Elizabeth Shea (00:44)

Hello everybody and welcome to Branching Out in our latest episode! I am so excited to be joined by Ab Emam in our office today. Nice to see you there, Ab!

Ab Emam (00:54)

Likewise! It's been a while, it's been a while. Thank you for having me.

Elizabeth Shea (00:58)

Yeah, so we're really excited to hear your story today. Ab and I share the distinct pleasure of both having our agencies be acquired by the same PE firm. So, we'll talk a little bit about the acquisition process and what that experience was like for you, Ab. But first, let's start from the beginning. Tell us a little bit about how you got started, how you founded WDG, and your story there.

Ab Emam (01:19)

That's such a long story. I've been an entrepreneur since year 2000. It seems like forever!

Elizabeth Shea (01:26)

I think you've had a couple exits, right?

Ab Emam (1:27)

A couple of exits . . . my entire career has really been around startups. I was counting the other day, I've been part of five or six startups — two weren't mine, but I was part of them early on. And they all led to very successful exits as well.

And then I started one that did well but didn't end as well as they usually do. Then I started another company focusing specifically on government hosting and marketing. And that took off and I sold that to a strategic partner. And I had this friend who just said, hey, I have a couple hundred thousand dollars. Can you build me a website? I was like, “what? Of course!”

So that's how the WDG started, with my first engagement being a very serious project that I had to scramble a bunch of people together that I knew from past. Next thing I know, like two weeks after getting that contract started, I had built an agency and that's how it started.

Elizabeth Shea (02:34)

That's amazing. So, somewhat accidentally, but that's what you do as an entrepreneur, right? You know, you make it happen.

Ab Emam (02:41)

You make it happen. You look for opportunities and a lot of times when you look for them, they don't come but when you're not looking that's when there is an opportunity and you just got to grab it when it gets to you.

Elizabeth Shea (02:50)

Totally! So, when did you start that agency and when did you decide to exit?

Ab Emam (02:55)

WDG was kicked off in 2012, and we exited in 2023.

Elizabeth Shea (03:03)

So, what about that growth period? What was that like for you as an entrepreneur, as owner?

Ab Emam (03:08)

It's interesting because when I started WDG and realized that it could be an agency, it was really a lifestyle business for a while. I was like, “oh, this is great.” You know, I hired a bunch of friends and I had that typical office with ping pong and kegs and dogs running around. It was that time where that was the cool thing that to do.

And one project after another and another and next thing I knew I had like 10 clients and we were like, “wow, this is phenomenal!” And we were very lucky that we got into more of a mid-market from the beginning where a lot of agencies kind of struggle, they get into small businesses— doing somebody's cousin's work or whatever — and they're just not scalable. It was really timing and luck and sort of like understanding that I needed to be in the mid-market from the beginning that really helped grow the business. So, it took about 10 years, but after the fifth or sixth year, I realized that this could be like a business that I could grow and have another exit.

So, I laid a lot of the foundation around it being from recurring revenue to long standing partnerships to bring it in the right people and building a client services team and so forth. So that's really when it all started coming together. Five years in, when I was like, “wait, I got something here, right?” Like this is not just project by project and just being able to pay the bills — it's profitable. Let's reinvest and let's build something and let's bet on it. So that's, that's how it all came together.

Elizabeth Shea (04:52)

That's amazing. What a great story. Your reputation alone within the private equity firm that we both belonged, you were always sort of the . . . wow, look, you built really big sites and very robust sites! And so, your reputation precedes you and you have an excellent reputation in the marketplace and with that company. How did you start the process to think about an exit? Was it purposeful?

Ab Emam (05:16)

It's interesting. I built the business to sell. After five years, was like, okay, well, there's a certain point of time where I want to retire or do whatever. So, I started to listen to podcasts and read books and all that stuff and started to really understand that you got to prepare for these things. If you want to sell a business, you got to prepare for it. You got to give yourself five, six, seven years before it could actually be sellable if you make all the right moves and timing is with you and luck is with you.

So, that's like halfway into the business. I was like, okay, I want to build a business again that I can sell. And having sold our previous company, I knew some of the foundations of things that I needed to get done in order to build a business that was attracting enough for somebody else to pick up. So that's really when I started to realize that, okay, I want to sell it, but it's going to take time.

And it took five years to build it to a point where I was like, “okay, this is the kind of multiple in EBITDA that I could get.” And I had set a goal in mind. I was like, “all right, if I get to this number of EBITDA, then I can get X multiple. And that's going to be enough for me to walk away from this and financially secure myself and all that stuff.” So, I had very specific goals in mind to hit. And I knew that when I hit those goals, that was a trigger moment.

Elizabeth Shea (06:23)

That's amazing.

Ab Emam (06:42)

So that's how it all came together. You know, I started the business 2012 and put a lot of planning in place, say in 2018. And it took about four or five years and 2022 is when I really started to take it serious. I went to the market on my own, reached out to private equity firms and a few strategic partners and realized that it's actually very difficult to do it on your own. And that's what I brought in a business banker. And that's when it all really came together really, really well.

Elizabeth Shea (07:18)

So, tell me a little bit more about your experience with your business banker. You decided that it made more sense to go and procure a partner. What was that process like and what did you learn from it?

Ab Emam (07:28)

I interviewed several business bankers, and I think I mentioned to you earlier, I try to go out on my own through my own network and so forth. It's difficult because there's so much legwork that requires a lot of outreach and all that stuff. I mean, running a firm and getting all that stuff, it's a little different. It's harder.

I had strategic buyers that came to me. But I wanted to cast a wider net and go more after the private equity type of acquisition deals. So, I interviewed a couple of business brokers and finally landed with one. And a lot of people don't want to do it because they charge money and they get a piece of the acquisition, anywhere between three to six percent is usually the number. So, if you're selling for a large sum, it can add up to five percent of a deal. It's a pretty substantial amount that you have to be willing to pay out.

But in my experience, I believe it was the best decision that I could have made. I highly recommend for people to explore business bankers when they go through this thing because they can get you a larger deal. They know how to negotiate. They have a network of their own and so forth. I'd say when I was looking at it on my own, I was getting multiples of five and a half and six. I ended up with nine multiples.

Elizabeth Shea (08:42)

Wow.

Ab (08:57)

Right, so yeah, I had to pay, but think about the three times more that I got, so that 5% was nothing. So, it was definitely the right decision for me, and I highly encourage firms to find a solid, experienced business broker or business investor because they can get you the better deal for the most part, right?

But you also have to be careful because they're in it for themselves as well, right? Because they want to make that commission. But you got to commit with eyes wide open. You got to be able to navigate and also say no to certain things too, because their job is to sell your business because that's how they make money. So, you have to be smart enough to push back on them when you feel like it's not the right deal for you during that due diligence and so forth.

So yeah, I had a wonderful relationship, but I also hated my business broker. It was one of those things, right? Every time I would get on the phone with them, it was like, okay, which side of me is coming out today? Because they're pushy, they're incredibly pushy, but they also know how to get the best deal for you.

So, in my experience, it was definitely the right move for me. I'm still friends with them now and I'm grabbing lunch with them next week to talk about a potential other deal. You got to go through it. But I've heard of others that also failed in that, right? You got to find the right business broker.

Elizabeth Shea (10:29)

Yeah, that's very, very important. And the other thing that we've talked about pretty consistently on this podcast is that it's not always even the price or the multiple, it's the terms that you get — you know, the length of the earn out like you described earlier, you who gets through your accounts receivables, whatever, could be minutiae — but there are terms that are going to matter.

Ab Emam (10:49)

There's a lot that goes into these deals, right? Like, and this is the other thing as well that's really important. A lot of times, when you get a letter of intent, that doesn't mean the deal is done. The deal can fall apart any second. There's a whole lot that goes into it. Once you get a letter of intent, you get so excited and you lose sort of like . . . and I remember this thing too, and when we got the letter of intent, it was sort of like you lose focus off the business completely because you're so focused on the letter of intent and the number that's in there and all the other stuff.

And that's also something that you have to be really careful with because you know that you have to go through this for another six months or nine months and a lot of things could fail, right? So, you still got to run a business, and you still got to focus and grow the business because that's the other thing too. Right before closing, you still have to share your financials, and they don't want to see any drop, right? So, during your negotiations with the buyer, during that long, brutal six to nine months, you still got to operate a business, and you have to do it better than you did before they knew you, right? That's incredibly important because right before close, you show them your books again and if there was any drop, they could back off and get scared.

So, it's incredibly important. That's really another good lesson that I think it's important to share too, is that when you get that letter of intent, it's not done. When you go through the diligence, it's not done. You have to work even harder, right? So that's another very important message to those that haven't sold a business before.

Elizabeth Shea (12:37)

Very, very true. And I think that so many times they die at the 11th hour. We've had a couple of people that talked about how it died a couple of times before it was rejiggered and brought back to life. So it is something to expect. So, you can't your eye off the ball on your business.

Ab Emam (12:43)

It's so true and I remember this too. I think it was like the week before closing, the legal team from the buyer was asking for all kinds of stuff and it was starting to get really, really like . . . I don't think I slept, right? Cause there's so much there. And even I, for a moment, I got cold feet myself. I was like, is this the right thing for me? I can't believe that I'm giving away that the business that I've worked so hard. I almost backed up. And I remember like I had hundreds of thousands of dollars in legal bills that I was willing to pay and just walk away. I was willing to just eat it because I had cold feet.

So, and the buyers will have the same thing too if they see any sort of weird things in the documents that they collect as you go through. Incredibly important for those that haven't sold businesses before is to have a lot of documentation during due diligence. You have to share everything because if you don't, it could come back around. Because once you sell a business, they have years to come back after and say that was fraud or that was wrong and what you said was not accurate.

We also spent a lot of money on just making sure that our financials were perfect. Because that goes back to the quality of earnings. You share your financials, they hire firms and they go through all your books and all that stuff to make sure that what you said is truly true and the numbers are coming in are true and not false. So, there's a lot that really goes into that due diligence period as well that a lot of people forget. Because once you get the letter of intent, you're like, “oh, the deal is done!” No, no, no, that's when it starts. And there's a 99% chance it's going to fall apart.

That's why it goes back to saying earlier that, I started planning for the exit five years before because I knew what it would take.

Elizabeth Shea (14:47)

Right, right. That's excellent advice. And how long did that take from the time that you created a relationship with a banker and then actually exit?

Ab Emam (14:55)

It took about . . . so my take is a little different, I think. I started the process with a business banker, went through that process. And the first year, I just didn't get the right offers or the right groups that I wanted to partner with. And at this time, the business was also taking off even more. So, if you recall, 2020, 2019 when COVID happened. I thought I was going to close the door and everything's going to end, right? No one's going to spend money anymore when COVID happened. But that really catapulted and just grew our business substantial because everybody wanted to invest in the web. Everybody realized that wait, we got to be more web friendly, web accessible and all the other stuff that came after COVID.

So, the first year that I worked with a banker, I just didn't get the multiples that I was looking for, but the business was growing. So I was like, “okay, well, let me hold off another year and grow the business more. And then we'll come back in the market again.”

So, we came back to the market, I would say it was like, April of 2023. And within two months, we had multiple offers from private equity firms and landed on the one with Trinity Hunt Partners for numerous reasons. It was it was the perfect multiple. It was the perfect bolt on. It was perfect types of acquisition. I love the private equity firm, very founder friendly. So, for those reasons, I was like, this is the right fit for me. And we closed in December of 2023. It took about six months.

Elizabeth Shea (16:32)

Okay, okay, that's terrific. Did you look at any strategic acquirers or was it just private equity that was of interest at the time?

Ab Emam (16:46)

We did. We had a couple of strategic partners as well that I really, really enjoyed and they all were great partners and great people as well. But for me, the multiple and a strategic partner wasn't there. And I also didn't want to be rolled into another big agency where we would sort of be forgotten. I was very strategic about making sure that the legacy of WDG continued within whatever platform that we went under where they didn't have the talent pool and the skillset that we came into. So that was very important to me.

Elizabeth Shea (17:21)

What else was important when you were structuring a deal? Were there other components? Keeping your name or your brand or your people or what were other things that really made the deal successful for you?

Ab Emam (17:32)

Keeping the people, this goes back to making sure that we found a partner that wouldn’t dissolve our business and just take the book of business but really believe in what we did and help us invest and grow that business. That was very important for me. And I think that was really the biggest one of all. And then second was also for me personally, was duration of earn out, what my future was going to be. I knew that after a year or two that I wanted to venture off to something else. And that was very important for me as well. And with this private equity firm that I went with, that gave me that flexibility.

Elizabeth Shea (18:12)

Now you're still there, you're still affiliated with WDG, which is not often that common for founders. So can you tell us a little bit about that? Like what is your role like now and has it changed from what you might've expected?

Ab Emam (18:20)

No, actually I feel like my role is enhanced quite a bit, taken a lot more challenges and been involved more within the different divisions that the private equity has acquired over time. It's been great. I know that the stories are always different from different individuals, right? Some have great experiences; others have bad experiences.

I will say that when you are acquired by a private equity firm, that comes with challenges too, right? It's all about growth. It's about sustaining the business, not losing clients, not losing talent. You have to do more with less. There’s all kinds of stuff that goes into it. But I've always been excited about challenges like that. I've taken this actually as a learning experience. And now, two years into it, I feel like I've learned so much. All this stuff I knew, it's just now put in motion because you're kind of forced to do the things that you wouldn't do before, right? Now it's like you're forced to make certain decisions. You got to make decisions faster and you can take a little more risk as well. So, it's worked out really well for me.

Elizabeth Shea (19:29)

Right, right. Yeah, I think that's fantastic. And I loved working alongside the WDG team when I was at REQ. It was really nice to see things grow. And you're right, they are a founder-friendly PE firm, and that makes a big difference, even the type of PE firm that someone might choose or select.

Ab (20:00)

That was actually another thing that was very important for me is to make sure that the private equity firm that we went with was a true legit private equity firm — well funded and backed in history and had multiple funds that they were able to turn around successful. That was another big criterion for me as well. Because there's a lot of private equity firms out there that are smaller or just don't have the proven track record. With Trinity Hunt, it was like the perfect private equity firm for my firm.

Elizabeth Shea (20:29)

That's fantastic, agreed. So, if you go back to your former self, let's say a year before the close happened, or even just six months, are the things you would have done differently, knowing what you know now, either about the process or what have you?

Ab Emam (20:43)

Great question. Yes, there's a lot. The most important one is I wish I had put in and trained an operator much earlier on. I was the CEO and the operator of the business. Going back, I would have put an operator that was better than me in the business and allowed me to really focus only on the vision and the moving forward of the agency. I know that's what I should have done.

Ab Emam (21:17)

And now looking back at it, because I implemented those things right after the acquisition, it's just been a phenomenal journey with that. Having a right operator in the seat while you can go do the other things that are important for the firm is incredibly important. So, for anyone else that's listening to this thing, what they should be doing if they're a founder is to find the right operator so that you can be freed up from the day-to-day administrative stuff and allow you to focus on what's important — building the business.

Elizabeth Shea (21:46)

Right. Right. So did your life change significantly post transaction?

Ab (21:52)

Oh my God, so much. Let's see . . I mean, I've gone through this before. . . The bad part, it’s so interesting that you asked that. My first exit, I didn't have a sense of loss of identity when I sold my first business. I was ready to sell. It was the right thing and all the other stuff. I just wanted to be completely free.

For this one, there was a period of six months where I felt like I lost my identity because I put so much effort and time and WDG was everything. It was Ab, right? I think that was the hardest part for me to realize that it was no longer my business, that my emails were being monitored and knowing that somebody else is like watching and can turn your email off any minute. That was probably like the hardest thing.

I remember this clearly. I had to give access to our domain name and they took over the domain name wdg.co, webdevelopment.com and all the ones that I own. That was the moment I was like, “shoot, it's no longer me.” That was the hardest part, which I feel blessed about if that's the only thing that I felt was hard. Other than that, it's been good. My life's changed in the way that I have access to more. I work with a lot of other talented leaders now that, you know, in the agency world and any business, you're sort of alone on the top. Where in this, you're amongst other acquisitions and other leaders such as yourself. You and I have had countless conversations and talks and venting sessions and all that stuff.

So, you know, those things were some incredible things that came into my life. And I've met some really, really great people through this job.

Elizabeth Shea (24:02)

I totally hear you. Well, that's not inconsistent with what other guests have said, the loss of identity or just knowing that it's not necessarily yours anymore. It's a transition to go through. So, tell me a little bit about what's next. What's next for you? What are you looking to do in the next couple of years?

Ab Emam (24:11)

Gosh, I think I want to slow my life down a little bit is what I think I'm going to do. I've been traveling a lot more and spending a lot more time with my kids and family. When you're running a business, especially in the agency world, it’s 24 / 7. So, this has been my way of being a little more relaxed, having more time with my family. I still work hard, but I work smarter now. And that's really what I'm focused on.

It's interesting when you sell a business, you create a reputation and people are drawn to you and you get all kinds of requests to consult, to help them grow their business or share these types of experiences. Like, what would you do different or should I be doing different? And I'm getting a lot of satisfaction from that. Last night, I was out at an event and met another agency owner who was trying to get as much as he could in that twenty minutes that I was spending with him about how can he grow his business.

And that's really fulfilling to me to be able to share that knowledge and help others because the playbook is the same. There's certain things that you got to do, but you don't do them when you're in that practice because it's risky or you're so in the grind. You don't want to make certain decisions, right? But when you look back from the outside and you can see things a lot clearer. It's a lot easier to tell people what to do, it's execution that's the hardest.

That's been one, one part of the past couple of months that I've really enjoyed is to have a platform like this where you can share and help others.

Elizabeth Shea (25:56)

So, what advice would you give or what advice did you give to the other business owner? What can we take away that would be something that people should think about? Whether or not they want to sell . . .

Ab Emam (26:14)

Whether or not they want to sell, you got to remove yourself from the day-to-day tasks. You got to find a great operator. You got to find entrepreneurs that want to work with you to build a business. That is like, I think so critical. When you go out and you hire people to work for you or with you, that they have to be entrepreneurs themselves. You'll go so much further. Allow them to take risks, allow them to come with ideas and try them and if they fail, they fail quickly, right? I think that's a big, big thing.

Then you got the basic stuff. It's like, how are you building a recurring business model, right? You can't be project to project. How do you build a solid pipeline, lead generation, and how do you build so that business is coming to you? How do you close more, how do you close often? What's your true value to the client, and are you client centric? That was an incredible, important thing to our success: our clients were everything for us. When we picked up a client, our goal was that they're a client for life, not for three months, six months or whatever. You are a client for life. That's a mindset that I think a lot of people forget, but that's incredibly important. If you have a client for life, that's recurring revenue. And that's going to make your business more valuable, and you don’t have to chase as much.

Elizabeth Shea (27:33)

Right. Right. Yeah, the recurring revenue, the repeatable processes, removing the founder dependencies — those are all things that acquirers are going to be looking at. That's one of the we talk about at TreeFork is how do you demonstrate that externally? But you have to live it first and that's the key. And that's where I think a lot of people struggle is just to make those things happen. So again, anything you would have done differently before we close out this session? Any other advice you can give to the people listening to this program?

Ab Emam (28:18)

No, I mean, that's it. The rest of the stuff is basic. Treat your employees right, treat your clients right.

Elizabeth Shea (28:24)

Right. The two most important tenets, right?

Ab Emam (28:26)

And that actually goes back to something . . . like my team that started with me in 2012 are still with me. That's rare, right?

Elizabeth Shea (28:33)

Wow.

Ab Emam (28:35)

It's rare to hold on to leadership like that because people move on and all that stuff. Especially like during when I built this business, we went through so much. There's a great resignation, there was COVID, there was so much. Finding talent was incredibly hard. But a strong leadership can really, really make the difference as well. Not only for yourself as you're building a business, but also for the acquirer. They look for that.

Elizabeth Shea (29:00)

Right. Were you part of any professional organizations or peer groups that were helpful and supportive in your process?

Ab Emam (29:07)

Yes, first of all, I had great friends, and I've made friends with lot of other entrepreneurs. That's always helpful, right? To be able to have roundtables and meet up with others that go through what you're going through, because it is lonely at top. But I was also invited to join YPO and I did that. That was a great thing for me as well. So yeah, it's important to build a community around.

Elizabeth Shea (29:37)

Yeah, yeah. We've had a couple of guests that have been members of YPO, EO, some of those kinds of organizations, which is really important. So, well, this was really wonderful to talk to you, Ab. Thank you so much for being on our show.

Ab Emam (29:50)

Of course, it was my pleasure and I'm glad that you invited me.

Elizabeth Shea (29:52)

So how can people get a hold of you?

Ab Emam (29:56)

Gosh, LinkedIn is the best. Ab Emam, LinkedIn, what is it? LinkedIn, just Google, yeah, LinkedIn, Ab Emam. I'm sure I'll pop up.

Elizabeth Shea (30:07)

All right, thank you so much. All right, have a good day. All right, bye-bye.

Ab Emam (30:09)

Of course, was my pleasure. Thank you, bye.