
07:28 yeah without question without
08:30 so that’s that’s quite literally I mean
08:32 how I executed on it and then as you can
08:34 imagine there’s a lot of businesses that
08:36 could use that type of support and so I
08:38 started you know doing it on the side
08:39 and then again I I went full-time with
08:41 it and you know made a ton of mistakes
08:43 in how to start a business but at the
08:45 time frankly I was really just a Hired
08:46 Gun I I didn’t have employees what type
08:48 of time frame was this uh this is
08:51 2016 at this point 2017 by 2018 I
08:55 couldn’t handle any more business I was
08:57 I mean having a great lifestyle you know
08:59 tons of cash flow but it was just me so
08:02 I decided in 2018 I was going to scale
08:04 and I was going to create an agency so
08:05 January 2019 I started endro which was
08:08 my agency if you will and scaled it up
08:10 to about 120 people on the team and then
08:13 we went into due diligence in uh
08:16 September of 2023 so last year almost
08:18 exactly a year ago and then went through
08:19 our exit we got acquired successfully
08:21 December 4th we signed of 2023 so a
08:25 little less than 5 years to the date of
08:27 founding the company we exited it was a
08:29 a really great but all those previous
09:31 businesses you started you know tilled
09:34 the soil got you ready to be able to
09:36 grow and be able to be thinking about it
09:38 right I mean that’s all the mistakes to
09:40 make sure not to make on the last one
09:42 right right and there’s kind of the
09:43 specialized skill set of like
09:44 synthesizing data and running conversion
09:46 optimization and then there’s the well I
09:47 guess it’s also a separate uh
09:49 specialized skill set up like how do you
09:50 build a company and that’s something I
09:52 had had floundered with several times
09:54 and made every mistake you can imagine
09:56 like across the board and then yeah
09:58 exactly to your point learn from lot of
09:60 those um I went hyper lean in the
09:02 beginning hyper lean profitability was
09:05 the only metric that mattered for the
09:07 whole time and I I kept daily ledgers I
09:09 mean it was almost kind of sick to this
09:11 point but like I was everything was was
09:13 dialed in right and so yeah I was very
09:16 specific on how to build it uh never
09:17 took any outside investment in never
09:19 took any Partners on um and yeah it was
09:21 it was it was a lot of fun and I’m
09:23 continuing to do it I’m still doing the
09:24 same service with who acquired us now
09:27 we’re just you know we’re an 800 person
09:29 agency versus is a bit over a 100 pretty
10:31 amazing we had a we had a podcast last
10:33 week with a with a gentleman that talked
10:35 about his he has a program about the
10:37 different stages of a company and the
10:39 different behaviors of a CEO in each of
10:41 those stages and how to grow called the
10:43 Rew Wilding and he’ll be you know part
10:45 of our conference in in October but one
10:47 of the things it’s kind of like what
10:48 you’re saying it’s like hey at the very
10:50 beginning in these first like segments
10:52 of your business it’s sell sell sell
10:55 profitability profitability before we
10:57 shift to adding and trying to grow the
10:59 business it’s like let’s get as
10:01 profitable as possible yeah and it’s
10:03 pretty powerful yeah there’s times you
10:04 focus on profitability times you focus
10:06 on just people right times you focus on
10:08 just pure growth without profitability
10:10 and if you you know there’s the
10:11 different cycles of the company and you
10:12 get success in the end yeah for sure
10:15 sure I I kept kind of these interesting
10:16 elastic kis in terms of like Personnel
10:19 sentiment and and profitability and like
10:21 we’d always if we wiggled too close to
10:23 hyper profitable you’d start seeing
10:26 internal challenges you know people
10:27 would be getting upset clearly because
10:29 there just too much work on their
11:30 shoulders right and then vice versa I
11:32 could use that metric when we were a
11:34 little too bloated and always trying to
11:36 stay on that threshold yeah we were able
11:37 to have a super profitable company and
11:39 scale really fast so yeah and you know I
11:41 think you know you talk about it like
11:43 it’s easy right but at the same time
11:44 it’s success a lot of times it’s about
11:46 making the mistakes beforehand right and
11:49 continuing to work through it and then
11:51 riding wave whenever it presents itself
11:53 right once an opportunity to present
11:54 itself you have to be able to have the
11:55 wherewith thought to go ride that wave
11:57 and again data sign I mean you couldn’t
11:59 have been in a better timing right I
11:60 remember I being a tech guy 2018 to 2022
11:03 you couldn’t hire enough data scientists
11:05 right it was all everybody was talking
11:06 about which it’s funny I was listening
11:08 to something I think it was yesterday
11:10 they’re talking about there’s the
11:10 opposite problem right there’s too many
11:11 data scientists now and there’s a lot
11:13 less demand but that that time period is
11:15 whenever the world was starting to grow
11:16 up and understand how the web and data
11:19 works right we kind of hit that like web
11:21 3.0 layer so to speak where people are
11:23 starting to figure out how do we really
11:25 streamline a lot of these things yeah
11:27 yeah sure never yeah exactly it was good
11:29 time never turn down opportunity you
12:31 know I mean there was I can’t tell you
12:32 how many times I did three four months
12:34 of light light free work for clients
12:38 that everyone was like you’re crazy why
12:39 would you do that and it yielded some
12:40 huge referrals so and you’re also
12:43 proving up your concept you’re just
12:44 sitting there re you’re improving up
12:46 your concept you’re reiterating it over
12:48 and over again and it’s those repetition
12:50 you know for a lot of the people that
12:51 listen to our podcast right A lot of
12:54 these listeners are looking to go out
12:55 and buy and acquire a business looking
12:57 to make that step into entrepreneur
12:60 right and sounds like you made that
12:02 decision out of school to be an
12:04 entrepreneur yeah You’ kind of already
12:06 gone through the patterns of like hey
12:09 entrepreneurship is about repetitive
12:10 failure right yeah learning learning
12:12 learning constant Improvement and it
12:14 seems like it got you to the place where
12:16 then now you exit right and you’re
12:17 sitting there going okay I’ve got 120
12:19 employees i’ I’m at this point was it a
12:21 decision that you made where you like
12:23 hey I’m ready to exit and grow it and
12:25 take this to the you know to do it the
12:26 way you did what did that process look
12:28 like when you got to that point yeah
12:30 actually there was no intention to sell
13:31 at all wasn’t even on my radar to be
13:33 candid that as The Story Goes I was
13:35 using a fractional CFO actually at a
13:38 time and he had split between us and
13:40 another agency in the marketing World
13:43 digital world and they were a pre- click
13:45 agency focused on consu you know
13:46 customer acquisition and he came to me
13:48 originally with the idea and was like
13:50 hey would you ever consider a merger and
13:52 that’s where he started to educate me on
13:54 because he was really tenur guy on risk
13:56 premiums and how that like for instance
13:58 in m&a like two plus two does not equal
13:01 four you take two two million ebah
13:03 businesses or two and a half million
13:04 dollar businesses in theory if you can
13:07 integrate them nicely that’s not worth
13:10 the the sum of the parts it’s worth more
13:12 than that right because the risk premium
13:13 adjusts Etc and you generally can get a
13:15 bigger multiple so as I started to learn
13:17 this process the generalities of it I
13:19 was like that’s pretty interesting there
13:20 might be a FasTrack here in the middle
13:23 of those conversations we were talking
13:25 about becoming a a sponsor so to speak
13:27 right and we would effectively be a
13:28 platform that private Equity would get
13:30 behind and so I started to ask like well
14:33 who are these Bankers that we’re going
14:34 to work with and one of the bankers that
14:36 I was introduced to kind of Midway
14:38 through the conversation was like look
14:39 man I got to interrupt you who what
14:41 you’ve built is exactly what some of the
14:43 larger groups that I work with are
14:45 looking to acquire would you simply just
14:47 entertain a conversation and you know I
14:49 was like why not as we started to have
14:51 those convos it became clear a bunch of
14:52 them were keenly interested and I you
14:54 know went to him and I was like look I
14:56 don’t I don’t really want to sell I got
14:57 great cash flow we’re growing you know
14:59 50 to 80% a year I mean I’m just in a
14:01 good spot and he’s like it’s an MBA
14:04 you’re going to get in a short period of
14:06 time on what the market likes about you
14:08 what they don’t and what you can go work
14:10 on and I thought that was brilliant
14:11 advice and so you know he’s a good
14:13 salesman too but he convinced me too to
14:16 go forward with it so I got engaged with
14:18 him as a banker who he was excellent by
14:20 the way and um yeah I got offers loli
14:23 started coming in and and candidly
14:25 between you and I I just had a number in
14:27 my mind that I thought the company’s
14:29 worth and any that came at that or
15:30 higher I was going to do it and the
15:32 number came in higher than that and I
15:35 went with it and it was I I can honestly
15:37 say now a year looking back it was a it
15:39 was a great decision zero regrets
15:42 awesome awesome so for those listeners
15:43 right maybe kind of approximately how
15:45 big were you how much you know was it
15:47 the multiple and what did the deal
15:49 structure look like yeah of course of
15:51 course so uh you know we weren’t by any
15:53 means a large organization compared to
15:54 some of the groups you you probably
15:55 talked to but iata wise we in the 2 to
15:57 three million ibata range they’re
15:59 playing about 6 million in Revenue so we
15:00 had really really strong margins there
15:02 margin um and then we we were in growth
15:05 mode at the time that’s still really
15:06 good margins for growth grow yeah
15:08 totally totally right and we we had you
15:10 know we had a lot of valued assets with
15:11 the company in terms of intellectual
15:13 property and things of thato but the
15:14 growth mode you’re absolutely right and
15:16 uh we got a you know a multiple that was
15:19 you know just put it this way it’s a
15:20 it’s effectively a double- digigit
15:22 multiple right which for an agency or a
15:24 company of that size is kind of unheard
15:25 of I I thought we’d come in like a five
15:27 maybe a six if someone really wanted us
15:29 a seven and we came in multiple turns
16:32 higher than that so again to me that
16:34 showed a tremendous amount of commitment
16:36 from the buyer and the PE group behind
16:39 them that they really valued what I had
16:40 built they valued me they valued my team
16:42 and it was just it was great you know
16:44 they it really was and so in terms of
16:46 the breakdown of the deal I wanted to
16:48 roll forward as much Equity as I could
16:51 again I had had a great company for a
16:52 while some good cash flow um I wanted to
16:54 is that where you started or is that
16:56 what they were trying to push you
16:57 towards you know what did where did they
16:58 come from
16:59 I asked for it huh I asked for it yeah
16:02 so I was like I want as much Equity as I
16:04 can because I’m like I I you know
16:05 there’s you know I want to take some
16:07 cash off the table to just you know kind
16:08 of have a proverbial pet in the back and
16:10 change the life a little bit but I don’t
16:13 need to 80% sell out so we were able to
16:15 roll forward basically split down the
16:17 middle if you will about half in cash
16:19 and about half in equity which is the
16:20 group was there’s a private Equity Group
16:23 so give us sizes like how big was the
16:25 group that came to you were they a
16:26 fairly large you know oh yeah yeah yeah
16:30 the PE I mean they’ve been around for I
17:32 I don’t know how many billions they’ve
17:34 deplo I mean they’ve got several funds
17:35 with multiple billions in it and so you
17:38 know for us you know being multi with
17:42 small potatoes but they I mean I could
17:44 speak all day about how professional and
17:46 amazing was working with them too to be
17:47 candid and still do work with them
17:48 obviously but um they’re they’re a
17:50 pretty well-known outfit um anyone in
17:52 the PE space would would know who they
17:53 are and they were backing of course the
17:55 Strategic who bought us right who is a
17:58 big player in the digital space
17:60 yeah I’ve got a very good friend of mine
17:01 he sold his business did something
17:03 similar he rolled a little bit more than
17:05 50% and then that group ended up having
17:07 five exits along the way
17:10 yeah unbelievable over 10 years he had
17:13 rolled and he he did well right he could
17:15 have taken money off the table and he
17:17 said hey I would have been fine he’s
17:18 said but I went ahead and rolled a big
17:19 chunk in because I believed in the
17:21 private Equity Group and I believed in
17:23 this group yeah and man he said we got
17:25 another exit three years later and then
17:27 we took another one and everyone got
17:30 and uh he doesn’t talk numbers and nor
18:32 do I need to I I know what that the last
18:35 one went for and I’m like holy crap you
18:37 know like that is exciting to see it
18:39 doesn’t always happen to where you get
18:40 rolled over that many times but yeah he
18:42 just kept rolling and rolling and
18:43 rolling because like you he probably had
18:45 the money had some success prior it
18:48 wasn’t about taking that it’s about that
18:50 hey how how big can this ultimately get
18:53 pretty excited that that’s verbatim the
18:55 methodology here exactly is is exactly
18:57 the top track I had with my team with
18:59 them and yeah we are still looking at
18:01 good perspectives here about a year in
18:03 you know in the next two to three years
18:04 maybe we’ll look to run a process but uh
18:06 that’s exactly it and looking to
18:08 effectively you know just to talk dollar
18:10 or not dollars but maybe numbers is to
18:12 make that 50% worth considerably more
18:14 than the entire deal value was last year
18:17 that’s the goal and there’s totally a
18:19 path to do it we’re we’re hitting marks
18:20 so no it’s funny so even if you’re a
18:22 buyer right this is an important thing
18:24 to really know because we actually had
18:25 this problem with a business that we’re
18:26 buying right now yes right where the
18:28 seller couldn’t get his head around the
19:30 fact he’s older right he knows that the
19:32 business is healthy right but he’s like
19:34 if I just hold on to it he’s going to
19:36 make more than what it’s worth follow
19:37 you know the next 18 months and you know
19:39 it was a struggle for him that was the
19:41 one thing right the value is the value
19:43 he you know but he got to know us he
19:44 really liked us right and you saw about
19:47 like you know some of these guys right
19:48 they get to the point where they’re
19:49 making good money but to take it to
19:51 another level is a whole another set of
19:52 work so to speak right and they know the
19:54 things that they need to do but they
19:55 don’t want to you know they don’t want
19:56 to do it or they want a partner to do it
19:58 and so with the seller kind of got to
19:59 know us better and better and It
19:01 ultimately led to him saying you know
19:03 what he went from not wanting to sell
19:04 her Finance or seller her carry anything
19:06 to him basically take one another bite
19:08 at the Apple because he knows the
19:10 business can do what it can do and you
19:11 know he’s retaining a big chunk of it
19:13 and everybody walks away happy right we
19:14 have a good partner on the B on the deal
19:16 person that knows the ins and outs
19:18 that’s always there he’s not just
19:19 checking out so to speak and at the same
19:22 time he’s betting on us to kind of do
19:23 what we’re going to do and take it to
19:24 another level and so you if you can kind
19:26 of get that buy in from a seller or
19:28 buyer I mean it’s a really really good
19:29 match yeah it is and and from the sell
20:32 from the you know the selling
20:33 perspective it’s like you know on one
20:34 hand it’s just an objective investment
20:36 criteria I mean this group that you are
20:37 in theory investing in are they on an
20:39 upper trajectory do you believe in the
20:40 future of it Etc I mean that’s obviously
20:42 one consideration but unlike other
20:44 traditionally passive Investments you
20:46 can affect the growth because like in my
20:48 case they’re like we you’re on the seite
20:50 team like you’re running this department
20:52 we need you agents I can affect the
20:54 growth of my own investment and so I
20:56 think we nailed the number and the
20:58 Distribution on the split because it’s
20:60 like great alignment on my end great
20:01 alignment on their end I have total
20:03 blinders on because like why wouldn’t I
20:05 right and so to me that’s why I really
20:07 think it was it was it was a great fit
20:09 and a great process and yeah I can’t
20:11 speak highly enough to it yeah so so
20:13 really quick during the negotiations
20:15 right was there much negotiation did you
20:16 just let out hey here’s my here’s how I
20:18 want the deal 1 5050 what do you guys
20:19 offer they offered you and you just went
20:20 forward right or did they try to talk
20:22 you down to a 30% ownership or something
20:24 like that the the LOI was very clear
20:27 that they were super serious about this
20:29 and that that this was not a let’s see
21:31 if we can get this at a discount it was
21:33 more of this is a valued asset and I
21:36 appreciated how they looked at me and my
21:37 team let’s make sure that that we get
21:40 this because this is going to be a great
21:41 company to buy and their offer reflected
21:44 that so I didn’t feel it was necessary
21:46 nor appropriate to even try to negotiate
21:48 it up it was already better than what I
21:50 was thinking uh the only thing I did
21:52 negotiate was a a bigger amount for my
21:55 team I wanted them to have options in
21:57 terms of rolling forward equity in that
21:60 in their company the the buyer’s company
21:02 that was the only thing that I
21:03 negotiated and and we were able to to
21:05 come to agreement very quickly on that
21:07 so yeah there was very limited
21:08 negotiations on that respect the entire
21:10 acquisition and due diligence process
21:12 you know due diligence is always really
21:13 tough but was generally speaking pretty
21:15 smooth well you hear some of those
21:17 horror stories that you roll in you work
21:18 for now a private Equity Group and now
21:20 you have a job we’ve had a couple of
21:21 those podcast interviews you’ve not
21:23 experienced any of that huh you’re still
21:24 kind of a free free solo free
21:26 entrepreneur or has some of those little
21:28 bit of handcuffs been put on you a
21:30 little bit yeah I mean there’s no
22:31 question there’s I’ll be CID there’s
22:32 handcuffs there but I don’t even look at
22:34 it as such because again it’s like why
22:36 there’s nothing I should be focusing on
22:38 other than this like I have so
22:40 much yeah you know I mean I’ve got you
22:42 know I’m deep into the eight figures
22:44 invested in it and it’s like if I can
22:46 two three 4X that like again what am I
22:49 gon to do differently in the next two
22:50 years that’s gonna yield that type of
22:53 nothing nothing and so and on top of it
22:55 I’m doing what I love I’m doing the same
22:57 thing just on a bigger scale bigger
22:59 clients so it’s like this is exactly
22:01 where I want to be so to me again it was
22:03 one of those where alignment was perfect
22:06 and yeah I don’t want to do anything
22:07 else I’ll be candid and you know we’ll
22:09 talk about it maybe once we do that next
22:10 exit maybe then but at this time it’s
22:13 you know I’m I’m loving it so question
22:15 though for you so you know obviously you
22:17 rolled 50% forward right how did they
22:19 value it into the parent company and you
22:21 know was did they did you have to get
22:23 comfortable with how they were valuing
22:24 the parent company so that way they’ll
22:25 know what your essentially cash converts
22:27 into as Equity to the parent company or
22:29 how did that part go about yeah I did
23:31 the good news is they had just closed on
23:32 an acquisition they were themselves had
23:35 already gone through a bite of the Apple
23:36 previously so the private Equity Firm
23:38 that bought my the Strategic who bought
23:40 me had just 18 months prior finished
23:43 their deal buying it from another
23:44 private Equity Firm that had backed the
23:45 Strategic before that so we had a pretty
23:47 healthy Baseline as to the valuation and
23:50 based on the trailing 12 18 months
23:52 growth where they were at at that point
23:54 again I didn’t feel like they were
23:55 overvaluing by any means and so that was
23:58 an easy ation and yeah I mean it was as
23:01 simple as that right and I had good
23:02 leadership around me and a good team
23:04 around me this wasn’t coming from
23:05 ignorance but yeah again I thought they
23:07 did it the right way they really did a
23:08 great story I mean we usually hear the
23:10 other side of it so I mean it’s great to
23:11 hear the ones that really work out well
23:13 and you know you’re a year into it right
23:15 and do you feel like your equity’s
23:17 already grown in value or has it been
23:19 more of setting up kind of the
23:20 foundation to start to really explode
23:22 from there oh it’s 100% grown yeah we
23:24 we’ve hit our 2024 marks like we’re
23:26 bearing down on it right now it’s 100%
23:28 grown now we’re not we’re still way
23:29 short of where we want to be before we
24:31 run a process but I mean in theory if we
24:33 were to run the climate’s not great for
24:35 m& m&a right now we’ll see after the
24:37 rate cut if it improves but like in
24:39 theory all else being equal uh if we ran
24:41 a process right now there’d be a nice
24:43 return so what advice would you give
24:45 some of our people our listeners you
24:47 know from one entrepreneur to another
24:49 what are some of your your takeaways um
24:52 gosh I mean so much right I mean I I
24:53 guess to the process itself one thing
24:55 I’ll say is you know em I think PE gets
24:58 a bad name unfortunately what I found in
24:02 my process there were frustrating points
24:04 that came up almost every single one of
24:07 those was due to my ignorance not them
24:10 trying to pull a quick one like as an
24:12 example I’ll just be C I had never had a
24:14 larger scale you know multi8 you know
24:16 decillion dollar exit like that like I I
24:18 didn’t by far the largest transaction
24:20 most people go through in their life
24:21 period I mean it’s exactly what we’re
24:23 facing with our seller too I mean every
24:24 one of them we have there’s a lot of us
24:26 educating them and explaining even
24:28 stupid things like did you know you’re
24:29 going to have to pay tax well if we
25:30 structured it this way you wouldn’t you
25:32 know kind of right or or or Indemnity
25:34 holdbacks or networking Capital
25:36 adjustments these were foreign terms to
25:38 me and when you first see it or hear it
25:39 you’re like you know what the f but then
25:41 you learn about it you’re like it makes
25:43 perfect sense and it’s exactly how it’s
25:45 supposed to be done I give a lot of
25:47 credit to the deal team on the PE group
25:49 they were I mean I could call them to
25:51 the point almost inappropriate times on
25:53 a weekend like this and that and they
25:54 were always responsive and they answered
25:57 every question and even when I’d flag be
25:59 like hey man this this this here doesn’t
25:00 make a lot of sense to me a cten times
25:02 they’ be like you know what we get why
25:03 you’re looking at it like that let us
25:05 get back to you and then we just have a
25:06 conversation about it and figure it out
25:08 right so it’s exactly how negotiations
25:11 are supposed to go in my opinion but one
25:13 bit of advice for anyone listening if
25:15 you are pending a transaction or
25:17 thinking of going through one there’s
25:18 going to be things that come up uh that
25:20 you’re not expecting again like they’re
25:22 going to withhold some of it you know
25:23 again these are Indemnity hold bet it’s
25:25 just part of the deal there’s networking
25:27 Capital hold bet it’s just part of the
25:29 deal it all makes sense at the end of
26:31 the day I’d say don’t get frustrated
26:34 just get educated on it and then assume
26:36 that it’s probably you who are the
26:38 ignorant one not them not that they’re
26:40 just trying to a quick one on you and
26:43 take advantage of your naiveness it’s
26:45 it’s probably you just being ignorant
26:46 that’s what I found 95% of the time in
26:49 the process awesome got it and then
26:51 moving forward right you guys are still
26:52 out there looking to find more
26:53 businesses to buy right yeah yeah we
26:55 have a very strong m&a Department this
26:57 year obviously the climate’s been uh a
26:58 little challenging but we as a parent
26:00 organization are always looking for
26:02 great businesses in this case in kind of
26:03 that digital space so yeah we’re anxious
26:06 to uh to find the right fits and you
26:08 know cultural integration is everything
26:10 I know it’s again super cliche to say
26:12 but like boy is that important once you
26:13 get through all the fun parts and you
26:15 start getting into the meat of working
26:16 together it’s like you better hope your
26:18 teams can get along because if they
26:20 don’t it’s a recipe for disaster and
26:22 thankfully ours I mean it’s been a 10
26:23 out of 10 fit so yeah and you’re also
26:26 looking for more clients right I mean
26:27 you’re always looking for customers
26:28 always looking for clients we’re just
26:30 bigger and better and got a you know
27:32 really really part of the reason I I
27:34 agreed to the acquisition and and it’s
27:36 public it’s power digital is is who
27:37 bought us right they’re a good siiz
27:39 agency based out of San Diego they have
27:41 a worldclass data intelligence team like
27:43 worldclass it’s like the type of
27:44 Department I had wished I was building
27:46 all along so to me I was like I can’t
27:48 wait to work with that team right so you
27:51 know we’re always looking to expand that
27:53 out we’re always looking to find new
27:54 clients of course and yeah just effect
27:56 change to their bottom line using our
27:58 our models for growth and conversion
27:60 optimization some of the other services
27:02 we provide all right perfect awesome and
27:05 wealth of information on this one so
27:06 very huge you know exciting stuff so
27:09 let’s go ahead and hop into our rocket
27:10 around where we basically ask the same
27:12 three questions all of our listeners all
27:14 right net so your first question is what
27:16 do you like to do in your free time I
27:18 travel a ton I’m always traveling love
27:20 to love to experience different cultures
27:22 and such uh a big Foodies so trying
27:24 different Cuisine I love golfing I was a
27:26 big golfer as a kid I actually gave it
27:27 up when I started my company uh the one
27:29 that I just exited and then uh picked it
28:31 back up again last year so I’m a big
28:33 golfer and starting to get into auto
28:35 racing too I guess that’s just the thing
28:37 people do when they exit a compy I don’t
28:38 know why but like are airplanes I’ve
28:41 been flying airplanes that’s my new yeah
28:42 exactly so getting getting into that now
28:44 which is cool and uh yeah uh honestly in
28:47 working I love working I still pull
28:49 pretty heavy weeks and uh it’s a lot of
28:51 fun I don’t I don’t really find it as
28:52 work you know it’s it’s a lot of
28:53 enjoyment so see Casey’s got the golf
28:55 game I me you know I’m in the wrong
28:56 industry for not knowing anything about
28:58 golf so got to pick that up here I did
28:59 get a postcard yesterday from some
28:01 company some VIP golfing experience but
28:04 anyways they must they must have heard
28:05 this podcast and heard me kind of not
28:07 knowing anything about golfing next
28:08 question most memorable moment in your
28:10 business journey I mean it’s it’s got to
28:12 be the acquisition right I mean it was
28:14 such a lifechanging event you know and
28:16 uh was it the day the money showed up in
28:17 the account or was it just the whole
28:19 process I mean what was it right for
28:20 some people it’s just seeing the zeros
28:21 in the the bank oh my god I’ve never had
28:23 that much honestly it’s probably this um
28:26 it was so so interesting I used to do a
28:29 retreat for the team uh and I would do
29:31 it the first weekend of December every
29:33 year and it started with like you know
29:35 eight of us and then it was you know 120
29:38 by the last year the team knew we were
29:40 going through this acquisition right
29:41 everybody knew we the whole goal was to
29:44 close the Friday before the retreat we
29:46 closed at like 11:45 p.m. Friday night
29:50 and so my whole team we were in uh
29:52 kurasa I had us all at a big Resort
29:54 there they were all on the beach and
29:56 knew it was coming so they set up this
29:58 whole like party with champagne and
29:01 everything and so when I walked down to
29:02 the beach to be like we’re done they
29:04 were all you know everyone spraying
29:06 champag and they were it was the whole
29:07 company together that was a really cool
29:10 moment because it was like just me for a
29:11 long time and now it’s like this huge
29:13 family that was that was a really
29:16 special moment cooler than when the
29:17 money hit I’ll be honest I mean you know
29:20 obviously it’s great this and that but
29:21 it’s kind of just like great it hits and
29:23 you’re already expecting it to hit it’s
29:24 not not really a surprise but that was
29:28 all right last question what is your
29:30 favorite tool or
30:31 resource uh tool and resource I mean
30:34 it’s got to be Google analytics just
30:35 because that’s like the common
30:36 denominator on analytics for websites
30:39 and that’s what I deal the most with and
30:41 so because of it I’ve been able to yield
30:43 some pretty good Proficiency in there so
30:45 I can do a lot in that tool and so just
30:47 by Nature I’m in there the most and
30:48 enjoy it the most awesome I’m a little
30:50 jealous because I I still can’t figure
30:52 any that stuff
30:53 out I still remember the day Google
30:55 analytics came out I used to be a big
30:57 web developer back in like early 2000 I
30:59 still remember it being brand new and
30:01 trying it out for the first time so when
30:03 they bought urchin that was the first
30:04 that it came from yep yep yep yep yep
30:07 awesome well Ned how can people get a
30:08 hold of you LinkedIn always works so
30:10 just Ned mcfur and you’ll see me as a
30:12 cgo for power digital or uh even just my
30:15 email nedow digital.com feel free to
30:17 reach out any questions or certainly uh
30:19 happy to help any businesses that are
30:21 looking to scale all right awesome then
30:23 will know love the story man so
30:24 definitely a lot of information for the
30:26 audience on this one yeah you bet
30:27 appreciate you guys having
30:29 very nice D thank you thanks take care
31:31 thank you for listening to the m&a
31:33 Launchpad podcast if you’ve enjoyed
31:35 today’s podcast and would like to
31:36 support us please leave us a rating and
31:38 a review after you listen if you’re
31:39 looking for guidance on your next
31:41 business acquisition or sale Capital to
31:43 support your next business transaction
31:45 or to invest in a private Equity
31:46 opportunity visit Equity launchpad.com
31:49 to learn more and to connect with our
31:50 team if you know of an individual who
31:52 would be a great guest for the show head
31:54 over to equity launchpad.com
31:57 nominate where you you have the chance
31:59 to refer yourself or someone else to be
31:01 a guest on our show I’m Casey mchu and I
31:03 look forward to talking with you next
31:04 week
