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Getting Around Your Non-compete

November 5, 2021 |  

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Nick Leighton started a marketing agency called NettResults with the idea of helping technology companies access consumers in the Middle East. Based in Dubai, Leighton built NettResults to around $2 million in revenue when he decided to sell.

Leighton attracted a number of offers including one from a much larger agency that wanted an office in the Middle East.

The acquirer had no interest in Leighton’s brand, so he carved the NettResults name and website URL out of the purchase, which turned out to be a prescient move. Two years later, Leighton’s acquirer decided to leave the Middle East.  Leighton, having honored his two-year non-compete, was able to re-start his agency, under the same name, without breaching his agreement with the acquirer.

In this episode you’ll discover how to:

Show Notes & Links

[20:56] Nick Leighton:The World Food Programme, which is one of the largest charity organizations in the world.”

[41:58] Nick Leighton: “The book is Exactly Where You Want To Be: A Business Owner’s Guide to Passion, Profit and Happiness

About Our Guest

Nick Leighton believes that you should make more money and have more free time to achieve your personal life objectives. These are Champagne Moments. He does this through his best-selling book (Exactly Where You Want to Be – A Business Owner’s Guide to Passion, Profit & Happiness), international speaking engagements, executive coaching business owners, and by facilitating peer-advisory-boards.

Over the past 25+ years, Nick has worked in North America, South America, Europe, the Middle East, Africa, and Asia. As a seasoned entrepreneur, he has founded and sold multiple multi-million-dollar agencies and advised countless others, including Fortune 500 companies, non-profit organizations, small businesses, entrepreneurs, political parties, and members of royalty.

Nick owns and operates a coaching and peer-advisory agency, an international marketing agency, and a project management company.

Fun fact – Nick met his wife sixteen years ago at the Playboy Mansion in Los Angeles.

Outside of work, Nick is studying to be a Sommelier and loves international travel.

 

Connect with Nick:
NettResults

Transcript

Disclaimer: Transcripts may contain a few typos. With most episodes lasting 40 minutes, it can be difficult to catch some minor errors.

John Warrillow:

So, when’s the last time you read a book on selling your company? My guess is you’ve never read a book on selling your company. Why bother when the only books out there read like textbooks filled with acronyms and terms you’ve never heard of, written by people who make it their job to make themselves look and sound smarter than you. Why bother? Well, the art of selling your business tries to do exactly the opposite. It features the stories of the founders I’ve listened to for the podcast. I’ve taken their best practices, their secret hacks, and bundled them into a storytelling format so that you can take away the key lessons, the action plan, the field guide without sifting through the boring textbook, that is most books on the topic of selling your company. You can get it at BuiltToSell.com/Selling.

So, one of the things you’re going to have to think through when you go to eventually exit your business is, your non-compete. This is a document that you sign where you agree not to compete with your acquirer for a period of time after they buy your company. It’s one of those documents that when you’re signing it, you may be like, I don’t care how long my non-compete is. You can have it for ever. I’m never coming back into this industry or this business again. You may be so relieved to be leaving your business that you may give away too much in your non-compete. Never is a long time. And as my next guest will point out, there may be a point in time in the future that getting back into the same industry you’re selling out of makes sense, and it’s appealing. And it’s at that point, you will want to have governors on your non-compete agreement. Here to tell you how he got to own his business twice, is Nick Leighton. Nick Leighton, welcome to Built To Sell Radio.

Nick Leighton:

Nice to meet you. How are you doing, John?

John Warrillow:

I’m great. So tell me about NettResults. I think people are familiar with an advertising agency model, but how were you guys different than the traditional agency?

Nick Leighton:

Well, we started it in 1999. I was in the Middle East. So, the agency was based in Dubai. Advertising, marketing, public relations. And I used to work for a technology company, a listed technology company in the Middle East. I’d worked all around the world for them and ended up in the Middle East. And my problem was that I couldn’t find agencies or staff that understood technology, understood marketing at a Western level, but also understood the Middle East market. So the opportunity arose that I should start the agency. And I was very fortunate back in 1999 there weren’t very many sophisticated agencies or anything else going on in the Middle East. So I spoke to maybe four or five, six, other of my friends who were marketing managers of technology clients and said, “If I start this, will you come?”

And they said, “Yes,” because they had the same problems I did. So I was very fortunate. I started the agency. Within the first month I had five well-respected brand name tech companies we were doing work for. So we grew very quickly in that first year and within that first year, Dubai at that time, wasn’t known, but Dubai announced Dubai Internet City, which then attracted all these other tech companies from around the world. So I was lucky to be in the right place at the right time, in the right industry. And we grew that agency for a number of years, based on that strength of technology and doing marketing for those kinds of companies.

John Warrillow:

How big did you get it before you decided you wanted to sell, either revenue or number employees, whatever you’re comfortable sharing?

Nick Leighton:

Right. So, there’s a number of things there. So size wise and office wise. So we were based in Dubai, which is where the technology companies were and it’s actually where the media hub for the region is, so that made sense. We then started having clients in Abu Dhabi, which is 19 minutes down the road in the same country. That’s great. We then had clients who really wanted to hit Saudi Arabia. And that’s a big challenge culturally, legally. But Saudi Arabia is where the money is for that region. So then we had an office in Saudi Arabia as well. So we had three offices. We’d have about 12 full-time employees at any given time.

And then we would have freelancers that we could use in every single country across the Middle East. And I say that in a broad way, because what some people think of the Middle East is not what other people would think. So some people would come and say, yes, we worked on in Iran or Iraq. And that’s what was in the Middle East. Some people think Turkey is, or isn’t. Some people go as far as Morocco. So we had a lot of freelancers depending on our client and their reach would depend on what teams we put together.

John Warrillow:

It’s so interesting because I’ve never been to the Middle East. And to me, it’s this exotic place where I totally… I have these probably stereotypes of what it would be like, but I’ve never actually been. So I probably would be [inaudible 00:05:43] to actually go. But I probably have all the same stereotypes that you and others may have had before you got there.

Nick Leighton:

It’s rapidly changing. And if I think about some of the large events that happen at a global scale, people would then project their opinions about that one with the work we were doing in the Middle East. And in fact, right at the beginning, when we started, we produced videos, we said, your perception of the Middle East is this. And it would be war and destruction and poverty, but really it’s this. And we show the luxury hotels and businesses thriving and people enjoying themselves. And when in New York, the trade centers fell, there was what’s called the Trade Center in Dubai, which was, I don’t know, a block away from my office. So people were calling me up going, “What’s going on?” and all that tanks going down the street. And of course there were. Business continued.

It was some interesting times, but because there was so much opportunity in the region, the large clients that we represented came. So we were very fortunate. And we grew, and we had revenues around the 2 million mark for an agency, which is highly desirable. We were very lucky we could hire, we could charge [inaudible 00:06:56] at a great rate. We were lucky enough to be able to do that. And that was two areas that from an agency perspective, if you can specialize, you can obviously charge more money. So we specialize in technology. So that was it.

John Warrillow:

A couple 100 grand in revenue per full-time employee almost. So that feels pretty-

Nick Leighton:

Exactly.

John Warrillow:

… Profitable relative to, I’m used to seeing 100, 150 grand. So that would be a higher end of it.

Nick Leighton:

And then of course we had this whole structure around us that we didn’t have any tax to pay because Dubai [inaudible 00:07:25] remember this is a tax-free area. So, this was massive. So the way we structure our businesses and how we could pay people was all very different. But, we had additional expenses that other people didn’t have. We’d often have to bring people into the region for our team because they didn’t exist locally. The talent pool was quite shallow. And that has its own challenges, people would come in and last three months, and they’ll just not like the region and leave.

John Warrillow:

What made you want to sell? What was there a trigger that started the process for you?

Nick Leighton:

There was. And the Middle East at the time was fantastic, but it’s a very itchy place. I think in all the years I lived there, I don’t think I stayed more than three months actually there without traveling. And I was a member of EO, at the time in Dubai, which had great members. That was fantastic. And there was an international conference university in Los Angeles. It’s almost just somewhere I’ve been to in a leap previously. And I actually went to one of the events for the university, which was, you had Ms Playboy Mansion and I bumped into a girl who looked like a bunny and told me her name was, July 98 and I fell in love and I ended up marrying that girl.

John Warrillow:

That’s awesome.

Nick Leighton:

But she was based in California.

John Warrillow:

Was she really July 98?

Nick Leighton:

Well, I realized that she wasn’t quite, but there were already five or six bunnies there wearing black cocktail dresses. And the best thing is, she wasn’t a yeoman, but she’d actually gatecrashed the party. So if you’re going to gatecrash the Playboy Mansion, I guess you just wear a black cocktail dress. So, when I see people moving from country to country, I normally ask them a question, are you running to, or running from? In my case, I was running to. So we decided that California was going to be our base and not Dubai.

I was lucky by that stage. I actually had a mansion director already in place. So I spent the next couple of years regrouping the agency that it was not dependent on me, which is hard to do for a marketing agency. Often it becomes owner dependent. So, I had enough time to do that. I knew that I had to move out of the region sooner or later. But then when we became pregnant with our daughter, my wife pretty much said, “Okay, it’s time for you to not be there and not travel there.” And, when I first met my wife, I’d come to Southern California for a week, every six weeks, and then gradually that reversed to I’d be back in Dubai a week out of every six weeks.

John Warrillow:

Nick, I think a lot of people listening to this are going to be asking themselves, what tactically, very specifically did you do during that time to enable your agency to work, to run without you. I heard, hire a managing director. So, that’s great. Can you think of any, maybe one or two other very tactical things that you did to enable it to run without you there?

Nick Leighton:

Yeah, absolutely. So, I mean, you hear this from all kinds of… if you go to EO events or all the entrepreneurial or leadership events, you hear a lot about making sure you know why you’re in business and the planning. And all the business owners that I meet, they know they need a plan, but not very many of them really have a plan. We became very regimented in every year, sitting down with the team, spending two days out of the office and building that plan and getting the buy-in from the whole team. That was really important for getting the momentum going at the beginning of every year. And we would start with, getting our revenue goals, et cetera, why are we in business? But we would drill down to the client level and decide, how long do you think we could keep them, what we thought the opportunities for them were? So we had a very defined plan which then led to monthly goals, which then eventually led to keep performance indicators for everyone within the organization and the [inaudible 00:11:24].

John Warrillow:

And did you follow any one system? I’m aware of a number of different platforms that have some methodology. Did you follow one of the methodologies?

Nick Leighton:

At the time, that was really a hybrid. So, Vaughn Harnish, he has a great program behind him and so do other people and we melded several together.

John Warrillow:

Got it.

Nick Leighton:

That made it work for us. And that’s legitimate.

John Warrillow:

So one of the tactical things you did was some really comprehensive planning, you hired a managing director, is there a third thing that you could point to that enabled your agency to work without you?

Nick Leighton:

You have to let go. And that’s one of the hardest things. If you build a company yourself, is to say, you know what, someone else can also sign checks. Yes, I don’t need to be on every call and yes, the team can get themselves out of problems. So I actually learnt from hearing other people speak when you make yourself hard to people to get contact with you, if you put up barriers around you, people actually deal with things themselves and they solve it themselves. And for me, it happened almost accidentally. The time difference between Los Angeles and Dubai’s is 12 hours or 11 hours, depending on the time of year. So automatically there’s a barrier to entry. The barrier for communication was the beginning of the end of the day. During the day, my team had to figure it out. And that I think was really powerful.

John Warrillow:

A forcing function in and of itself, is the 12 hour time difference of that. So your wife comes to you and says, “Honey, we’re pregnant, time to cut the cord. We’re not commuting back to Dubai every day.” What did you do next to market this business for sale?

Nick Leighton:

So at that stage, I put in a new general manager, someone who had a lot of experience in a very large agency, global scale. And he knew that the remit was that when the time was right, I wanted to be out of the agency. And so that’s an opportunity for him. And it was opportunity for him to leverage his relationships, to see who might be that good poach. So.

John Warrillow:

In what way did he benefit from the sale?

Nick Leighton:

He was going to get a percentage ownership of that. And was going to be the guy running the agency, that was the intent to do that. So we wanted to find, poach so very specifically that was not already in the region. Someone who wants to come into the Middle East region and probably needed that base of a good leader already established.

John Warrillow:

How did you structure? Because I know that’s another question a lot of our listeners grapple with is, structuring the compensation for their general manager to president role. So there seems to be a few different ways to slice it. One is, you pay him a salary and some sort of a success fee if you sell the company, another is to give them equity as a gift, others sell equity, others keep options, I can’t think of other things, Phantom shares. How did you structure it?

Nick Leighton:

Well, so the first structure wasn’t the best structure. Before the process, I heard, I experienced that everyone who is an owner in a company or an agency gives more. So I had this grand idea of offering ownership to everyone in the agency. So I want to change everyone’s business card to, I’m an owner and accountant [inaudible 00:14:56], owner and translator, whatever everyone’s role was. Put together this great elaborate plan, launched it to everyone. And it’s crickets. They’re like, “What are you doing?” And they essentially, I guess, didn’t believe that we were going to give them that ownership, because unfortunately in the Middle East there wasn’t really a legal structure to do that. It wasn’t as if we could go through [inaudible 00:15:18] or anything. So I was a sole owner, although legally in the Middle East, it’s slightly different because you have to have an Arabic sponsor.

So ultimately for these general managers, I brought them on, my fear was that we would stop selling, would stop concentrating on growing the agency as we were selling the agency. So I gave them a salary and a package of benefits around that. And I gave them a bonus on new business coming in and I offered them an ownership with the new purchaser. So in other words, if I was selling 100% of the ownership of the company, they would get bought and the new owner would get another [inaudible 00:16:00], if that makes sense.

John Warrillow:

Interesting. I think it does. I’m not sure how you would structure that. How did you structure that piece?

Nick Leighton:

So again, being in the Middle East, the legalities are slightly different. So it was really written on a piece of paper at handshake. And that’s the best we could really do. So there’s a lot of trust involved. But I find with businesses, it doesn’t matter how long that contract is, as long as there’s a common understanding between two people and there’s trust bills, it’s going to work out.

John Warrillow:

Take me back to your presentation. So you were like, “We’re going to make you owner and account manager, owner and a creative director,” whatever. You said it was crickets. What were they reacting to? Did you stipulate how many shares they were getting, what they were worth?

Nick Leighton:

Oh my goodness. There’s a whole structure behind it. I mean, but maybe it was too complicated, but yeah. Based on longevity and seniority level and what you do moving forward and keep performance indicators, and this is what it’s going to equal out to. And if we sell the agency at a certain site, that this amount of money, this is how much money you’d make, and they’re just like, “Look, we’re here because we like the agency, we like doing the work, we want to live here. We don’t care about that.”

John Warrillow:

Really? Wow. That’s crazy. Tech company people listening that are going to be blown away, right?

Nick Leighton:

Totally. I worked in a tech company and I got the shares and it was a huge amount of money. It was one of the major things. So, they just didn’t care.

John Warrillow:

And in retrospect, I mean, you’ve had time to reflect on this. What might you do differently if you were in the situation of wanting to empower your employees, make them feel like owners, try to get them to act like owners? What might you do differently if you had to do over a Mulligan?

Nick Leighton:

Well, I think now you can buy all kinds of tests or assessments [inaudible 00:18:09] to really find out what does motivate them. And I think as businesses entrepreneurs, we’re very misguided and think that everyone else is motivated the same as we were. So anyone who’s listening to this, that entrepreneurial and that building businesses. So yes, of course they’re motivated by money, but some people just aren’t and there are other motivators that they have. So, I think I’d spend more time right now, understanding for my team, what motivates them? Is it just recognition? Is it aesthetics around them? Is it the intellectual challenge? There are so many things that could really be motivating someone beyond money. And I don’t think I was aware of that at that time.

John Warrillow:

What did you come to learn later was more important to them than ownership?

Nick Leighton:

In the agency of the type that we had, it was a diverse thing. So that’s why it’s so complicated. I think even more today, when we have disperse teams to motivate everyone. You’ve almost as a leader or as a manager, you’ve got to know what motivates each individual person. So one style of motivation is not going to work.

John Warrillow:

What did you come to learn though specifically for your folks of which there were 12? What were the themes you heard about what does get them?

Nick Leighton:

So, the freedom was a big thing, which is interesting because you’re in a Muslim society in the Middle East where you don’t have a lot of freedoms. So you have less freedoms in that society than elsewhere. So recognition was important, but freedoms within the business world was important. So back then it was like, oh, one day a week I could work from home, which was unheard of because in an agency culture, everyone’s in there, we have bean bags in the office and it’s bright colored walls and you have a physical table. That was all important. But actually something where like, I just want to work at home for one day a week, sounds a bit crazy now.

So, that was important to people. Being able to set their own times, within the day, some people were morning, some people weren’t, some people had cultural, religious implications that maybe they were fasting or they weren’t at certain times of the year. So for them to all have their own freedom of setting their times and just having a system that we knew could get in contact with people, but they pretty much could come and go as they wanted. And then one of the most vital things that motivated my team was the clients we took. So, our customer base. And although, as I said earlier, we were tech focused. We took one client that wasn’t a tech client and that was charity work we did for the United Nations for the World Food Program. And that alone motivated and also helped us with recruitment more than anything else we could do.

John Warrillow:

Really interesting. What was the name of the program? It was the United Nations and you mentioned?

Nick Leighton:

The World Food Program, which is one of the largest charity organizations in the world. But it allowed people a little bit more meaning in their life. So as well as helping a company that’s listed on the stock exchange, have more profit, they also knew that they were doing something in the marketing world, which fed more kids. It was pretty good that we’d go out and do work in the field as well. And we went into Pakistan and Cambodia and show journalists all the aid of the United Nations are doing, and my team loved that.

John Warrillow:

Let’s go back to the Playboy Mansion.

Nick Leighton:

Sure. I’ll give a green to go, I think, let’s just go. Okay. No. That’s fine.

John Warrillow:

Let’s go back to the sale of the company. So you put these things in place, you are getting the company to run without you through the techniques we talked about. What was next? Did your GM find potential suitors? Did you put the business on the market? Did you hire an M&A professional? How did you proactively get this done?

Nick Leighton:

I worked, we did everything. So I spoke to an M&A guy, and worked with them. They were based out of the UK. They had options, but nothing which was exciting. I think they felt that I wanted to sell that for what’s available right now. And it really was through personal connections. And as anyone who’s gone through the sale of a company, it’s not because you want to sell this month, the next month or next year, that’s not going to make it. If you want a good sale, it’s got to be a strategic buy for whoever is going to take the company. And for us, it was very strategic. The agency who eventually we sold to, was in the right place and valued what we had. So at the time, they valued the team that we had in place, the client base we had, and actually the office space we had was really hard to come by. So there was a real shortage at the time. So they wanted that.

John Warrillow:

Times have changed.

Nick Leighton:

Right. Exactly, right? So it was the team, the client base and that office space that they wanted. And that was interesting to me because as one of the first agencies in the Middle East, with this Western feel, we thought it was our reputation that someone actually wants to come and buy and our reputation meant nothing to this agency. This agency was obviously large, well, not obviously, but was larger than us. And it already had an international reach. They just didn’t have a reach in the Middle East, and that’s what they were looking for.

John Warrillow:

Got it. That’s helpful for sure. I want to go back to what you shared about the UK based firm that was looking for office. You mentioned they came up with a few, but nothing was interesting. What did you think the company might be worth? Did you have a multiple of earnings or revenue or some number in your mind that you thought was a fair number?

Nick Leighton:

Fair, yes. There wasn’t a huge expectation. So, once you’re working between one and $3 million in revenue for what I wanted to do at that stage of my life, if I’d made one time earnings or three times earning, it wasn’t really going to change my life. So that wasn’t so important. I was moving onto something else, not retiring forever, and this is going to keep me going until I die. So, there wasn’t very many transactions, there wasn’t very much history to look at.

So it was very much, well, what could this be worth to someone else? And the Middle East was moving very quickly at the time. So that was pretty hard. So we had to really sit down and go, wow, I don’t know if it’s a multiple, I don’t know if it’s 0.5, 1, 2, 3. We really didn’t have any ideas. Let’s see what people will offer us. And that M&A expert came with… looks at it as a transaction, as a simple transaction for himself. And so I don’t think he was able to show the real value of the agency.

John Warrillow:

And what multiples did they get? You mentioned the offers were not really terribly interesting. What stuff were you getting from them?

Nick Leighton:

Less than a multiple of 1.

John Warrillow:

When you say less than, one times revenue or?

Nick Leighton:

Revenue, right.

John Warrillow:

Less than one times revenue. Got it. Right. Okay. So you thought its got to be worth more than that?

Nick Leighton:

Yeah. I mean, that was the goal and I wasn’t in a huge rush. I mean, it wasn’t like I had a deadline I had to do this by. I mean apart from negotiating with your wife, which is always the most important thing to be doing. But-

John Warrillow:

I was going to say [inaudible 00:25:18] bit of a deadline.

Nick Leighton:

I didn’t have to be here the day that our daughter was born, but it was like, yeah. So it was trying to find the right and having the patience and remembering to stay focused on the actual business while it’s going on. I see too many businesses who the owner, that one person will focus on all the energy you need for that sale. And they forget to look at the day-to-day running of their business. So that was a focus for us as well.

John Warrillow:

For sure. So you get the offers from the UK companies, not terribly interesting.

Nick Leighton:

Right.

John Warrillow:

What next? Where did you go from there?

Nick Leighton:

We were lucky that the GM I put in was very well connected. And the agency space and managed to, and I have no idea how, connect an agency, someone with finances in Saudi Arabia and to connect those two entities and our agency together to put something together happened, I guess, relatively quickly. So, again in the Middle East, there’s no formal accounting, even. So it’s as simple as going well, he has access to a bank account statements and everything you need to know is there. There’s no formal statements or profit and loss. I can even give you, just take everything you want from our bank account.

John Warrillow:

Literally a bank account statement?

Nick Leighton:

Literally a bank statement, yeah.

John Warrillow:

That’s crazy. Think about that, it’s nuts.

Nick Leighton:

Right. So, I mean, we’ve been banking with the same bank forever [inaudible 00:26:49]. I mean, well maybe I say forever. When I first started the agency, again, due to rules and regulations, we worked up an envelope. On the front of the envelope, we wrote all the money that we owed people. On the back of the envelope, all the money that people owed us. And if you have money in the envelope, we were cash posted, life was good. So, because there’s no tax, there’s no formal accounting. So.

John Warrillow:

Oh my gosh. I wasn’t making the connection between not paying tax and the formal accounting. So you literally have a bank statement and the acquirers can look at money in, so this is all the money coming in this month and this is all the money going out.

Nick Leighton:

Yep. And you see that the same legitimate listed companies that’s paying us every month. So therefore you could see how much money we make it, it’s obvious you can see our salary line, then we go done.

John Warrillow:

Wow. That’s incredible. Okay. So you did that. And so this general manager found an agency. It sounds like, that wanted to have a presence in Dubai. Are we able to talk about the name of that agency or do you prefer?

Nick Leighton:

I can’t tell you that.

John Warrillow:

Okay. No worries.

Nick Leighton:

And you’re going to find out why can’t you that. So, we started talking, and it was clear they wanted you to expand into the region.

John Warrillow:

Got it. And so they came forward with an offer. What was your reaction to that?

Nick Leighton:

I’m like, sure. Again, it wasn’t really, I had to hit a value because there wasn’t very much valuation available. It was as much a guess as anything else. So I’m like, “It sounds fair. Sounds good.” And again, it was pretty informal. I mean, documents went backwards and forwards, but they wanted our people, our accounts and our space. And they didn’t care about our reputation or anything else. And so I asked them just informally, “So, what are you going to do from day one? I’m interested to know. Are you going to [inaudible 00:28:50] brand for a little bit and then switch it over.

And they said, “No. Our brand holds on its own. So we’re going to come into the region. And the day that we push you, we are going to rebrand your agency.” And I’m like, “That’s awesome.” And I’m like, “So you don’t really want to buy the NettResults brand?” They said, “No, it doesn’t mean anything to us.” And I’m like, “Well, that’s awesome. Let’s take that off the table. Let’s just give you what you want.” And that was my 11th hour negotiation. And so they didn’t buy my brand. They bought the people, the accounts and the space.

John Warrillow:

And with regards to the original offer that they made going back and forth, I’m assuming that was more than the one times revenue that the folks in the UK were offering. Are you able to share?

Nick Leighton:

It was more than one times revenue. It wasn’t as much as two times revenue. But I felt confident that these people, beyond the money I was selling it for, were going to look out for the client’s, were going to look out for the team. And to me that was important.

John Warrillow:

Okay. So, they come to an offer somewhere between one and two times revenue. You’re like, okay, I think we can get a deal done. Last minute, they’re like, we’re going to drop the NettResults brand. Did they lower the price based on getting rid of the brand?

Nick Leighton:

No.

John Warrillow:

Or did you ask just the same number?

Nick Leighton:

Yeah, same number. It was fine. It didn’t have a value for them. [inaudible 00:30:19].

John Warrillow:

They literally put no value on the brand?

Nick Leighton:

Yeah.

John Warrillow:

Got it. And why was it important to you to hold on to that? At the time, did you want to hold onto it? If so, why?

Nick Leighton:

So, there was no master plant. All I could tell you it was, is convenience. So while I was selling this agency in the Middle East, I’d already started doing some work in the US. There wasn’t a team or structure around it, but I was doing it under the same company name. So I literally said to the acquirer, I’m like, “Well, I’m still using the website, NettResults for work I’m doing in the US, so it’s just more convenient for me if I keep that website, I’ll take down anything about the Middle East.” And they’re like, “Yeah, that’s cool, whatever.” Now, I realize there’s going to be a huge upsell to that. Eventually, the upside to keeping a brand was massive, but finally just did it for convenience sake of same website, some people still know me by that name, seems convenient.

John Warrillow:

Got it. So in the back of your mind, you thought, these guys are crazy.

Nick Leighton:

No, I don’t think they were crazy. Because I knew their brand, I’d known their brand for some time. I don’t think they’d done their due diligence. In fact, I don’t think my general manager had done the due diligence enough to advice them. That, what’s going on. I mean, he had the longer term relationship with them. I was leaving the region and being told as non-compete, I was told I could not work in the Middle East for certain amount of time. And for them, that was really important. For me, I couldn’t be happier. I was going to move to California and be with my wife and my new baby. So, that was an upside to me. And they just thought the clients that we had, would respect and move on over to a new brand and no questions would be asked.

John Warrillow:

Got it. I wanted to ask you about non-competes. So you had to sign a non-compete, well, what did that preclude you from doing?

Nick Leighton:

Pretty much precluded me for two years out of the region, which I was more than happy, in this case, to sign because I had no intention of being in the Middle East for the next three years.

John Warrillow:

How do you put barriers or wrappers or guardrails around that? Because being in the Middle East, there’s one thing you can’t step foot on soil in the Middle East versus work with a brand that’s domiciled in the Middle East, but you weren’t doing that anyways. You were working with these big technology companies that wanted a presence in the Middle East. So, how did you guys put guardrails to make that practical?

Nick Leighton:

I mean, again, it was down to language and a common understanding and a trust that we just don’t want to you see working in this Middle East region. And it was such an easy agreement for me because I had no intention. They knew why I wanted to leave the region. So they’re like, “You can do anything you want in the US, we don’t care, we’re not in the Us.” That’s not a market for us to go after. So they had an understanding. I think they probably could feel the trust. I mean, if you have a wife and a kid in one country you’re probably going to go there. So I think there was trust there. Legally, could they have done very much? I don’t think so.

John Warrillow:

So what happens next? So you…

Nick Leighton:

So, I come to Southern California and I’m doing my thing in Southern California. And then one day I get this call from someone that says,” Hey, Nick, you still doing work in the Middle East?” Someone at a tech company moved a couple of times. I’m like, “Well, no, because I sold the agency.” They’re like, “Oh, really?” I’m like, “I just sold too.” And they say that they have no presence in the Middle East. [inaudible 00:34:09] on that website. I’m like, “Really?” Did a little bit of digging.

And probably about two years later, let’s put it that way, they moved out of the region, which is understandable because I started at the end of 2006. And now we’re looking at eight, it’s beginning to be nine, some recession rumblings going on. So that’s pretty much what happened, that agency withdrew from the region. So I’m like, “Okay, that’s interesting.” And then obviously the [inaudible 00:34:39].

John Warrillow:

So, wait, the agency that bought you retreated from the Middle East?

Nick Leighton:

From the Middle East, right.

John Warrillow:

So, they basically wrote off the entire investment of your company presumably.

Nick Leighton:

Well, I mean, they’ve been there for over a year, so they probably got some money back.

John Warrillow:

What does that have to do with your life in California? Why is that relevant to the story?

Nick Leighton:

So that’s relevant because after recession, I had a couple more people who’d call me up say, “Hey, Nick, [inaudible 00:35:03] in the Middle East. And I’m like, oh, there’s a demand here. And although I’d said, I wasn’t going to be that, I was very happy not to be that, it really was as simple as turning on a website for me to have presence in the Middle East again. So, I’m very fortunate that I have the opportunity to resell a company that I sold already because we turned on a website. I started putting a set of team members down there and often negotiated with my wife, who said, “You cannot go back there.” We have a presence back in the Middle East. We have a team there, full-time team there, and we have clients there. So I sold the agency to people who pushed it for me. And now I’m outside of my non-compete. So the agency with the same branding was able to turn back on and we’re running again. It’s fun.

John Warrillow:

And running up again under the same value proposition, helping technology companies have a presence.

Nick Leighton:

The technology companies, 100% focus on technology clients, with offices out of Dubai, doing our stuff. You see in large countries that you have to specialize locally. And when we’re talking about the Middle East, which is a number of countries, it makes normal sense to be able to specialize, not with the local market, but with an industry, in our case technology and for the international work coming in. So, if we represent zero clients locally, there are no Middle East countries that we work with. We only work with international companies, so coming into the region, we help them with their marketing. So that allows us to have healthy profit ratios, allows us to charge sensible amount of money. And it allows us to stay within our specialization.

John Warrillow:

And do you continue to own the business now?

Nick Leighton:

100% ownership. Yeah, absolutely. And I won’t be offering ownership for the rest of the team so don’t think that’s changed, but maybe they come and ask me, maybe we’ll talk about it. So, I run that agency, but it’s very… how times have changed. I mean, the fact that we’re dispersed now means nothing to anyone. Before previously, well, Nick, you’re not actually in Dubai this week, where on earth are you? But our team are dispersed and that’s totally great.

So there’s way more of an understanding of people moving around, that digital nomads mentality can fly now, which is awesome. So I do that and I have a team run it and they’re very good at what they do and [crosstalk 00:37:34]. Go ahead.

John Warrillow:

Sorry, go ahead.

Nick Leighton:

And so as well as doing that, I wrote a book, and I speak and I coach, but only in that marketing agency space.

John Warrillow:

I love it. For folks who want to execute something similar and I’m not suggesting anyone listening to this, do anything illegal, nor did you do anything illegal. This was totally above the board, but there are ways to do this illegally and get yourself in all kinds of hot water and all kinds of troubles. We want to avoid that at all costs. So let’s just break it down for folks. Number one, you honored your non-compete. You had a two year non-compete. So you honored that to begin with. And so it was two years. Did they push for a lengthier non-compete and did you limit it to two years? Do you remember? Was it two years from the start?

Nick Leighton:

I don’t remember negotiating, particularly. Honestly, I would have given them one though, because I didn’t think I was ever going to be back there. So, I don’t think that was an issue.

John Warrillow:

Got it. Okay. So there’s a two year non-compete, when they purchased your company, I’m assuming they bought your assets as opposed to your shares, is that correct?

Nick Leighton:

Mm-hmm (affirmative). Assets in the Middle East, it’s a business license and you have to be aware of, so that was all of that.

John Warrillow:

Talk to your lawyer, neither of us from my knowledge are lawyers but talk to your lawyers about that.

Nick Leighton:

Absolutely.

John Warrillow:

But if you’re buying the shares of a company, you’re inheriting all of its long-term liabilities and so forth. So, that’s not what they did.

Nick Leighton:

Absolutely. There was no shares, legal structure set up. So, absolutely.

John Warrillow:

Got it. And the third thing you did wisely was, you maintained ownership of your brand and your website, which is something that they gave up freely. They didn’t want it, they didn’t have any use for it and you were able to carve that out. So that was another, that was a third thing you did.

Nick Leighton:

Right, Now, that’s not something that I dreamt of. I know that other agents have done the exact same. In fact, I know Saatchi & Saatchi grew to one of the largest agencies by doing an exactly the same style when they were a very small agency with only about a dozen people, they sold to a larger agency and in the 11th hour, they said, “You can buy us, but the new agency has to be called Saatchi & Saatchi.” And that’s a true story. So you’re going to find people from the beginning of Saatchi & Saatchi, they’ll tell you that story. So I think brand, as far as what you’re doing, if you’re an owner, if you’ve built a company, keep hold of that brand.

John Warrillow:

If you can. It’s not always possible. Obviously, the unique situation that you had, enabled you abled to do that. So, that’s awesome. Again, I want to reinforce, I’m not suggesting that anybody go away and not honor their non-compete or do something that’s underhanded, none of which you did, but at the end of the day, as long as you’re honoring the terms of your agreement, then there are ways that you can get back into the business that you were in before, perhaps even in better shape than you were before selling it. If you play your cards right and you’ve got the right buyer that has different motivations, as you said, it wasn’t like they wanted to become a global brand. They were really focused on the Middle East. And that was an area they [inaudible 00:40:57].

Nick Leighton:

And I think part of what made this exchange easy, and I see a lot of people who don’t go through a happy M&A experience is because I think they approach this negotiation as people on opposite sides of the table. And we didn’t. I think all the parties involved, had trust even though we knew each other for a short amount of time. There was trust, there was openness, transparency. So, there wasn’t any games being played. I was open. I’m like, “I’m moving out of the country for this region.” And, they told me why they wanted to come into the region. So that trust element and just working with the other party, allowed us to very quickly negotiate and to find a win-win for everyone at that time.

John Warrillow:

And it worked out and here we are, here you are to tell the story. Tell us about the book, where can people get it? What inspired you behind?

Nick Leighton:

The book is Exactly Where You Want To Be As A Business Owner’s Guide to Passion, Profit and Happiness, by Amazon or Google drops. And another time we’ll talk about the stories, but that worked, but I did feel like the United Nation’s allowed me to be in crazy situations, like hijacked in Pakistan. And we went to crazy places in Cambodia. And that really allowed me to think as a business owner, where exactly do I want to be and what do I want to be doing with it? Because I believe it’s more than just hitting the first and then the next million dollars.

John Warrillow:

Well said, indeed. And we’ll put links to the book and to NettResults in the show notes. Nick Leighton, thanks for doing this.

Nick Leighton:

[inaudible 00:42:38]. This has been so much fun, thanks indeed.

John Warrillow:

Hey, if you like today’s episode, you’re going to love my new book, The Art of Selling Your Business. The book was inspired by the cohort of my guests over the years, who’ve been able to negotiate an exit far better than the benchmark in their industry. Sometimes it’s two or three times more than I would’ve expected. I was curious to understand the tactics and strategy to these entrepreneurs and what they do differently from average performers. The result is a playbook for punching above your weight when it comes to selling your business. To learn more, go to BuiltToSell.com/Selling, where we put together a collection of gifts for listeners who ordered the book, just go to BuiltToSell.com/Selling. Built To Sell radio is produced by Haley Parkhill. Our audio and video engineer is Dennis Labattaglia. If you liked what you’ve just heard, subscribe to get a new episode delivered to your inbox each week, just go to BuiltToSell.com.

Outro:

Thanks for listening to Built to Sell Radio with John Warrillow. For complete show notes, with links to additional resources, visit BuiltToSell.com/Blog. John is the founder of The Value Builder System™. To find out how to improve the value of your business by 71%, visit ValueBuilderSystem.com. John is also the author of Built To Sell: Creating A Business That Can Thrive Without You and The Automatic Customer: Creating A Subscription Business In Any Industry. Connect with John at Facebook.com/BuiltToSell or on Twitter @JohnWarrillow, W-A-R-R-I-L-L-O-W. Thanks for listening.

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