3 Ways to Play an Industry Roll-Up

Transcript

Disclaimer: Transcripts may contain a few typos. With most episodes lasting 60+ minutes, it can be difficult to catch some minor errors.

John Warrillow:

These days, a lot of industries are going through a roll up. What’s a roll up? A roll up is where usually a private equity company will come into an industry, they’ll buy a platform company and then they’ll buy some additional companies around it to try to make a collection that they can go on to sell four to five or seven years down the road. They make a lot of money when it works, but it does have some downsides.

Typically, you’ve got to put some of your proceeds at risk in the form of taking shares in the rolled up entity. Now that may work out spectacularly well, but it can also be a risk whenever you’re becoming a minority shareholder that you don’t necessarily control the outcome of the company, there can be problems.

My next guest, Jon had a great experience selling his company into a roll up situation. He does a great job of describing the three potential routes you can take when industry starts to go through a roll up. He talks in particular about the downsides of remaining independent. Think of the game of musical chairs.

When the music stops, you’ve got to grab a chair. And if your industry is rolling up to some extent, that’s an analogy you might think about. When the music stops, you want to be able to find a chair because the companies that do don’t go through the roll up and choose to remain independent often get rolled over as John will explain in this interview.

He also talks about add backs and how they can be both blessing and curse to your deal. In particular, you can help improve your EBITDA by making some adjustments, but you’ve got to be able to make the case to the acquiring side that those adjustments are legitimate. He talks about add backs, defines it and how he approached it in his deal which he’ll explain.

He also talked about driving a sense of urgency. Oftentimes, deal get protracted and often you will lose negotiating leverage as the seller, the longer the deal takes to close. And he talks about how they drove a sense of urgency in their deal, here to tell you his entire story is Jon Claydon. Jon Claydon, welcome to Build to Sell Radio.

Jon Claydon:

Thanks so much for having me, I’m really excited to be here.

John Warrillow:

So I’ve got Streamline Marketing as an agency, but you guys were a special kind of marketing agency. Describe what you do.

Jon Claydon:

Yeah, so we were I guess the high level description would be a partner marketing agency. Most folks who are familiar with digital usually refines itself down to affiliate marketing is really what our specialty was. But we changed a bit of what we call the industry, it’s more so described as partnership marketing these days. But folks that have been in digital marketing know it as affiliate, and-

John Warrillow:

So let’s say you identify someone who’s got a big Instagram following and you have a brand that wants to sell more, I don’t know, chocolate bars to teenagers. You would say, “Great, this guy’s got a ton of followers on, whatever, TikTok, Instagram.” And then you would do some sort of tie up with them? How did it [crosstalk 00:04:40].

Jon Claydon:

Yeah, so you just described one type of affiliate. And so affiliates actually span any type of entity that you could think of that is digital in general, could be considered an affiliate and really what affiliate marketing means, it’s the payment mechanism for working with that partner. So for example, that, that Instagram influencer who’s selling candy bars, the brand to pay that influencer when they drive sales so they actually give them a commission or a cog of the transaction.

A more common example and most listeners would be familiar with this would be, if you’ve ever shopped online, you’d look for coupon and you’ve gone to RetailMeNot, and you’ve browsed on their site, you found a coupon for Nike. If you click on that link on RetailMeNot, you go to Nike and you buy that pair of shoes, RetailMeNot is given the commission from that.

If you are reading articles on Buzzfeed or Business Insider that are talking about specific brands, and they have links in those articles that are telling you to go buy this product, oftentimes, those are affiliate deals. We work with podcasters, we work with bloggers and mommy bloggers, and any entity again could really be an affiliate. It’s just that the way that you pay them is generally compensated on a percentage of the sale or a commission, or maybe paying them for driving a lead or something like that.

John Warrillow:

Got it. How did you make money? What was your business model as a marketing agency?

Jon Claydon:

So we were paid by the brand. So we were effectively the agency of record. So brands would hire us and we would charge both a retainer for our services and then we would charge performance on top of that retainer. So usually, percentages of revenue or percentages of incremental revenue for growing the business, we would have some sort of performance kicker. And our pitch to the brands was always, “Look, we cover our costs which is really the model we built with the retainer. We’ll make a little bit of money as a company, but it keeps the lights on, but really the way that we are incentivized as an agency is to hit this performance benchmarks for you so we both win in that scenario and it worked out really well in our business.

When we did actually exit, it was roughly 50/50 in terms of that performance revenue which was somewhat variable, but fairly consistent, it didn’t range that wildly and the other 50% was recurring revenue retainer from our clients.

John Warrillow:

How did you measure the performance kicker?

Jon Claydon:

So it was either again, we had a number of different ways in which we built them, but it was always based on the revenue or spend in some cases that was directly in the channel that we were managing. And sometimes we wrote contracts that were incrementally based. So if they did let’s say on average over 12 months that their channel did a $100,000 dollars in revenue, we were going to take 2% for anything that we did above that on average. So if we, then over 12 months, each month the program was doing $200,000 in revenue, we would take that performance that we’d made from that.

John Warrillow:

What were the biggest areas of dispute you had with brands around the performance kicker? What caused disputes or misunderstanding?

Jon Claydon:

So fortunately we didn’t have many with brands. Again, the reason and we can go into this and … Our business grew very quickly in our industry because we came in and I think we offered a bit of a different type of service model to brands that were looking to get outsourced help from managing their partnership or affiliate program. Our industry in affiliate in general has a bad rap and it has bad reputation for legit reasons I would say.

There’s been some nefarious actors in the space. A lot of times, you could really question whether or not what affiliates in general were doing if it was incremental to the brand. There’s just been a lot of stuff over the years that has really cast a bad light in the industry. And honestly, I think it’s justified. We came in with the mindset, like we’re doing work that is going to be quality for the brand.

We’re not going to do things that are essentially defrauding them like some of the other agencies in the space were doing right. And so when we were driving performance, it was very much aligned with what the brand was looking for. So we had their main objectives of KPIs. So for example, say it’s a brand that’s wanting to grow their new customer base, that’s what their main directive is.

So we would build strategies around driving new customer acquisition through the affiliate channel. And most of that’s done by making consumers aware of a product. So we’re working with content affiliates and bloggers and influencers, and really upper funnel, highly valuable types of partners. And so when those partners are driving revenue, it’s really justifiable just in terms of like, “Hey, does this makes sense? This is really good for the brand.” And the brands bought into it.

We were able to weave that story together and explain it really well. The other thing that we did and I think was really helpful for our business and helped us grow is we actually built an analytics suite that lived on top of our service level. So we pulled in data from the affiliate platforms that were tracking all this stuff, and then we also pulled in internal data from the client. So we would pull in start from Google analytics or I’m not sure whatever internal attribution system our clients were using.

And then we would actually show them like, “Here is your full at view, and this is what we’re doing in affiliate. And this is why it’s incredibly valuable for you. And this is why we’re very much justified in charging you this pretty hefty performance fee and our teams earned it.” So there wasn’t too much dispute in that regard.

John Warrillow:

And the analytics suite. Did you leverage something off the shelf or did you build it from scratch?

Jon Claydon:

So the front on end was Tableau just in terms of the visualization of it. The back end, we built all our APIs and we pulled into an AWS database and, duct-taped it together so they worked pretty effectively. We had teams of analysts that were embedded across our client teams that were also giving a lot of really valuable insights to our, A, to our client teams then to our clients. And we were really having data organization and that definitely helped us both as we were running the business, it helped us be really efficient and also at exit, the fact that we had sort of a tech-enabled service business was very enticing for potential buyers.

John Warrillow:

I want to come back to that. How big did you get this company in terms of revenue or number of employees, whatever you’re comfortable sharing before you decided to sell?

Jon Claydon:

Yeah, so we were mid seven figures in revenue. We were a little over 30 people and we were highly profitable. So our overall net EBITDA was roughly around 50%. So we were really profitable from the EBITDA perspective. I think two reasons, one, all the efficiencies that we talked about just in terms of how we ran our business, we were really good.

We earned these performance fees that, again, you could get the same service that we were offering probably for a lot cheaper from other agencies. They just wouldn’t be able to do the job that we were doing. So there was the performance component of it. The second component is I ran the business really lean. We didn’t really have a marketing team. We outsourced it to a friend’s agency that did some really good SEO work for us. We didn’t really have a finance person, we had an outsource bookkeeper.

We had one sales guy who was great, but no outbound stuff, it was all based on internal referrals and word of mouth. And so it was a very lean business in the sense of the operational structure of what most companies might look like if they got a little bit bigger than that.

John Warrillow:

Yeah, yeah. Make sense. What was the trigger that made you want to sell?

Jon Claydon:

So I think there’s two sides to that. One is the personal side and then one is the industry side. So I guess we can go the personal route first and then maybe the industry stuff that was leading into that. So I started streamline and with a couple other … I founded it, I had a couple other partners early on, but they were not there for long.

They all wanted to keep it a smaller thing. And one who really was my co-founder with me, she ended up getting a massive opportunity to go by a startup and she couldn’t turn it down. So she left and long story short, I dragged the thing from zero to where it got to on my own. And that was a hell of a experience to go through.

And I’m sure anybody listened to this, you know the turmoils of going through entrepreneurship and the ups and downs of it. We were growing so fast as a company that we had to reinvest every dollar that we made back into the business. So I wasn’t pulling a lot of cash out. We also service business, the cash flow of challenges that we had were really tough, we’re like we’re doing work for 30 days, then we bill a client they’re supposed to pay us 30 days later.

They really pay us 60 days after that. Some of our clients were really, really big and they just paid net 90, and that was their net payment terms. And there was no negotiation around that. So your outlaying cash flow for six, seven months until you get really any dollar in the door from some of those brands. And so financially while we were profitable, I wasn’t pulling a lot of money out of the business. So there were some things that went into that just from an overall lifestyle and wanting to be able to support myself and things that I wanted to do.

And the other part of it, it was really … It just became taxing from an emotion and stressful perspective of running a business. We had some falling out with a couple of partners and horror stories that go into that, and I’m sure that folks are … There’s plenty of those that go around, but it was just stressful. And I ended up in 2019, I was 35. I got shingles.

And for those of you don’t know, shingles is a really nasty rash and a neurological nerve issue that happens. And people get it are usually in their 70’s or 80’s. It’s not a normal thing for a young guy to get. And I went to the doctor and they gave me some medicine. I was like, “Oh, this is really annoying, but I’m going to keep working through it.” And so I did, and I just … Well, I wasn’t sleeping.

I’m working 16, 18 hours a day, just hustling, just trying to get through it, and eventually it got better, but then I started getting this, my throat really started hurting after the initial rash had down away. I was like, “Oh, this is really weird.” And I just kept working through it, and it was right before Q4. So really big time of the year for us. And my throat got so sore I could barely drink water.

We ended up having that company offsite retreat that weekend. I went to it, I showed up, [inaudible 00:15:33] been like a month because I’ve been at home and they were like, “Dude, you don’t look good.” And I was there for a couple of days, and at the end of it, my right hand woman, Hailey was like, “Look, I’m taking you to the hospital.”

So went to the hospital, and what had happened is that the shingles had actually spread to the inside of my throat and my esophagus, and it ruptured, and the ER doctor sat me down after they like sorted me out. And I was very, very fortunate. Had I waited a little bit longer to go in there, this could have been really bad. And the guy sat me and I was like, “Look, you could have died.”

No joke because I wasn’t really able to eat, I wasn’t getting fluids in me. So it was a huge wake up call. I spent a few days in the hospital, it was really scary and but he is like, “Look, this is stress related. You’re working too much, this is what happens.” So that was a personal thing. So there was some tenderizing that happened on that side of the house where I was like, “Okay.”

John Warrillow:

Tenderizing, that’s perfect.

Jon Claydon:

Maybe working yourself to death is not really what you want out of it. And that was in the middle of 2019. So personal stuff going on. Look, maybe like you’ve done a really successful, everybody knows you’ve built a great business, that’s really something that’s cool, but like what’s the next step that you really want to do? Do you really want to keep doing this for another five years? Do you want to have another house there?What are you doing?

So there was a lot of that stuff spinning around in my head. Coincidentally, just as a side note, as I got super sick and as I had to take a step back, the funny thing is the business actually got much better at that point because I relinquished control of all the things that was trying to hold on to that my team was actually better at doing than I was doing. So a little tidbit for anyone listening, don’t don’t try to do everything yourself. Finally learned that the hard way.

So there’s the personal stuff that was going on, and then the other thing I think in our industry that started to happen. There was another agency that had done a private equity deal about three years prior to that. And they had rolled up a couple other agencies underneath them already, and there’s not a lot of agencies in our space.

Really there’s 10 or so that are of any reasonable size in the US, and I just saw this trend happening in the industry. And usually when industries consolidate, there are three positions that are available to agency owners. One is you are big enough to be the company that is rolling up other companies. You are probably 5 million plus in EBITDA, you’re bought by private equity firm, they give you a bunch of money. You go out and you buy other agencies, you roll them up, that’s one option.

The second option is that you are an attractive enough entity that you would be acquired by one of these holding companies and you roll up with them. You probably bet on which one you want to roll into, and there’s been reasons why you might go with one or the other and then the third position you get into is you get rolled over and I did not want that to happen.

And we’re seeing that now after we’ve done the deal, our firm is the company that did end up selling to you, worth 260 people. There’s another big private equity of that group that’s a couple hundred people as well. And then there’s all these agencies that are like 10, 15, 20 people, and they’re all racing to the bottom in terms of price. They’re big clients realize that this is not really the type of business that can service me and the business that I run and so they’re, they’re losing bigger clients.

It’s not a fun place to be in right now if you’re in this smaller agency side. So I was a bit of ahead of the curve in terms of realizing that was going to happen. So I really started looking at things very heavily, a couple years really before I did the exit, and I just sort of saw the trend going that direction and wanted to make sure I was ahead of it.

John Warrillow:

Love it. So platform company for those listening, and I think certainly in the marketing services space we see this, but I think the same selection of options exist in other industries where there’s a private equity group will purchase a platform company on which they want to build and make tuck in acquisitions, or you refer to it as a tuck in or an additional company and then rolled over meaning eventually these companies get so large and dominant that they’re hard to compete with.

And the folks who left will remain independent and miss the chair at the musical chairs game end up struggling for the scraps. It’s something that we’ve seen in other industries as well for sure, but that’s a really helpful framework for folks to think about. I want to go back to the personal side of things. As you reflect on it, what I’m hearing and I’m piecing together a couple of things here.

So tell me if I’m wrong Jon, but one of the things I heard was you were really lean and you were able to squeeze out 50% profit margins because you were lean, in part one salesperson you’re outsourcing the marketing and the SEO stuff. Presumably, that there’s a double edged sword there, right? So yes, it’s very profitable, but it requires all hours in the day and night to duct tape it all together.

Did you think about rather than sell, did you think about building out some expenses, hiring some C level talent and building out the team to make it less dependent on you and then do another tranche of growth? Was that one of the options you considered?

Jon Claydon:

Yeah, absolutely. And I think, again, the metrics behind, again, in service businesses, the acquisitions, there are certain levels. No one will really buy you if you’re under a million dollars and need a job. That’s like you’ve got to get north of that for it to really make sense for the buyer and for you as a seller, right? You’re going to get a two to three X multiple beneath that. It’s just not really worth your time to do it either, but it’s like a million dollars plus you’re an acquisition target again, you’re one of those companies that a portfolio company will buy and roll into that. But in order to be bigger and larger and go to that sort of next level, that benchmark really is four to five million, right?

John Warrillow:

In EBITDA.

Jon Claydon:

In EBITDA. And so for us to get to that number, we would’ve had to invest in a full fledge sales team, both and we even had an external going out as opposed to just rely on inbound leads. So full on sales team, we’re really building out HR department. And then the third thing would’ve been marketing and then realistically, I would’ve needed a COO to really run things.

I’m very much the visionary head in the clouds. I make more problems than fixing things when it comes to day to day operations. I am 100% that character. And I had some really amazing individual contributors who there’s this woman who ended up running our client services team, Holly, who’s absolutely exceptional and amazing, but she probably wasn’t necessarily at the caliber to be the COO and be that really right hand person, I was never able to find that person.

So I could have gone out and done that, I could have done the, “Hey, we’re a high growth company.” We had a lot of press and exposure in Seattle which is where we were based. It would’ve been easy enough to find maybe potentially good caliber people that were at that level and then maybe a marketing lead and a sales lead and an HR lead, but you’re talking about adding four senior expensive people onto it. And so your EBITDA which is north of a million now then goes to maybe underneath that once you bring on those people.

And then you have to grow in a pretty, pretty … Exceptionally at that point to get to that four or five million dollar mark, you’re talking about maybe four or five X in your revenue at that point to get to that number, right? And so I did this thought process of like do I really want to invest in this? And this is also, I’ve bootstrapped this thing. I didn’t take any outside capital. There were many times where I wasn’t pulling a salary, I didn’t pay myself.

At one point, I think I had $100,000 in credit card debt just from putting money into the business and doing another. So it’s like did I want to go to that process again? And that was a tough decision. I was thinking about it. I really was, I was talking to folks, I was actually looking for that right hand person. I was exploring it. And ultimately, I think what the deal that I ended up doing with the private equity group, we’ll get into this specifics of that in a minute.

It gave me the immediate liquidity that is completely life changing and great. But it also, I had a significant stake in the new venture that I’m in. So that the hope is that that will actually return much more than the initial liquidity event.

John Warrillow:

Great. Love to get into that now. So you have this incredible, these scary health event, and then at the same time, the business is going through, the industry is going through this sort of consolidation phase. What was the next step? Did you, did you hire an M&A professional? Did you market the business yourself? What did you actually do proactively?

Jon Claydon:

Yeah, so I mentioned before, it’s a pretty small industry. Everybody knows each other. And so the guys that were potential acquirers, there were a handful. I knew both direct competitors that had PE money in our space. And I also knew larger portfolio of holding companies that were PE back that didn’t have an affiliate practice or a partnership practice, and it talked about wanting to explore that.

So I started having conversations with a number of these folks and had throughout the years. We had hypothetical conversations with our direct competitors about like, “Oh, what would it look like if we put our companies together?” We’d kick the tires on this throughout the years. And again, the one piece of advice I might give to anyone is even if you are competing with people, at some point, they may end up wanting to buy you, or you might want to buy them, so keep it friendly.

John Warrillow:

Yeah, a friendly competition.

Jon Claydon:

The deal we ended up doing, we had taken a lot of clients from them over the years, but we always did it and vice versa to be fair, but we always kept it cordial and respectful, and we worked together and we actually, I think all were advocating for the advancement of our industry. So if I’m successful, they’ll be successful and vice versa. And so we always had a really like positive engagement with each other, but I was exploring conversations with some direct competitors, also some other large and holding companies.

I talked to a couple M&A advisors who really, their value they were trying to sell in was, “Look, we can introduce you the buyers.” And the point in the end of 2019, I was like, “Look, I know everybody who’s going to buy me. I don’t need you to do that.” And so I decided to go at it on my own. And the one group that I had mentioned that had taken PE money a few years prior and rolled up a couple other agencies, we got into some serious conversations towards the end of 2019.

We disclosed some of our financial information. They said, “Look, you’re big enough for us to do a deal with, we really want to put this together.” They did give me an LOI. We did a couple of turns on it, negotiated. When I say we, I did it. And we actually got to point where I was happy with the number at the time and the size of the business. We had just gone through, again, some of that tenderizing stuff that I had talked about and we were it was enough money where I did the math on.

It was like, “Look, this is great for me. This is a life changing amount of money. I think it’s a good opportunity for the employees as well.” This is going to become a much bigger agency, and it is a really attractive pitch to me personally because I knew the guys really well who were co-CEOs of this other private equity group. And it would’ve been really fun to work with them. I’d been good friends with them for years.

I liked the PE buyer, he didn’t have a lot of experience in our space, but I thought he was a good guy and I liked the firm. And so it all looked really good. So we ended up negotiating, doing a few terms and I signed an LOI at the end of 2019. So that was LOI executed number one, that was the first one.

John Warrillow:

Okay, I have a feeling there’s a number two, but let’s just get into number one for a second. So the LOI number one, this is a private equity backed competitor. So it’s a marketing agency that’s got a blank check from a private equity company to go buy other businesses essentially, that’s the pitch, got it. And so when you say you did a couple of turns, again, I’m asking on behalf of listeners now, they’re probably wondering what did you negotiate? What were the deal points that were important to you to work through?

Jon Claydon:

Yeah, so again, there are standard industry multiples that are not really disputable. And again, it’s like at the million dollar threshold, you’re going to get four to six X EBITDA which is right around where we were at that point. And you’ll get a higher multiple if you have maybe better marketing clients, if you have less concentration risk, if your client retention is really high.

There’s things that’ll move it one way or the other. If you have more recurring revenue as opposed to variable performance stuff. So there’s a standard multiple and ours ended up we knew it was going to be somewhere between four and six, as we were negotiating things. What really was the negotiating factor were things like add backs.

And we were growing very, very quickly as a business. There were a lot of things where I was always cautious in terms of hiring ahead of new business. So we knew we had exceptional close rates, and we knew the certain times of the year we would have more companies coming to us looking for support. So everyone, retailers would be signing up agencies in the middle of the summer towards this end of the summer, because they want to take advantage of Q4, right? It’s the big time of the year for them.

So we knew we’d always get a ton of business then. So we’d start hiring people in like May. We knew we’d put them on accounts in September. We’d want have them trained up, our industry’s a little difficult and that you can’t really find a lot of talent that knows our space that well. So we try to train people as much as we can. And so we’d always be building ahead. And so if you look at our trillion 12 months in our books, it may have been 750K or something like that. And there were a few other pieces I had bought out a partner that was a sizeable add back to it.

We had all these discussions about like, “Okay look, well, even though it says 750K, I could really clearly show you, it should be like 1.3 million, right.” Or whatever my argument was. And we ultimately ended up settling on, but it’s really like a million in terms of the add back adjusted stuff. When we signed the LOI, that’s what they agreed. We’re going to agree to the quarter million add backs to it so you get about a million dollars in EBITDA.

John Warrillow:

Got it. So just for are folks who may not be familiar with this add back concept, we think of a profit in law statement as this binary, linear objective thing, the accountant provides it and it’s done. And of course, it’s a little more subjective. There’s the adjusted EBITDA or adjusted financial statements is where you get into this interpretation of EBITDA if you will.

The art versus the science of it. So you’re making the case … Look, I’m getting unfairly dinged for these two employees who are all expense and no revenue. I’m just training them right now, so there’s 50 grand here and I’ve hired them of recruiters, blah-blah-blah and that’s lowering my EBITDA, artificially lower it, and you’re making the case say let’s put that expense off the profit and loss statement, therefore increasing our EBITDA. And they’re saying, “No, no, let’s just break your course of business. You have to hire people, right?” That was the back and forth that you were having?

Jon Claydon:

Yeah, that was the majority of it. And there’s also cases that I was trying to make and again, hindsight, I think having a third party make this case probably would’ve made it go over a lot better, but we were growing at like 40% annually. I should have said, “Hey, I’m at let’s say a million.” But I’m going to be at 1.8 next year, you should be buying me for 1.5 or some something in the neighborhood of negotiating a little bit better from that perspective. But most of the negotiation came down to, “Okay, let’s agree on a multiple. Jon, you are not going to get a 10X multiple on EBITDA, thank you for asking, but that’s not realistic.”

John Warrillow:

Did you ask?

Jon Claydon:

Of course I did, but I knew that coming in. I think a lot of folks in our industry, it is funny, I’ve talked to other agency owners in the affiliate space specifically. They’re like, “We should get 4X on revenue.” And that’s not how it works unfortunately, if you were a product business or a SaaS business, maybe you could.

John Warrillow:

Sure.

Jon Claydon:

We all went into anyone that’s in the service business always kicks themselves and says, “I wish I would’ve built a product, I should have been in the SaaS business.” Because the multiples just aren’t the same unfortunately. You can make the case, they should be, it’s recurring revenue. It’s relatively consistent, but that being said, I was realistic with my expectations on what the multiple was going to be. So really the negotiation standpoints were the add backs and we signed the LOI. We had agreed, we had written them out in the LOI if this makes sense. This is where the number is right off the races, let’s go through due diligence, so we signed the LOI.

John Warrillow:

Can I just pause for one second Jon?

Jon Claydon:

Yeah.

John Warrillow:

Did you talk about what proportion? So you were in the four to six range? I’m assuming on the higher end, given that you had some proprietary technology and diversified customers, et cetera. So did you agree? Was that going to be all cash? Were you taking some in shares? Was there an earn component? How was that contemplated in the LOI?

Jon Claydon:

Yeah, so there was an earn-out component with this deal. It was mostly cash. There was a little bit that was rolled into it. So I think it was probably about 20% was rolled over into equity.

John Warrillow:

Just for folks who may not know that term, rolled over means you were not taking cash for that, the 20% of the proceeds were going to be in shares of the acquiring company, is that correct?

Jon Claydon:

Correct.

John Warrillow:

Okay, got it.

Jon Claydon:

So it was about 20%. I think 60% was guaranteed in cash and the other 20% wasn’t an earn-out. So it wasn’t an overly aggressive earn-out. It was actually really fair. It was basically just keep your volume consistent. It wasn’t like you have to grow 50%. I felt really good and it was achievable and in fact, part of the negotiation was, “Okay look, if you want to give me an earn-out and I crush my numbers next year, I want the upside on that.” And so they did give us upside where we could have maybe got an extra 10% in total deal value if we would’ve hit the upper mark of the internet which we would’ve in hindsight done for having the full year, yeah. So yeah.

John Warrillow:

So for folks who are new to this, you come up with evaluation somewhere in the four to six times, EBITDA range in your industry, service business. And then it comes down to, “Okay, how is that money going to be paid? Is it all cash or closing? Is it a structured deal?” In your case, it was 60% cash, 20% in shares. And then another 20% that you had to earn that was put at risk. How many years was the earn-out?

Jon Claydon:

It was just one year. So it was a short earn-out which I liked. I think long earn-outs always get really difficult to forecast. Who knows what the business is going to look like in three years, are the guys buying you? Going to control you? I felt confident as well that they had bought a couple other agencies and those agencies had remained independent. So they hadn’t smashed everything together yet. Eventually that was plan because all these groups are effectively doing the same thing.

At some point, all the agencies are going to come together and combine, but they’d left the groups independent. The guys running them, I knew the owners of those other agencies that have been acquired. They told me, “Look, they give us advice, but they let us run things on our own.” I knew they weren’t going to come in and say, “Well look, you need to hire 10 more account managers. Therefore it’s going to screw your EBITDA and then you won’t hit your earn-out.” They had no incentive to do that and I trusted the guys enough to be comfortable with that.

John Warrillow:

Got it. So what happened?

Jon Claydon:

So we signed the LOI towards the end of 2019 and we started going through diligence and there was a Q of E analysis. So Quality of Earnings.

John Warrillow:

Yeah, Quality of Earnings where usually, and again, I’m doing this for our listener’s sake who may not have heard that Q of E, oftentimes an accounting firm or due diligence firm is brought in to vet the earning statement to validate what you’ve portrayed or you’ve said as part of the sale process. Am I getting it basically right?

Jon Claydon:

That is correct. And we had a lot of add backs that we had agreed to in the LOI. And so the buyer, we thought we were on the same page there. This third party came in and nice enough guys, but didn’t really feel like they understood the digital advertising business, all that well, there were a lot of questions. It took a long time, and the end of when we got the Q of E, this was now into 2020.

So we’re two months in due diligence and we dug through everything and it’s an exhaustive process, and by the way, anyone that ever goes through due diligence, it is murderous, it’s absolutely exhausting. They came back to the Q of E and they said, “Look, we agree with some of the add backs, but you should have actually, you hired this director of operations towards the end of your year. And so you need to add back that guy’s salary for the full part of the year for the TTM.” Which is a hundred grand, right? As opposed to where it was and-

John Warrillow:

TTM stands for Trailing Twelve Months by the way.

Jon Claydon:

Trailing Twelve Months and you need to add. There were all these things that came back within the report. And so it took our million dollar EBITDA down to 800. And I said, “Guys look, we sign this thing. We talk through all this stuff. This is not what we agree to. This is a sizeable difference.” And so we started having conversations. And again, this is where me as the guy who is going to have to go work for this group now and one it’s difficult because we’re friends and two, I’m going to have to work for them. It’s starting to get really contentious. It would’ve been great to have intermediary to help out with that.

John Warrillow:

Mm-hmm (affirmative). Yeah.

Jon Claydon:

So we go through this stuff, around the same time, we lost one of our larger clients, it just kind of came out of the blue, it’s unfortunate it happens. We had a new business in the pipeline, we hadn’t necessarily sold them yet. And then this was, I don’t know, February or so. And then this little thing, you may be familiar with, COVID happened. And the world started shutting down.

And so basically one of that happened, we were negotiating, we took longer than we should have done to close the deal to begin with because again, I was trying to do it myself, all these things and then the pandemic had happened. And so we just had a huddle and collectively with us and they were like, “Look man, even if we got to a point where we agreed with the add backs, we get back to that number, the world might be imploding right now so we need to step away from this.”

And I said, “I totally understand. Let’s go save our businesses, make sure everybody’s healthy.” And all that stuff. And we walked away. The timing of the LOI, we had a 90-day exclusivity that was done at that point, but they said, the buyer was like, “Look, we want to keep in touch. Let’s get through this thing. We are still very interested. Let’s circle back around. Hopefully once things stabilize with the world, the economy and who knows what, and we’ll look at doing a deal later on in 2020.”

John Warrillow:

Okay. I want to pause there because I got a couple questions. I’m really curious how this re-trading or renegotiating what’s happening after the quality of earnings is affecting your health because the shingles in the corresponding, domino effect of that was caused by stress in the first place.

Jon Claydon:

Yeah.

John Warrillow:

This has got to be pretty stressful.

Jon Claydon:

So here’s the interest thing about that. It was stressful. However, I will say that going through that experience, whatever the hell you want to call it, it actually got me into a much better head space. I knew and even that, again, the reason they were walking away from the deal was they’re like, “Well look, all this stuff, we’re not sure, is your business really going to be worth what we’re paying for it?” These uncertainties, and I had 100% rock solid confidence I’m going to go out and crush the numbers that I’m telling you that I’m going to do, and if you want to buy me, I’m going to make you pay for it.”

I just knew that at that point and I don’t know, going through that and just the way that we sort of rebuilt the structure of the company and have a team running and everything else and the forward looking momentum with prospects and what we’re doing. I was just so confident in the company that I really was okay when they started talking about pulling away from it.

Then the pandemic happened and then that all went to hell and I was terrified again, but I got through it actually. I think going through some of those testing experiences will actually … It makes you know that you can get through anything really.

John Warrillow:

Yeah.

Jon Claydon:

And I think at that point, I just knew it would be okay.

John Warrillow:

There’s nothing like crushing your numbers during the whole negotiation thing to make you feel confident, right?

Jon Claydon:

Mm-hmm (affirmative).

John Warrillow:

That like, “Okay, if you guys don’t want to buy it, that’s totally cool because we’re going to go hit, we’re going to be twice the size in a year or two.” Talk about because a lot of people may be surprised that an acquirer could re-neg or renegotiate on a letter of intent. So you sign this letter of intent, you had a no shop clause, I’m assuming where you agreed to … The quality of earnings thing is done by an outside firm. So first of all, what was your reaction when they started to raise the specter of renegotiating on the LOI? How would you characterize the emotions that ran through your bloodstream at that point?

Jon Claydon:

Yeah, look, I was frustrated and I don’t want to … I actually wouldn’t classify as saying it’s re-trading. I think it’s a really negative term. And again, I like these guys a lot and I think they’re really good people and to be fair, if I try to objectively look at what this outside accounting firm was doing and looking at Q of E, we had just all these add back that were put into. We had invested in our analytics reporting suite and we’d hired a developer to do a bunch of work for that.

These guys are accountants and bookkeepers that don’t understand digital marketing or tech really in general, the firm that we were using. So they didn’t get that was one-off expense. They were like, “Well, what if you need to hire that person next year?” And so ultimately, it’s a private equity buyer, they are bound by covenants to their banks and the lenders that are giving them money to go out and buy companies in general. And so like the stuff that we’re asking for while I think as a seller is totally justifiable.

You also have to put yourself in the position of the buyer where they’re just conservative, they’re a value buyer, that’s what this private equity group does. And to be fair, some of the stuff that we were asking for, you could totally make the case that like it shouldn’t have been accepted as an add back, right? Now, I think that I was able to get the buyer to agree to those add backs and sign the LOI because the personal relationship that we had with them, but then you have these other parties that are ultimately the checks and balances on this stuff and they’re coming in and saying, “Look, do you realistically … I can’t get the bank to sign off.” Or whatever it was. Right.

I think that’s more of what it ha what it was as opposed to the company attempting to come in and re-trade because that’s their a practice. I don’t think that they’re that type of actor, [crosstalk 00:45:15].

John Warrillow:

Yeah, no. I’m sure. The letter of intent that you negotiated, did it specifically-

Jon Claydon:

Specified.

John Warrillow:

Yeah, it specified the add back? So you had it in writing. You’re like, “Hey, we agreed to this 60 days ago or 90 days ago.”

Jon Claydon:

Yeah.

John Warrillow:

And then this third party accounting firm, did you ever get the feeling sometimes I’ve heard it described as good cop, bad cop negotiation. Right? The third party accounting firm is the bad cop, the Darth Vader says, “No, we can’t support this.” And then the good cop is the private equity guy saying, “Hey man, it’s not me, it’s them.” Did you get the sense that there was a gamesmanship going on at all or they were playing a bit of a charade?

Jon Claydon:

Again, I don’t think it was a charade. I think that that was very much the way that it happened. The bad cop was the accounting firm. And again, I understand their position. I think we were asking for law, but yeah, it made the entire situation challenging. And again, the one thing in hindsight I shouldn’t have been the one in the middle of this. You should have had banker dealing with it, that usually gets squashed. There’s an intermediary, they can go out of the difficult conversations so that you aren’t doing it with the people you’re going to be working with.

John Warrillow:

Yeah, yeah, we’ve heard that a ton that having somebody be that foil allows you to … They can absorb some of the negative energy. That’s what they’re referred. They’re a broker. At the end of the day, they are brokering, they’re trying to bring the two parties together without blowing up. So where does it go from there? So the pandemic strikes. They’re like, “Look, keep in touch, but we got to figure our stuff out here.” Where does it go from there?

Jon Claydon:

Yes. So now the pandemic is a whole other story in general. We actually first couple months selling the company, that thought process is now gone. It’s like, “Okay, how do I keep the company together?” And really, we sat down with this senior team. We said, “Look guys, a number one goal for the next however long this lasts is to try to keep everybody’s jobs.” That’s the first and foremost thing.

We probably should have been proactive and let people go, but we just didn’t want to do that. And so we navigated it really well. We had some clients ask us for concessions, others asked delay in paying us. We were fortunate to take advantage of a lot of the loan opportunities with PPP money and of those things to keep things afloat without much of a hitch.

And we were doing well enough at that point, we had a bunch of cash in the bank and we were okay. So we navigated the first few months of it and then realized like, “Okay, this is fortunately not the end of the world.” And our business started accelerating rapidly. And I think for folks that are unaware, ecommerce sales accelerated in 2020, they accelerated basically what they were projected to do over the next 10 years in one year.

Just in terms of overall market share of people buying digital. It advanced so quickly, and so naturally as a byproduct of that, our clients did very well. We became very much in demand and we got a ton of new business and we grew like crazy and we pretty much doubled in 2020. So it was a hell of a year for us, which again thinking back in March, I didn’t know if that was going to happen, but fortunately it ended up working out really well.

John Warrillow:

Amazing. So then where does it go from there? How did you then get back on your front foot from a selling perspective? What triggered the second?

Jon Claydon:

So we were still in touch with the initial buyer or potential buyers. And we talked a lot, and actually, everybody in our industry was talking a lot during the whole [inaudible 00:49:11] time. Again, we’re competitive, but we’re all friends. And so we always get shared advice and things. And so we kept telling them, “Hey look, things are going well. It’s really good.”

Again, they very much wanted to make the deal happen with us. I think if it would’ve been up to them, they would have done the deal the first time around, and it wasn’t really their call. So they came back around in late Q3, early Q4 and they said, “Look, we feel like we’re through the worst of what was happening with things last year, we want to do this deal.”

And I said, “Great. The company is twice as big as it was a year ago. I told you I was going to make you pay for it, so let’s go through this again. And by the way …” And I knew that I wasn’t willing to put up with the back and forth negotiations and all that stuff again. And I brought in an investment banker, Ron from Daryl’s group, he’s really well known in the space for working with service firms and just knew things really well.

He had offered to represent us the first time around. I told him no, I thought I had it, but ultimately this time it was like, “Look, this makes sense.” So I brought him on board and we started negotiating an LOI at that point. And again, we were a lot bigger and so LOI came in at a higher multiple, and it was based on a much larger EBITDA and there were still some … Actually, there were add backs now because we didn’t have an office anymore, so that was one that we had to go through, but we spent a few weeks going back and forth on the LOI, they sent us a few terms of it.

I was very happy to have Ron as the intermediary to go and negotiate and do that stuff. And we were getting to a point where I was again, really happy with it. But the interesting thing happened during the negotiation of LOI. We were just getting new business inbound left and right. The prospects were looking really good and we signed a deal with Apple, it was a huge deal.

So new client, massively a successful one, and I’m starting to think in the back of my head like, “God, am I making the right choice? We’re growing so fast. Are these the right guys to be doing it with?” The other thing that I was thinking in terms of this deal, it was the same structure. There was an earn-out, there was a bunch more cash up front, and there was also an equity component, but they were four years into their holding cycle with this private equity group.

And I knew that they were going to be selling in a year or two. And I was only going to get a certain amount of increase in that equity that I rolled into the company. And so for the people listening to this, when you, when you, again, you sell a new private equity group, if you’re on the tail end of that cycle,

And most private equity groups hold companies for three to seven years let’s say, somewhere in that range. But if you’re on the tail end of that, you’re selling yourself, and let’s say you roll a couple million dollars into that company you might be selling into it and only getting a percentage point or two because that collective group is worth $100 million.

So they’re valuing themselves at a large number and they might sell for 120, and so you might get a 20% return on the money that you keep in it as opposed to if you do it at the start of that private equity cycle, you may get five, six X return on your money. So it was one of the things that I was waiting my mind. So long story short, we had an LOI, it was a good shape and something was just not sitting great with me. I was a little miff to be fair about the guys backing out on it last time and I’m like-

John Warrillow:

To be clear, it’s the same guys, right?

Jon Claydon:

Same guys, same group.

John Warrillow:

Same guy, okay.

Jon Claydon:

Same group, yeah. And I was just thinking about it and chewing on it, but I was feeling pretty good, and I was like, and I was talking to friends and family and everybody’s like, “Sign the damn deal, sign it. What are you doing? Do it.” Right? And it just happened just randomly. I was chatting with the president Matt Wool of Acceleration Partners who is a competitor in our space and we’re good friends.

And we were talking about something completely unrelated. And AP was bigger than us, they were 200 or so people. We knew they were going to eventually going to do a deal. This is one of the groups we had hypothetically talked about putting our businesses together at some point, and I just randomly asked Matt. So I was like, “Hey, so are you guys selling anytime soon?”

And it wasn’t necessarily leading with anything like that, I was just more chewing the shit with them. And he’s like, “You know what? We’re thinking about something, why? What’s going on with you?” And it didn’t come right out and say it, but I’m sure that I … He got the can that I was maybe getting close to doing something. And he said, “Hold on a second. Let me call Bob.”

And so Bob Glazer, the founder of AP calls me two minutes later and he’s like, “There’s something that we’re really close on that I need to make a couple of phone calls.” But if you’re looking at doing something, just don’t sign anything for an hour. I was like, “Okay, this is interesting. What’s going on here?” So 30 minutes after that, I got on a call with Bob, Matt and Bennett from Mountaingate Capital.

And so Mountaingate Capital is a private equity group who I had actually met a few years prior. They were the backer of another company that we were actually really close with and partnered with and friendly with which was called Tenuity. They took them from 150 people to 700 before ultimately selling them. Mountaingate is incredibly well-known, respected in the service businesses as being the Harvard of Private Equity Firms for that group.

So got on the call with Bennett, and we knew each other roughly and Bennett said from Mountaingate and said, “Look, we’re about to do this deal with Acceleration Partners. It’s not announced yet, it’s going to happen in a couple of weeks, but while we work through that, we would love to make an offer for your firm.” So that was on a Friday.

So on Sunday, they worked all weekend. We shared our information with them and they presented an LOI to us on Sunday night. And they went through the whole process. They pretty much worked nonstop and got us something. And the LOI was very aggressive. It was better than what we had previously been looking at, there was no earn-out.

John Warrillow:

[crosstalk 00:56:06].

Jon Claydon:

No earn-out, multiples higher, we had no questions about the add backs or anything like that. And then there was an opportunity to roll a larger portion of equity into the new company which is very attractive for me.

John Warrillow:

That’s an interesting way of putting it. So an opportunity to roll equity. Was that a requirement to roll equity? Or I’m assuming you were being asked to take a portion of the deal in shares in the consolidated company.

Jon Claydon:

So I did not negotiate on it because I knew this was the smart thing to do. I think if we would’ve pushed back and said, “No, I just want all cash.” They probably would’ve done it, but it might have been at a lower number. But generally Mountaingate and their philosophy is they buy founder-led companies and they generally suggest, highly suggests that they roll a sizable portion of the proceeds of the sale into this new platform company.

John Warrillow:

And so roughly, what proportion of the deal were you asked to roll?

Jon Claydon:

I rolled 30%.

John Warrillow:

30%, okay. Got it. And so the other 70% was cash?

Jon Claydon:

Yup.

John Warrillow:

And closing no earn-out?

Jon Claydon:

Yeah, closing no earn-out, yeah.

John Warrillow:

Got it. Got it. What happened to the other guys? Did they come back and counter again?

Jon Claydon:

We did not go through that. It wasn’t something where we wanted to have them bid off each other and try to drive the price up. Again, there are industry standards that maybe you get a little bit higher. We didn’t feel like going through that process. And ultimately, I felt a little bit bad about it, I wasn’t trying to lead these guys on and find another buyer, it just literally happened at the last second.

Really Mountaingate, they took a huge gamble and even putting their LOI in front of us because, and we did as well with them because they hadn’t finalized their deal with Acceleration Partners yet. So we didn’t go back and negotiate. I think we’d already kind of gotten the initial first buyer up to really their maximum threshold of where they were going to be comfortable going and didn’t want to turn this into a bidding war.

I think the numbers were attractive enough where, “Hey, maybe if we would’ve done it, we might have gotten extra five or 10%, but is it worth it at that point for the relationship going forward? I didn’t think it was.” So we didn’t do that. We told the initial group, we said, “Look, there’s another buyer came in the last second. Really sorry, it wasn’t something personal, we’re going to go with them.”

John Warrillow:

What was your reaction?

Jon Claydon:

I think they were disappointed, but I think that at the end of the day, they had a chance to buy us first time around.

John Warrillow:

Man, I’m sure they’re kicking themselves now. The accountant Zach, could we bring them in for this?

Jon Claydon:

They ended up doing just fine. I think they just did their first PE round, and they did great out of it. But yeah, I think they were obviously disappointed and they thought we were going to get a deal done and this didn’t happen, and that’s that’s okay. So we ended up going with new buyer with Mountaingate and Acceleration Partners.

John Warrillow:

Got it, got it. That’s super helpful. And what was Ron’s, your M&A professional, what was Ron’s role in negotiating with Bennett and Mountaingate guys?

Jon Claydon:

So anything money related I said talk to Ron. You want to talk about multiples, you want to talk about other than questions about the P&L or things like that. Any negotiation on that, Ron is the guy that you’re going to talk to, and he will go to that.

We actually had something come up with Mountaingate, I did say there was no earn-out which is true. However, there was a hold back on equity based on the successful resigning of a marquee client of ours. We had one client who was roughly 20% of our revenue. We’ve been working with them for a number of years. I saw zero risk in losing them, but it was big enough that Mountaingate went to hold back some of the equity that we were rolling over.

And so I let Ron negotiate this, and then the deal that Ron worked out is we said, “Okay sure, we’ll hold that back. But once I get that deal signed, if I’m risking something and doing this, you need to risk something as well so when we get that deal signed, you give me more than what you’re holding back.” And so we did get the client signed and Ron took care of all that stuff.

John Warrillow:

Oh cool. So you got a little [crosstalk 01:00:51].

Jon Claydon:

Yeah, well a lot more out of it, yeah. So it was nice. So anything financially related, yeah, left it to Ron, really their work from an investment bank and a firm, there’s so much documentation that goes into doing these deals, right? You have to look at all the contracts for all your clients. You have to look at employment contracts, you have to look at insurance, you’ve got to organize all this stuff.

I basically just said, “Ron, here’s access to all of our online files. It’s organized, go dig through it, let me know what you out find, and then we’ll provide it for you. And then you just handle all that stuff, working with the acquirer and the people that they’re bringing in to do the deal.” And so they were just really the middle man and in organizing everything, and it was a ton of work.

And we also, by the way, we closed 45 days after signing the LOI, and we had to get it done before the end of the year, that was our timeline. We want it done in 2020, makes it cleaner for tax purposes. We’re also concerned maybe potential capital gains tax changes in 2021. So we wanted it to happen in 2020, and I think we signed the deal on November 15th. So we were racing to finish before the end of the year. This is also the hectic time of the year, there’s the holidays and everything else. So having Ron and his team involved was the only reason why we got the deal done is because we had that party involved.

John Warrillow:

In retrospect, was that something that Ron used to tighten the due diligence process? Here’s what I’ve heard. Oftentimes due diligence gets dragged on and the longer it gets dragged, on the more it favors the buyer, right? The buyer starts to renegotiate, finds things and the seller starts to get desperate and gives up concessions that they wouldn’t have if the due diligence period was shorter.

Do you think, in retrospect, Ron picked the calendar year 31st and drove to that, knowing that that was a hard line in the sand? Or was that just a happy coincidence or was Bennett trying to close by the end of the calendar year? Who was driving that?

Jon Claydon:

Yeah, so actually, we both had that objective. So now we wanted to close before the end of the year, we wanted to close before the end of the year. So we were both aligned from that perspective. I do think working under a shorter timeframe allowed us to … Yeah, it probably worked out in the seller’s favor. We did have add backs into the business.

They weren’t nearly as large as maybe it was what we had tried to do the first time around, but someone if they really wanted to dig into it, they could ask deeper questions. We could have really had to go back and forth and explain things. And who knows, right? We may have agreed on concessions and gotten a lower number because of that because there simply wasn’t time. You had to sign, you had to get the contracts done, you had to get the tax reviews done. Everything else that goes into it. There’s just was not enough time to really dig into too much of that stuff.

John Warrillow:

Where were you when the check cleared your bank account when the wire came in?

Jon Claydon:

Yeah, I was at home which is where I was for the entire time doing this. It’s funny, we actually … I finally met Bennett and the guys in … Bennett specifically in person about a month ago at the first conference that we’d gone to as a company. And he came out there because he was speaking on the panel. We laughed about it.

He’s like, “Look, this is the first deal we’ve ever done. We’ve never met in person. This is always usually face to face thing and so doing it virtually, it was just wild.” Yeah, I was at home where I had been though for the past 12 months pretty much. I hadn’t really left much. And that was a crazy feeling actually to go through that, that was fun.

John Warrillow:

Describe for me the emotional … I wanted to avoid the wood rollercoaster because it’s leading the witness, but in any event, describe the emotions you went through from refreshing your bank account and seeing the money hit. So you refresh your browsers there, just walk me through the emotions that you experienced over the days that followed.

Jon Claydon:

Yeah, I think it felt very surreal for a long period of time. It doesn’t feel real and look, I’m almost a year out of having to deal done at this point, so it’s still relatively fresh. And I think it’s finally settling in that I actually did that. In a moment because there’s just so much pressure and energy that’s put into just closing the thing.

When it’s finally done, I actually didn’t feel this moment of elation and like, “Oh, let’s go celebrate.” It was just like, “Oh thank God, I can sleep now.” It was more of what it felt like to me. I think the reality of things set in a few months later where it’s like, “Okay, cool.” Mom, dad, I know you wanted to retire, well you can now, let’s go get you that house. And working with a financial advisor and they’re like, “Yup, you’re set. If you want to quit today, you don’t have to work ever again.”

The reality is the financial implications start to reveal themselves down the road I think a little bit more, but in the moment honestly man, it’s just like I was just happy that it was done and I didn’t have to talk to lawyers and get on the phone with 13 people every day for a while. So it was a relief as much as anything else. And I think the joy came afterwards, but it just takes a little bit of time to just feel it.

John Warrillow:

Tell me about the experience of talking to your parents about helping them retire.

Jon Claydon:

Yeah, I think it’s interesting. My folks are successful in their own ride, but my dad, he’s a psychologist and he would still work and doing a few clients, he’s partially retired, but just I think that they’ve never been in a position where they could not work. And I think to finally be able to further them to have a son that could do that, it was a foreign concept of them, but obviously they’re very proud and happy about it.

And ultimately, that was part of the decision in terms of what I was looking for out of an exit. I knew that I could keep running this thing and I could keep growing it and doing that, but I was ultimately losing time with my family, my parents, and I wanted spend more time with them. And I knew that at a certain number mark, I’d be able to do that right and help them.

My mom’s going to be moving up to Washington to retire up here. So I’m hoping to help buy her a house up here when she does that and you all those things that went into it. And I think that’s really the rewarding thing. For myself, it’s cool. It’s great to have money and, I’m always going to work. I’m not the type, I’m not going to go sit on the beach. I don’t want to do that. But I think to be able to just take care of the people that you love and care about, that’s the really rewarding thing for me.

John Warrillow:

I bet. I bet. Well, it’s an amazing story. I’m really grateful that you’re willing to share it with us. If people wanted to reach out and connect with you, what’s the best way to do that? Is there a website you want to point people to or LinkedIn or?

Jon Claydon:

Yeah, LinkedIn is the best one. I try to actually be subtle on social media these days, but LinkedIn, if everyone wants to chat with me and anyone interested in the affiliate partner marketing industry, I am part of Acceleration Partners now. I run strategy and bigger picture things for them. And so you can find us at accelerationpartners.com if anybody wants to chat about that industry.

John Warrillow:

AccelerationPartners.com. On LinkedIn, are you Jonathan Claydon or Jon Claydon?

Jon Claydon:

I think either one will probably pull it up, but I think it’s actually Jonathan.

John Warrillow:

Officially it’s Jonathan so it’s-

Jon Claydon:

I think it’s Jonathan, yup.

John Warrillow:

Yeah, I think that’s best. We’ll put all those links in the show notes at BuiltToSell.com. Jon, this was great. Thanks for doing it.

Jon Claydon:

Thanks so much for having me. I really appreciate it.

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 guest over the years who have been able to negotiate an exit far better than the benchmark in their industry. Sometimes two or three times more than I would’ve expected.

I was curious to understand the tactics and strategies of 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 order the book. Just go to BuiltToSell.com/Selling.

Built to Sell Radio is produced by Haley Parkhill, our audio and video engineer is Denis Labattaglia. If you like what you’ve just heard, subscribe to get a new episode delivered to your inbox each week, just go to BuiltToSell.com.