In January 2018, Nick Eubanks acquired two agencies six days apart.
His agency, From The Future (FTF, formerly I’m From The Future), was a side project that grew to a $1M company. After three years of guiding FTF in his spare time, Nick left his executive role at a growing eCommerce company to become the CEO of FTF. That was just three months before the double acquisition.
What could go wrong?
(Everything. Everything could go wrong.)
But before we address what went wrong (and how he fixed it), let’s take a moment to understand why the acquisitions happened in the first place.
Nick Eubanks, who founded SEO agency From the Future, closed two agency acquisitions in two weeks.
Nick is no stranger to running businesses — he’s grown, bought, and sold them before. So when he came on as CEO for his agency, he wanted to turbocharge his team and service offerings. The fastest way to do that, he figured, was to acquire other rising stars in the industry.
“I don’t want to be a $1M agency; I want to be a $10M agency,” he explained. His move to acquire agencies was part of his plan to:
‣ Jumpstart the revenue fire
‣ Hire better talent
‣ Gain strategic advantages
‣ Cross-sell services.
In theory, it was a solid plan. And ultimately, it did work. He’s thrilled with the caliber of the team he has in place now. And the merger pushed him to create services and build deliverables better than he imagined they could be.
In practice, acquiring two agencies in one week was “a pretty egotistical move,” he laughed.
Now that he and his team have deconstructed and reconstructed everything from job roles to deliverables to brand messaging, Nick shared his greatest difficulties after acquiring two agencies — and how his team overcame them.
Bonus action list: [sg_popup id=”224″ event=”click”]Get our 2-page PDF summary[/sg_popup] of action items you can use to navigate agency acquisitions based on Nick’s advice.
What Made the Acquisitions Difficult
FTF provided high-end SEO strategy and implementation, so Nick sought agencies (and agency owners) whose skill sets would complement his. That led him to acquire True Voice Media, a social media marketing agency owned by Jeff Gibbard, and WEBRIS, an SEO agency with bulletproof processes owned by Ryan Stewart. To keep taxes simpler, he chose to acquire both of them at the beginning of the tax year.
But trying to integrate two teams with his own just three months after he became FTF’s CEO was no easy task. Even worse, FTF didn’t have a clearly defined set of processes that could be taught to the new team members. Nick eloquently referred to their organization and direction at the time as “a dumpster fire on a roller coaster track.”
In other words, not only did he need to integrate the missions and directions of two new companies, he also had to resolve outstanding issues with his own.In retrospect, he identified a few key problems they had to overcome:
- All three agencies had clients at different price points.
- The deliverables sold by each agency were similar, but not the same. Clients sold on the service from one agency were upset to get something different if a team from another agency did fulfillment.
Solving those problems meant Nick had to retool every aspect of his agency.
The Solution? Deconstruct & Rebuild the Agency
Nick Eubanks and Jeff Gibbard pose in a (not so serious) photo after the acquisition.
During the six months before the acquisition, Nick, Jeff, and Ryan made plans to smooth over the acquisition. “None of what we planned worked out. We had to burn everything down and start over,” Nick recalled.
The first six months of their partnership “was a mess,” he admitted, but they needed that time to strategize and implement fixes. Now, a year after the acquisition, they’re finally in a good place.
Here are four major steps they took to solve their problems and set a new course.
Step 1: Define Service Offerings
Without pinning down exactly what they offered, to whom, and why, it was impossible for Nick and his team to fix the other problems facing FTF.
To begin, Nick looked at their respective market segments. FTF’s clients wanted things like technical SEO, engineering, and code optimization. They would happily pay $15k+/mo for those services. The price points for the other two teams, in contrast, had been under $4k in most cases.
So, they had to retool their service offerings with an eye to profitability: How could they combine their expertise and develop high-end services that FTF’s clients would want?
They chose to cut their least profitable offerings and combine the best services from each agency.
“We don’t do content fulfillment anymore; we focus on content strategy. We found three fulfillment partners for content creation. We still do link building, but we call it outreach because it had to blend with social. Now it has to represent not just link building for SEO, but link building from the influencer marketing side and the content amplification side,” he explained.
During the transition, they lost a number of clients. But they also gained clarity regarding the clients they valued most.
“The companies that stayed were the more sophisticated brands, the ones that understood that they were paying for access to the brains and the experience within the team that we’ve put together. The people that we lost didn’t see it that way. They didn’t see us as partners; they were transactional. They wanted to come and pay for their turkey sandwich and they wanted to get a turkey sandwich. And then next month they wanted a ham sandwich and they knew they needed a ham sandwich.”
“But all the clients we have today, they come and they say, ‘What kind of sandwich should I be eating to fulfill this hunger I have for increased sales and conversions?’ And we’ll figure out by looking at ridiculous amounts of data that we collect with a bunch of software tools that we’ve built that, ‘Well, you need a club sandwich this month. So we’re going to put some turkey in there and some ham in there and we’ll use a different kind of bread. And here’s why.’”
Step 2. Adjust Deliverables Accordingly
Changing their services meant their deliverables — and how the team executes on developing them — had to change. Fortunately, the process resulted in better deliverables and higher revenue.
By way of example, Nick pointed to combining WEBRIS’ “Website Quality Audit” with the FTF “Keyword Matrix.” The Keyword Matrix was a macro-level look at keyword competition; the Website Quality Audit was a down-and-dirty on-site analysis that also included keyword research.
“We tried to blend them together and it just didn’t work,” Nick said. Now, “they’ve been completely replaced by our TAM (Total Addressable Market) analysis. Instead of just looking at a competitive landscape to define a total market, which is what the Matrix was, we collect all this additional business information to figure out the total actually addressable market for a client. Maybe that includes service lines or products and the terms that represent those products that maybe they don’t even know exist yet. Maybe there’s demand out there that they are completely unaware of. It lets us identify much larger opportunities because of it.”
It’s a high-end offering that thrills their clients, and it wouldn’t have been possible if they weren’t looking to combine or replace their older offerings.
Step 3: Fix Roles and Department Organization
Employees interact at a From the Future gathering.
Once deliverables started to change, that meant that job roles and departments had to change, too.
When Nick decided to outsource content, that meant the writers who came on from WEBRIS no longer had a place in the organization. But that was the most dramatic change. Most were subtle shifts: Their SEO analyst position, which previously was more of a fulfillment role, became oriented around research and strategy. The account manager and project manager roles combined to become the client strategist role.
Departments changed, too. Link building used to be part of the SEO department. But since link building turned into part of the “outreach” service offering, it got its own department. UI and design started as one department, but they learned over time that the differences between the two functions necessitated two departments.
Interestingly, Nick found that teams were more siloed when they were part of one large department than when they were broken out into their specialties.
Step 4: Get Everyone on One Project Management System
FTF tried four different project management platforms in a year before circling back to the one they started with.
At first, Nick and his team looked for exciting functionality and tried to build their processes around that. But after several failures, Nick realized that you shouldn’t evaluate a platform by functionality alone. Instead, you should look for the platform that fits the process you have.
“We needed to understand what our process was like agnostic of software,” he said. And once they took a step back to pin down that process, they were able to choose a software that meshed with their workflow (if you’re curious, they chose Asana because they could reconstruct many of Ryan’s PM tools on the platform, something that wasn’t possible until Asana launched their Gantt chart functionality).
Getting that settled was the last piece they needed to start scaling the company instead of reacting to acquisition woes.
One year after the acquisition, Nick is thankful he acquired both companies. But he does regret trying to do it all at once. He recommends spending a lot of time deciding what your new service offerings and deliverables will be.
Every acquisition will come with challenges, some of which are impossible to predict. But it’s worth laying the groundwork as much as possible before you’re staring down an organizational nightmare. Nick recommends acquisition as a strategy in either one of two cases:
- If your clients or campaigns demand services that are far enough outside the scope of your agency to warrant joining forces with another agency, but only if that opportunity would increase top-line revenues in one year by 20% or more.
- If your agency is doubling in size every year for 3+ years or running at a net margin of 30% or better. “This means you have the cash to finance extending compound annual growth rate (CAGR) to 50% or better through acquisition,” he explained.
Interestingly, the experience gave him personal clarity on how he wants to run his agency. While the acquisition was a push to grow quickly and scale, Nick now wants to put a cap on growth.
“We’re rapidly approaching 100 clients. And when we get to 100 clients, we will not be taking on any more,” he shared. “I want to focus on having the absolute best talent I can: a world-class team creating world-class digital strategies.”