1
00:00:02,019 --> 00:00:05,796
Cool, so yeah, if you could start by introducing yourself.

2
00:00:06,946 --> 00:00:08,737
How far back do you want me to go?

3
00:00:11,892 --> 00:00:16,467
Well, when did you first start up a business?

4
00:00:16,750 --> 00:00:17,941
20 years ago.

5
00:00:18,849 --> 00:00:20,032
Okay, and what was it?

6
00:00:20,032 --> 00:00:21,892
Are we recording now?

7
00:00:21,892 --> 00:00:22,954
this the thing?

8
00:00:23,053 --> 00:00:23,713
We are.

9
00:00:23,713 --> 00:00:27,532
Can we start by introducing, start by giving you your name?

10
00:00:27,532 --> 00:00:29,647
Okay, my name is Jim Hawker.

11
00:00:29,982 --> 00:00:35,806
I co-founded an agency called 3Pipe, which I exited in April this year.

12
00:00:36,907 --> 00:00:37,639
Okay.

13
00:00:37,639 --> 00:00:39,884
And so you founded that 20 years ago.

14
00:00:39,884 --> 00:00:43,914
Yeah, so we started April 2004.

15
00:00:45,198 --> 00:00:49,001
the same, I think, month that Mark Zuckerberg started Facebook.

16
00:00:50,177 --> 00:00:52,745
Okay, very similar trajectory then.

17
00:00:52,745 --> 00:00:53,816
similar.

18
00:00:54,218 --> 00:00:58,235
But we don't have the stigma around us in the same way that perhaps Meta does.

19
00:00:58,235 --> 00:01:01,280
So we've won on a few counts.

20
00:01:02,191 --> 00:01:02,672
Good.

21
00:01:02,672 --> 00:01:06,504
So how did you get into, how did you decide to start a business?

22
00:01:06,504 --> 00:01:10,057
How did the setting up of that company come about?

23
00:01:10,318 --> 00:01:20,463
Yeah, so I essentially started my career in PR and had worked predominantly agency side,
but also in-house as well.

24
00:01:20,584 --> 00:01:27,948
And I just think I got to the point where Classic felt I could do it better than the
agency I was currently working for.

25
00:01:29,109 --> 00:01:39,212
Plus, a very good friend of mine had started a business himself, not in PR or marketing,
but I'd been very close to that.

26
00:01:39,212 --> 00:01:44,207
And I think it gave me a bit of confidence to actually consider it myself as well.

27
00:01:45,390 --> 00:01:56,011
And I also had a really good business partner at the time and we had very complimentary
skills and we decided to give it a go.

28
00:01:57,549 --> 00:02:00,374
how did you get your first client?

29
00:02:00,770 --> 00:02:07,495
We were very, you know, like most businesses start very disorganized or on a whim.

30
00:02:07,495 --> 00:02:11,337
We actually planned our business ridiculously in depth.

31
00:02:11,677 --> 00:02:17,841
were, you know, probably six months or so planning out what a business could look like.

32
00:02:17,841 --> 00:02:21,744
We actually even wrote a business plan, which is quite unusual.

33
00:02:22,305 --> 00:02:30,790
But also spend a lot of time thinking about the kind of clients we wanted to work with,
who was in our network and who we could persuade to give us a go.

34
00:02:31,608 --> 00:02:39,022
And so, yeah, it was reaching out to friendly faces that were willing to take a risk on us
having worked with us before.

35
00:02:39,022 --> 00:02:41,846
And we're very grateful, been ever grateful ever since.

36
00:02:42,839 --> 00:02:50,561
And, and so, I mean, I guess 20 years is a long time, but can you give me a sort of potted
history of how the company grew?

37
00:02:50,766 --> 00:02:51,706
Sure.

38
00:02:51,766 --> 00:02:55,966
yeah, the business today is very different from the business I started.

39
00:02:56,026 --> 00:03:11,486
So it was originally a very, I guess, a traditional PR agency that started in 2004, got to
about 2012, got it to about, I don't know, 30, 40 people.

40
00:03:11,486 --> 00:03:20,456
And at that point, the business changed quite dramatically because we decided to merge it
with a paid media agency.

41
00:03:21,086 --> 00:03:25,229
to bring in more analytical data skills into the team.

42
00:03:25,289 --> 00:03:32,714
And then we acquired an SEO agency and acquired a creative agency, started building out
various teams internally.

43
00:03:33,155 --> 00:03:46,574
And then we sold it to a technology consulting firm back in 2019, at which point we were
about six million income, 70 odd people, and doing much more, I would say brand

44
00:03:46,574 --> 00:03:49,086
performance work than traditional PR.

45
00:03:50,593 --> 00:03:56,678
Okay, so I'd quite like to take those one at a time because they're all quite, will sound
quite interesting.

46
00:03:56,678 --> 00:03:59,144
So, so the merger came first, it?

47
00:03:59,144 --> 00:04:00,797
How did that come about?

48
00:04:01,302 --> 00:04:13,232
Well, it was around the time, and this is going back some way, that Google started
changing its algorithm and the way that brands were surfacing in search.

49
00:04:13,313 --> 00:04:22,901
So they had things like Panda and Penguin updates, where they were trying to crack down on
bad link building activity.

50
00:04:22,982 --> 00:04:27,826
And essentially, it became quite apparent to me that we as a business

51
00:04:27,958 --> 00:04:32,761
needed to change and evolve in the same way that Google was changing search.

52
00:04:32,861 --> 00:04:40,785
And I felt, always felt that we were always doing great work, winning lots of awards, but
I wanted to really upskill ourselves digitally.

53
00:04:41,066 --> 00:04:46,729
And the way I could really see us doing that was to bring in a different type of person
into the agency.

54
00:04:47,690 --> 00:04:54,834
So we were already working with an agency called Blowfish on two or three other clients by
chance.

55
00:04:56,235 --> 00:05:05,360
And clients were asking us to increasingly work together with the content we were
creating, but they were trying to distribute it in a much more, I guess, more of a

56
00:05:05,360 --> 00:05:08,041
data-led way than we were doing.

57
00:05:08,602 --> 00:05:16,126
So I proactively approached the owner of that agency and we decided to throw it in
together.

58
00:05:17,645 --> 00:05:26,653
So how does that, okay, because this is something that lot of agency founders kind of
think of, I think, and they kind of go, wouldn't it be great if we could merge with

59
00:05:26,653 --> 00:05:27,674
someone else?

60
00:05:27,674 --> 00:05:30,597
in practice, how does that work?

61
00:05:30,597 --> 00:05:40,445
And I guess, starting off with like from a legal perspective, how did you go about kind of
valuing both agencies setting up a holding company and taking equivalent amounts of equity

62
00:05:40,445 --> 00:05:41,306
in that?

63
00:05:41,306 --> 00:05:44,770
Or how did you go about putting the deal together?

64
00:05:44,770 --> 00:05:50,833
Yeah, I mean, I guess it was quite clean in many ways because we were both independently
owned.

65
00:05:50,833 --> 00:06:03,138
We were both founder led and actually we were slightly different sizes, but from a value
perspective, it was very similar enough to make us believe that we could actually just

66
00:06:03,138 --> 00:06:09,320
merge them in and value the businesses at the same valuation essentially.

67
00:06:10,281 --> 00:06:13,602
So I guess it was quite fortuitous in that way.

68
00:06:14,367 --> 00:06:16,568
and made it a lot simpler.

69
00:06:16,909 --> 00:06:25,426
Also, think both of us have got to that stage where we'd both been running our businesses
for seven or eight years.

70
00:06:25,426 --> 00:06:31,000
I've done pretty well, but felt that actually there was more we could be doing.

71
00:06:31,000 --> 00:06:41,088
Market was changing around us and there was a real willingness to, I guess, not rip
everything up and start again, but do things bit differently.

72
00:06:43,788 --> 00:06:46,479
Yeah, so there was a willingness on both sides to make it happen.

73
00:06:46,479 --> 00:06:48,140
We got it done pretty quickly.

74
00:06:48,740 --> 00:07:00,776
And because clients were also positive about it, and we shared some clients, it happened
quite quickly and we quite cleanly as well.

75
00:07:02,115 --> 00:07:05,469
So how many, you said you had a business partner as well.

76
00:07:05,469 --> 00:07:10,473
Did you end up, did the other business have two founders as well?

77
00:07:10,935 --> 00:07:15,926
And how many people sort of ended up in the, in the holding company running?

78
00:07:15,926 --> 00:07:20,606
and the agency we merged with had one founder.

79
00:07:21,726 --> 00:07:31,706
So and the total entity became probably about 55 people or so from what I remember.

80
00:07:31,706 --> 00:07:34,086
So that was back in 2012.

81
00:07:34,086 --> 00:07:35,476
So yeah, it was interesting.

82
00:07:35,476 --> 00:07:40,106
we created a new, we merged into their business essentially.

83
00:07:41,146 --> 00:07:44,658
And yeah, the shareholding structure.

84
00:07:44,674 --> 00:07:51,466
changed it, changed, and the equity positions aligned based on the valuations of the
business.

85
00:07:51,466 --> 00:07:57,498
So essentially I was one of two founders, but then my shareholding reduced.

86
00:07:57,498 --> 00:08:08,502
But my view was always on the long term, that it's better if you have a smaller part of
something bigger than a bigger part of something smaller, and be on a, I guess, bigger

87
00:08:08,502 --> 00:08:10,152
growth trajectory as well.

88
00:08:11,361 --> 00:08:12,342
Okay.

89
00:08:12,422 --> 00:08:24,194
So did all three of you then have kind of equal voting rights or like how did you set up
how the business was going to be managed after the merger had gone through?

90
00:08:24,194 --> 00:08:35,257
Yeah, so we had, when we first started the business, we had a shareholder agreement and
that updated when we merged the two businesses.

91
00:08:35,297 --> 00:08:42,479
So there were all sorts of levers and agreements about how decisions would be made within
that shareholders agreement.

92
00:08:42,679 --> 00:08:49,201
I'm actually advising a business at the moment doesn't have a shareholders agreement,
which is a big problem.

93
00:08:49,901 --> 00:08:52,102
But yeah, we did have one.

94
00:08:52,102 --> 00:08:53,662
So we sort of

95
00:08:53,666 --> 00:08:57,615
thought about every eventuality and how we would make those decisions.

96
00:08:57,615 --> 00:09:01,012
So that made life a bit easier moving forwards.

97
00:09:02,443 --> 00:09:10,256
And how did it work integrating the two cultures and how was it for your employees?

98
00:09:11,322 --> 00:09:19,685
It was hard, I would say, because we were bringing together, I would say, two very
different types of people.

99
00:09:21,206 --> 00:09:26,128
But that's what modern marketing requires.

100
00:09:26,208 --> 00:09:32,541
we were doing this a while ago, but yeah, we learned a huge amount of lessons about how to
integrate agencies.

101
00:09:32,541 --> 00:09:37,473
And we'll probably come on and talk about how we did that another two or three times after
that.

102
00:09:37,473 --> 00:09:39,174
But yeah, it was...

103
00:09:39,980 --> 00:09:50,773
what we were doing is bringing together quite analytical people together with quite
creative people and trying to get them to work together.

104
00:09:51,013 --> 00:09:57,115
And that wasn't always easy and we made a lot of mistakes along the way.

105
00:09:57,255 --> 00:10:07,318
But I think what has been born out over the last 10, 15 years or so is that marketing is
having to bring together, you know,

106
00:10:07,554 --> 00:10:13,117
brand and data together and understand how to best collaborate.

107
00:10:13,198 --> 00:10:17,941
And I think that's what we were trying to do under our own one roof back in 2012.

108
00:10:17,941 --> 00:10:25,856
yeah, I think that's always the juggle and I see agencies still trying to grasp that
nettle as well today.

109
00:10:26,873 --> 00:10:27,813
Well, it's interesting actually.

110
00:10:27,813 --> 00:10:41,493
I'm working on a deal at the moment to buy a digital business, which has developers in it,
which is quite different to the type of employees that I've got in other companies in the

111
00:10:41,493 --> 00:10:41,793
group.

112
00:10:41,793 --> 00:10:52,493
So I'd be interested to know how, what you did, what kind of, have you got any tips for
how you integrate the, you know, those two, you know, I'm sure they're all people at end

113
00:10:52,493 --> 00:10:56,369
of the day, but do you know, yeah, there's the sort of slightly different approaches.

114
00:10:57,070 --> 00:11:02,470
Yeah, I think you could have a whole separate podcast on that one, to be honest.

115
00:11:03,570 --> 00:11:08,690
I think you need really good people in the business that understand the benefits of
aligning.

116
00:11:08,690 --> 00:11:17,010
And I think there are potentially when we first came together, there were people that were
quite suspicious of why we were doing it, what was the purpose of it, because both

117
00:11:17,010 --> 00:11:19,070
agencies were growing quite strongly.

118
00:11:19,070 --> 00:11:26,606
And all of a sudden we were sort of being quite disruptive, I think, in terms of trying to
ask people to work in different ways.

119
00:11:27,611 --> 00:11:36,295
And I think we were too, in hindsight, were too, we were putting too much pressure on
people to work together straight away.

120
00:11:36,295 --> 00:11:43,459
And actually the best, the best advice I'd give was to let things happen organically to
some extent.

121
00:11:44,320 --> 00:11:52,624
And actually the main, the main reason why you're doing it is for, is to, is to bring
better work to the client.

122
00:11:52,624 --> 00:11:56,268
And when the client is accepting and

123
00:11:56,268 --> 00:12:01,660
wants you to integrate, think your team see it as well and figure out how to do it.

124
00:12:01,660 --> 00:12:06,162
And a lot of it was actually just letting people figure out what is the best way of coming
together.

125
00:12:06,282 --> 00:12:15,586
And what you tend to get is sponsors on each side that see the value of it and actually
are really passionate and enthusiastic about it.

126
00:12:15,666 --> 00:12:25,770
And I think that's what kind of happened in the way you got these internal advocates that
saw the value of it and also almost did our job in the way of integrating it organically.

127
00:12:27,545 --> 00:12:28,546
That's interesting.

128
00:12:28,546 --> 00:12:35,650
So tell me a bit about the acquisitions that you then ended up doing.

129
00:12:36,111 --> 00:12:42,695
How come you kind of pursued that as a sort of strategic way of growing the business?

130
00:12:42,695 --> 00:12:46,837
Was it the fact that you'd done this merger and it had gone pretty well?

131
00:12:47,758 --> 00:12:54,618
I think what it revealed was where there were more gaps perhaps in our offer.

132
00:12:56,018 --> 00:13:03,358
And we were working with some bigger brands and marketing can often be quite siloed.

133
00:13:03,358 --> 00:13:11,978
And so we were being asked to work with other agencies where we didn't have those
particular offerings.

134
00:13:11,978 --> 00:13:17,412
And I guess it became a bit in a way sort of filling the gaps really.

135
00:13:18,263 --> 00:13:29,448
So the obvious gap, not necessarily that obvious, but between what we were done with the
previous merger was there was a big gap in SEO.

136
00:13:29,582 --> 00:13:38,042
We were doing a lot of PPC work and so SEO and PPC obviously, well not obviously, but they
do work very strategically together.

137
00:13:38,042 --> 00:13:45,037
We were also doing a lot of content marketing and so having an SEO wrapper around that was
really helpful.

138
00:13:45,757 --> 00:13:47,488
And again, we will...

139
00:13:47,618 --> 00:14:01,830
we identified another agency where we had shared clients, where there was a smaller SEO
agency of about 10, 11 people that again made sense for us to have a conversation about

140
00:14:01,830 --> 00:14:04,132
folding them into what we were doing.

141
00:14:04,212 --> 00:14:14,761
And again, because we're sharing clients, we almost had permission to do that from day
one, from both them and also from the teams, because we were also collaborating.

142
00:14:15,790 --> 00:14:21,410
And we also had a chance to see them up close and understand that actually they were
really good at the work they were doing.

143
00:14:21,410 --> 00:14:26,410
And we would see the commercial benefit from bringing them into the agency.

144
00:14:26,550 --> 00:14:32,090
So yeah, the next acquisition we did was, and again, was from an equity perspective.

145
00:14:32,510 --> 00:14:38,378
So it was mostly time and legal fees, bringing in an SAO agency.

146
00:14:39,669 --> 00:14:40,650
Okay.

147
00:14:40,650 --> 00:14:57,337
And the founders of that agency, like how did you kind of go about approaching them and I
guess giving them the overview of the, you know, the benefits of joining the group and you

148
00:14:57,337 --> 00:15:04,941
know, did they give up a hundred percent of their, their company for equity in the, in the
larger group?

149
00:15:04,941 --> 00:15:06,530
How did that all work?

150
00:15:06,530 --> 00:15:14,333
Yeah, so I think by this time we decided that we were on a buy and build strategy to exit.

151
00:15:14,452 --> 00:15:17,214
That was this overarching plan.

152
00:15:18,155 --> 00:15:31,460
So I remember when I approached the SEO agency, the vision was, talk in with us, you'll
get a higher multiple than if you were to crack on yourselves and you'll get there

153
00:15:31,460 --> 00:15:32,381
quicker.

154
00:15:35,446 --> 00:15:45,012
Yeah, they folded fully into the agency with an equity position based on an evaluation of
what they had at that time.

155
00:15:47,779 --> 00:15:51,030
Was that, how easy was that?

156
00:15:51,030 --> 00:15:58,212
And the reason I ask is I've been going out looking for businesses to buy quite a bit over
the last few years.

157
00:15:58,212 --> 00:16:04,393
And I've found quite a lot of founders are very protective over what they've built.

158
00:16:04,594 --> 00:16:14,666
And even though they can get excited by the opportunities of joining a larger group,
actually, when it comes down to it, it's a big step.

159
00:16:14,666 --> 00:16:17,709
It's a big decision to make to say, I'm going to seed

160
00:16:17,709 --> 00:16:25,622
control on the basis of potential future earnings, which may or may not materialize.

161
00:16:26,776 --> 00:16:31,047
Yeah, I'll say I've got good persuasive skills, perhaps.

162
00:16:32,328 --> 00:16:36,079
But yeah, I can see that.

163
00:16:36,079 --> 00:16:48,852
I think it also depends on the state of the business, the age of the owner, their own
growth cycle, where they are in their lifetime, and also what's going on in the market at

164
00:16:48,852 --> 00:16:50,562
any one time.

165
00:16:50,562 --> 00:16:56,462
I think today would probably be a different conversation from the one we were having.

166
00:16:56,462 --> 00:17:03,767
perhaps in 2014, 2015, whenever it was, because of the tax environment.

167
00:17:04,428 --> 00:17:09,311
People are looking for slightly different exits than perhaps they were seven years ago.

168
00:17:10,102 --> 00:17:16,116
So I think there's multiple reasons why people would and wouldn't consider doing something
like that.

169
00:17:16,857 --> 00:17:24,512
I think because we had gone through a successful piece of &A ourselves, I think it also
gave them a bit of confidence.

170
00:17:24,512 --> 00:17:38,962
and the fact we were quite aligned in terms of client portfolio and the kind of work we
were doing, they could also see the advantages of us working more strategically together.

171
00:17:38,962 --> 00:17:41,640
It wasn't a cold relationship.

172
00:17:42,519 --> 00:17:48,636
And at that point, was there a plan for an exit for the larger group?

173
00:17:48,818 --> 00:17:51,280
And how well-defined was that?

174
00:17:52,547 --> 00:17:53,948
It was pretty defined.

175
00:17:53,948 --> 00:18:01,832
think this was a big motivation for making all this happen and going through the pain of
making it happen as well.

176
00:18:03,034 --> 00:18:06,255
And I think we were pretty upfront and honest about that.

177
00:18:07,277 --> 00:18:10,999
We also went on to acquire another agency as well.

178
00:18:11,519 --> 00:18:15,241
And it was a similar sort of sales pitch, really.

179
00:18:16,603 --> 00:18:20,175
And, you know, again, it was someone we were already working with.

180
00:18:20,175 --> 00:18:21,856
We'd identified a gap.

181
00:18:21,920 --> 00:18:27,073
in our, well, we were doing, we actually were then wanting to acquire a creative agency.

182
00:18:28,635 --> 00:18:34,799
But we were working with a number of joint clients again.

183
00:18:35,250 --> 00:18:48,399
And maybe we just got lucky, I guess, in terms of having a lineup of agencies that we were
sort of collaborating with quite closely, all led by entrepreneurial founders that could

184
00:18:48,399 --> 00:18:50,420
see the value in coming together.

185
00:18:51,755 --> 00:18:53,229
OK, so.

186
00:18:55,541 --> 00:18:57,973
Was I gonna, I had a question, it's gone now.

187
00:18:57,973 --> 00:18:58,974
Sorry.

188
00:19:04,633 --> 00:19:20,069
Yes, so in terms of the sort of equity of the larger group then, you ended up with quite a
few different shareholders, I guess, all of these former founders.

189
00:19:20,600 --> 00:19:26,670
Yeah, yeah, the equity positions changed every time we did a piece of &A.

190
00:19:27,092 --> 00:19:33,414
One of the founders that I originally started my agency with had left the business by this
point.

191
00:19:34,254 --> 00:19:40,876
So some of the equity that was returned was used to acquire one of the actually the SEO
agency.

192
00:19:41,736 --> 00:19:47,418
But yeah, our holdings changed as we did the &A.

193
00:19:48,792 --> 00:19:57,825
But again, it was always with the view that we were building something bigger and that it
would be worth it in the end.

194
00:19:59,095 --> 00:20:05,293
And how did you go about combining sort of back office functions with all of these
businesses?

195
00:20:05,293 --> 00:20:08,257
Like which bits were you able to consolidate?

196
00:20:09,240 --> 00:20:14,632
Yeah, mean, so we, everyone moved into the same offices.

197
00:20:15,313 --> 00:20:21,735
So there was some shared sort of overhead there or stripping out some overhead from the
other businesses.

198
00:20:23,016 --> 00:20:30,970
And yeah, we put a centralized team of, know, PA and front of office, back office
together.

199
00:20:30,970 --> 00:20:36,792
And obviously, yeah, there were cost savings involved in that.

200
00:20:36,792 --> 00:20:45,447
There were no cost savings in terms of, you know, redundancies, you know, because everyone
was doing complementary services.

201
00:20:45,447 --> 00:20:52,030
So every agency had its own clients as well as shared clients.

202
00:20:52,030 --> 00:20:55,192
So they came with revenue from day one.

203
00:20:55,192 --> 00:21:00,715
So the whole point of it was not a sort of cost saving exercise.

204
00:21:00,715 --> 00:21:06,878
It was actually an income growth exercise with clients from day one.

205
00:21:07,430 --> 00:21:11,312
So there weren't a huge amount of efficiencies to strip out.

206
00:21:11,972 --> 00:21:14,509
They were all being run fairly well.

207
00:21:14,509 --> 00:21:17,274
There wasn't a lot of fat in the businesses.

208
00:21:18,134 --> 00:21:27,958
So it was more about, this is a strategic operation we're going through to drive more
growth and we've got the right people in the business to do it.

209
00:21:29,993 --> 00:21:37,028
And you had a story about your finance director and the finance function.

210
00:21:37,531 --> 00:21:40,376
Can you tell me a bit about that?

211
00:21:40,590 --> 00:21:54,970
Yeah, so I guess, yeah, this, I haven't really spoken much about it before, but yeah, we
were, you know, when we were actually talking to someone about potentially selling to

212
00:21:54,970 --> 00:22:03,510
another company and they started doing some due diligence, it was revealed that we did
have a bit of a black hole in our business.

213
00:22:03,810 --> 00:22:08,806
And I think what happened when we

214
00:22:08,920 --> 00:22:18,556
When we went through a lot of change as an agency, the business kind of outgrew some of
the back ends that we had in terms of the support.

215
00:22:18,556 --> 00:22:21,157
And the finance team was one of those things.

216
00:22:22,278 --> 00:22:35,486
And we ended up in a situation where our existing finance director turned out to have a
gambling addiction.

217
00:22:38,041 --> 00:22:43,602
And it was revealed that a lot of money was being siphoned off.

218
00:22:44,662 --> 00:22:49,082
So it was a tough time for everybody.

219
00:22:50,202 --> 00:23:05,842
The first that I realized we had an issue was when I was sat in a cafe and I had a flood
of emails into my inbox offering to represent me in the High Court against HMRC.

220
00:23:07,060 --> 00:23:11,732
And I got the first one, I thought it was some sort of, you know, bit of spam or
something.

221
00:23:11,972 --> 00:23:16,334
And then after the third or fourth, I realized potentially there's a problem here.

222
00:23:16,334 --> 00:23:21,276
And it turned out we hadn't paid HMRC bill, even though we'd been told we had.

223
00:23:22,856 --> 00:23:27,318
And then so, RFD turned out to be a problem.

224
00:23:27,918 --> 00:23:35,381
And the business, it was apparent, was just weeks away from going under through

225
00:23:36,217 --> 00:23:37,038
goodness.

226
00:23:37,038 --> 00:23:38,999
cashflow challenges.

227
00:23:40,239 --> 00:23:42,720
So our bank accounts were frozen.

228
00:23:42,781 --> 00:23:43,891
We couldn't pay anything out.

229
00:23:43,891 --> 00:23:45,321
We could only pay in.

230
00:23:47,503 --> 00:23:54,626
The founders at that time had to remortgage our homes to keep the business afloat, to pay
staff salaries.

231
00:23:54,826 --> 00:24:01,068
So the business we'd been running for 12 years at that time was about to be stripped away.

232
00:24:01,849 --> 00:24:03,249
And then we spent...

233
00:24:05,368 --> 00:24:09,541
probably a year, 18 months building up the business again from scratch.

234
00:24:10,542 --> 00:24:25,094
We made no redundancies, unbelievably, and then went on a huge growth boom and built up
enough cash reserves to actually get the business back into the state it needed to be in.

235
00:24:25,995 --> 00:24:31,640
But we had to invoice factor our way out of a big problem.

236
00:24:32,761 --> 00:24:33,986
We were about to do a

237
00:24:33,986 --> 00:24:41,053
deal to sell the business which we had to pull back from at that time and it was a huge
amount of stress.

238
00:24:42,555 --> 00:24:49,952
The finance director sued us for constructive dismissal at that time.

239
00:24:50,697 --> 00:24:52,032
Excuse me?

240
00:24:52,032 --> 00:24:57,783
Yeah, until we figured out what the hell was going on and went to the police.

241
00:24:58,284 --> 00:24:59,224
Yeah.

242
00:24:59,904 --> 00:25:02,685
We went to the police, handed it all over to the police.

243
00:25:03,945 --> 00:25:09,287
And after a lot of not guilty pleas, it went all the way to the high court, the Crown
Court, sorry.

244
00:25:10,327 --> 00:25:12,667
And then went through a trial.

245
00:25:13,848 --> 00:25:21,566
And by this time, we'd built the business up and had grown it to

246
00:25:21,566 --> 00:25:35,253
decent level and the company that acquired us were actually waiting on whether it was a
guilty or not guilty verdict in the court before signing all the paperwork.

247
00:25:35,254 --> 00:25:38,175
So it was an incredibly stressful time.

248
00:25:38,175 --> 00:25:43,458
He was found guilty and got seven years.

249
00:25:44,505 --> 00:25:46,205
seven years.

250
00:25:46,525 --> 00:25:47,185
Wow.

251
00:25:47,185 --> 00:26:01,905
I mean, we, at my previous production company, we had a similar story, but on a smaller
scale, we had a producer that was using company credit cards to do all sorts of things,

252
00:26:01,905 --> 00:26:06,645
essentially furnish her flat and book nice trips away for her and her partner.

253
00:26:07,945 --> 00:26:12,817
And yeah, I racked up about £50,000 worth of

254
00:26:12,939 --> 00:26:14,809
unauthorized expenses.

255
00:26:14,990 --> 00:26:22,051
And yeah, by the point where that we found out the sort of amount was so much that same
thing we had to have to go to the police.

256
00:26:22,051 --> 00:26:26,232
She did actually plead guilty just before just before it went to trial.

257
00:26:26,873 --> 00:26:30,354
So didn't actually actually have to appear in court.

258
00:26:31,174 --> 00:26:33,194
And she got suspended sentence.

259
00:26:33,795 --> 00:26:43,077
But yes, it sounds like the the the quantity the levels the levels of embezzlement and the
amount of stress

260
00:26:43,518 --> 00:26:45,230
was quite something.

261
00:26:45,346 --> 00:26:46,787
Yeah, it was horrific.

262
00:26:48,030 --> 00:26:53,596
Yeah, it was also very sad as well because I'd considered him a friend.

263
00:26:53,897 --> 00:26:59,604
And so there was all that emotional turmoil sort of to deal with.

264
00:27:01,427 --> 00:27:02,974
But yeah, I mean...

265
00:27:02,974 --> 00:27:04,339
the motivation as well, isn't it?

266
00:27:04,339 --> 00:27:04,550
why?

267
00:27:04,550 --> 00:27:05,351
Why?

268
00:27:06,222 --> 00:27:11,802
Well, you know, I've learned a lot more about addiction, obviously, since then.

269
00:27:11,802 --> 00:27:14,802
And, you know, it's quite common, unfortunately.

270
00:27:15,182 --> 00:27:20,742
You know, you do see, I'm probably more alert to it now when I see it in the media.

271
00:27:20,742 --> 00:27:31,202
But, you know, unfortunately, gambling is an addiction and it can ruin lives as well as
ruin businesses.

272
00:27:31,402 --> 00:27:35,482
We were very fortunate that we had

273
00:27:36,238 --> 00:27:48,538
I guess we had a really good management team that were able to pick ourselves up and go
again and with minimal disruption to the clients, to the business, to the staff.

274
00:27:48,538 --> 00:28:01,678
And we hid a lot of it from people and we were just able to work our way out of it again
and get to a good place where we could have the right people in the business running the

275
00:28:01,678 --> 00:28:06,214
business and get to a size where

276
00:28:06,286 --> 00:28:11,329
you know, we could get it clean and exit in a good way.

277
00:28:11,869 --> 00:28:27,998
But yeah, it was, it tested all our reserves, I think, in terms of entrepreneurial flair,
in like, how would you bounce back from something like that and not get drowned in it.

278
00:28:29,081 --> 00:28:30,201
Yeah.

279
00:28:30,201 --> 00:28:32,531
And presumably it dragged on for quite a long time as well.

280
00:28:32,531 --> 00:28:38,158
I mean, if it was going through various, various courts and then to a trial must have been
a couple of years.

281
00:28:38,158 --> 00:28:38,928
Yeah, it did.

282
00:28:38,928 --> 00:28:40,798
took a couple of years.

283
00:28:41,378 --> 00:28:47,678
And it was stressful, stressful on the family, stressful on relationships.

284
00:28:49,038 --> 00:28:52,368
But we didn't lose faith in the business itself.

285
00:28:52,368 --> 00:28:54,238
The business was a good business.

286
00:28:54,238 --> 00:28:58,558
We just had a person that tried to ruin it.

287
00:28:59,678 --> 00:29:06,918
But I didn't celebrate the guilty verdict.

288
00:29:07,266 --> 00:29:09,306
It wasn't something to be happy about.

289
00:29:09,306 --> 00:29:12,210
It was just all very sad, really.

290
00:29:12,210 --> 00:29:25,361
I, you know, I, as I said, this person was a friend and, you know, it is, it is an illness
and, you know, so, you know, you have to be positive and look forward.

291
00:29:26,042 --> 00:29:36,152
But yeah, we were a somehow able to keep going and, and flourish despite.

292
00:29:36,152 --> 00:29:39,489
having a massive curve ball thrown at us.

293
00:29:40,107 --> 00:29:40,979
Yeah.

294
00:29:40,979 --> 00:29:45,607
So how did the, who was the eventual buyer?

295
00:29:45,607 --> 00:29:46,949
How did that come about?

296
00:29:46,949 --> 00:29:51,787
Did you, how did you find, did you go to market or did they approach you?

297
00:29:51,938 --> 00:29:54,439
Yeah, so we decided to go to market.

298
00:29:54,439 --> 00:29:56,139
We appointed a broker.

299
00:29:58,840 --> 00:30:00,410
It was pretty organized process.

300
00:30:00,410 --> 00:30:06,842
We'd always had interest, but decided to sort of formalize the process.

301
00:30:07,742 --> 00:30:12,023
And in the end, we ended up selling to a company we'd actually hadn't heard of before.

302
00:30:12,484 --> 00:30:21,126
And I think that's probably the reason why you do go to a broker, because you should never
sell to the first person that comes along and wants to buy you.

303
00:30:21,378 --> 00:30:30,540
someone in your network, there's always going to be a strategic need from someone in the
world, why they might want to acquire your agency and your services.

304
00:30:30,861 --> 00:30:38,843
So yeah, we ended up selling to a company called Reply, great business, great people, good
fit for us.

305
00:30:39,043 --> 00:30:46,485
And we did that deal in 2019, six months before lockdown.

306
00:30:48,825 --> 00:30:51,022
It was meant to be a three year earn out.

307
00:30:51,022 --> 00:30:53,103
a traditional earn-out kind of model.

308
00:30:53,243 --> 00:31:03,927
We ended up resetting after the first year because of COVID, which at the time we were
very grateful for because in that first year we kind of broke even and it probably would

309
00:31:03,927 --> 00:31:05,988
have ruined our earn-out.

310
00:31:06,048 --> 00:31:16,712
So at that time we were very grateful to have sold to what was a technology consulting
firm, which actually those kinds of firms did pretty well in the pandemic, whereas the

311
00:31:16,712 --> 00:31:20,942
marketing services firms, which would have been a more traditional acquirer.

312
00:31:20,942 --> 00:31:24,782
of our kind of agency, we were in all sorts of problems.

313
00:31:25,602 --> 00:31:31,782
so strategically, we were very happy to have sold to a more of consult technology
consulting firm.

314
00:31:32,419 --> 00:31:45,309
Well, you're the I've had quite a few people on this podcast to have had their earnouts
ruined by that COVID period, and did not have understanding by us who were willing to

315
00:31:45,309 --> 00:31:47,550
renegotiate or push it back a year.

316
00:31:47,550 --> 00:31:53,902
So I'm glad that they made a sort of a practical and sensible decision there.

317
00:31:53,902 --> 00:32:03,182
Yeah, I I remember feeling very grateful we hadn't sold to an Omnicom or a WPP or, you
know, we were, because they were doing very well.

318
00:32:03,182 --> 00:32:07,462
They were almost like a safe harbor for us at that time.

319
00:32:07,462 --> 00:32:12,242
And actually we did well to break even in that first year really.

320
00:32:12,442 --> 00:32:15,382
Cause we were exposed to a lot of retail clients.

321
00:32:15,382 --> 00:32:23,084
In fact, our client base going into the earn out was almost completely different from the
one when we came out just because of

322
00:32:23,084 --> 00:32:33,874
the way we had to pivot to new sectors and how we organically picked up clients or lost
clients because of the changing retail landscape or consumer spends.

323
00:32:35,149 --> 00:32:43,637
What was the revenue at the point where you sold and how did you sort go about valuing the
group?

324
00:32:44,454 --> 00:32:48,357
So we were doing about six million income when we sold.

325
00:32:49,519 --> 00:33:00,147
So the valuation was a sort of typical sort of multiple on an average net profit.

326
00:33:01,089 --> 00:33:12,648
There was quite a complex formula dreamt up in terms of the earn out, which was a mix of
top line and bottom line with different

327
00:33:13,262 --> 00:33:17,465
levers at different income levels.

328
00:33:18,866 --> 00:33:25,430
So it was quite hard to track actually how we were doing based on the performance.

329
00:33:26,812 --> 00:33:35,658
yeah, think it ended up being a four year earn out because of COVID.

330
00:33:35,838 --> 00:33:41,082
And it probably took us a year to get ready for selling the business anyway.

331
00:33:41,486 --> 00:33:52,090
When you look at the stretch, it's quite a long stretch in terms of that traditional kind
of earn out model where you're talking, in our case, probably five years really in terms

332
00:33:52,090 --> 00:33:58,123
of prepping and then going through it and then finishing up as well.

333
00:33:58,123 --> 00:34:06,516
So people might think, it's just a three year earn out, but actually ends up being like
five by the time you end up going through it properly.

334
00:34:07,366 --> 00:34:10,828
it's quite interesting now with, you

335
00:34:10,828 --> 00:34:16,766
Most conversations I have with other agency owners is all about EOTs, which is relatively
quick, right?

336
00:34:16,766 --> 00:34:23,904
You can do that within sort of six months to a year, which I think for a lot of people is
more appealing.

337
00:34:25,325 --> 00:34:36,119
I think especially for smaller businesses as well, there aren't necessarily, where there
isn't necessarily of a scale where it's kind of stable enough to be of interest to other

338
00:34:36,119 --> 00:34:37,109
buyers.

339
00:34:38,409 --> 00:34:43,085
But also that EOT thing is very tax efficient for founders, isn't it?

340
00:34:44,111 --> 00:34:44,971
Yeah.

341
00:34:45,792 --> 00:34:49,473
How did the, how did the integration go with, with Reply?

342
00:34:50,378 --> 00:34:52,959
It was, you know, they were a very big company.

343
00:34:52,959 --> 00:34:55,830
I think when we sold to them, they were like 8,000 people.

344
00:34:55,830 --> 00:35:06,164
you know, I think by the end, because they're very acquisition hungry themselves, I think
by the time we left, they were like 15,000 people.

345
00:35:06,325 --> 00:35:09,005
And so for us, it was quite a big change.

346
00:35:09,618 --> 00:35:19,650
You know, I think, you know, I think you have to adjust from, you know, personally, I
think my ego took a bashing from being like, you know,

347
00:35:19,790 --> 00:35:31,390
considered myself quite important to all of a sudden becoming not that important when you
look at a business of that sort of scale and how you fit in and the kind of time you're

348
00:35:31,390 --> 00:35:32,310
given.

349
00:35:32,930 --> 00:35:46,150
I guess like anything, the success of the integration was dependent on your relationship
with people internally and how much you were willing to really integrate.

350
00:35:46,570 --> 00:35:47,820
Because actually,

351
00:35:47,820 --> 00:35:52,942
you know, and between the, with the management team that we had, we ended up dividing and
conquering really.

352
00:35:52,942 --> 00:35:59,895
So I spent most of my time more outwardly focused on trying to grow ourselves.

353
00:36:00,875 --> 00:36:08,118
And one person in particular on our management team spent more time internally mining the
opportunities.

354
00:36:08,318 --> 00:36:11,639
So I think we did pretty well really.

355
00:36:12,660 --> 00:36:17,814
But we were very much focused on taking control ourselves externally.

356
00:36:17,814 --> 00:36:20,404
as well as integrating internally.

357
00:36:20,404 --> 00:36:23,434
And I think in the end, that was the best thing to do.

358
00:36:25,451 --> 00:36:28,119
And have you now you finished your run out?

359
00:36:28,119 --> 00:36:31,138
you now left the business?

360
00:36:31,138 --> 00:36:39,804
Yeah, so of the four founders, two have remained and two have, I've left and one is
leaving.

361
00:36:41,525 --> 00:36:59,057
So I exited in April this year and the business is now still being run by two of the
original founders today within the bigger business.

362
00:36:59,097 --> 00:37:00,438
But yeah, I left.

363
00:37:00,438 --> 00:37:01,525
April this year.

364
00:37:02,614 --> 00:37:04,399
and what have you been doing since?

365
00:37:06,071 --> 00:37:13,654
So I pretty much realized quite quickly that I can only work with founders, let's say,
founder-led businesses.

366
00:37:13,775 --> 00:37:19,938
So I'm doing a mix of agency advisory work, mostly around growth, planning.

367
00:37:20,318 --> 00:37:28,322
Though what I've realized is that I'm fast becoming a therapist for other founders.

368
00:37:29,323 --> 00:37:33,885
But yeah, I'm working with a creative agency, an e-comm agency.

369
00:37:36,581 --> 00:37:39,422
just a few different types of agency.

370
00:37:39,422 --> 00:37:43,462
And then I'm working directly with a number of brands.

371
00:37:43,462 --> 00:37:50,906
I'm working more as a sort of fractional CMO for a couple of founder led brands directly.

372
00:37:52,132 --> 00:37:53,043
interesting.

373
00:37:53,043 --> 00:38:01,358
So looking back on your time, I you've been on both sides of the &A table.

374
00:38:01,358 --> 00:38:05,785
Is there anything you would have done differently?

375
00:38:08,859 --> 00:38:24,152
Yeah, I've often looked back and, you know, our strategy for growth was through &A, which
was, you know, quite disruptive in many ways and hard to integrate people and different

376
00:38:24,152 --> 00:38:24,752
services.

377
00:38:24,752 --> 00:38:34,841
And I often wonder, would I have been better off just carrying on doing what I was doing
and actually just growing what was a quite traditional PR agency without adding lots of

378
00:38:34,841 --> 00:38:36,856
more performance channels?

379
00:38:36,856 --> 00:38:38,066
to the business.

380
00:38:38,507 --> 00:38:40,307
That's something I'll never know.

381
00:38:40,408 --> 00:38:51,653
But for me, I personally feel my professional development would never have been the same
if I just carried on doing what I was doing.

382
00:38:51,653 --> 00:38:57,815
And so I don't regret doing what I was doing because I've upskilled myself massively.

383
00:38:57,976 --> 00:39:02,497
And it's enabled me today to be a more rounded marketeer.

384
00:39:03,808 --> 00:39:10,081
and working with the kind of brands I'm working with and the relationships I have and
understanding of different channels.

385
00:39:10,142 --> 00:39:23,219
But I'll never know whether I could have got there quicker just by carrying on doing what
I was doing, but in growing the PR agency because, but personally, I probably wouldn't

386
00:39:23,219 --> 00:39:25,890
have found it as motivating or as interesting.

387
00:39:25,890 --> 00:39:30,953
Despite all the challenges we've spoken about, they've all been professionally.

388
00:39:34,444 --> 00:39:46,784
A good thing for me to do and I personally have been motivated and it's kept me interested
in marketing by understanding new channels and new people and new ways of doing stuff.

389
00:39:47,425 --> 00:39:50,207
But would I have got there quicker just by doing what I was doing?

390
00:39:50,207 --> 00:39:51,708
That's always the thing.

391
00:39:51,789 --> 00:39:53,750
I think about when I'm in the shower.

392
00:39:55,618 --> 00:39:56,322
No.

393
00:39:57,886 --> 00:40:01,948
And on that note, what a place to wind it up.

394
00:40:03,990 --> 00:40:05,211
Well, yeah, thank you very much.

395
00:40:05,211 --> 00:40:07,833
Thanks for your time for coming on telling us your story.

396
00:40:07,913 --> 00:40:12,216
And yeah, good luck with the next chapter.

397
00:40:12,653 --> 00:40:13,654
Cheers.