How the Right Strategic Relationship Sets Up a Smooth Agency Acquisition

Smart Agency Masterclass with Jason Swenk: Podcast for Digital Marketing Agencies

Do you want to sell your agency in the future? What strategic relationships can help you grow and possibly sell your agency? Roy Chong was working in the music industry for many years before deciding to make a drastic change and start over in digital marketing. Now with Noodle Wave Media he helps companies in the healthcare space thrive by developing meaningful strategies and tactics that move their marketing efforts towards success. In this interview with Jason, Roy discusses the most important decisions he made for his business, how he always envisioned a strategic partnership for the future of his agency, and why you should always take your passion wherever you go.

3 Golden Nuggets

1. The most important decisions for his business. Roy never really saw a reason to rent an office space he could not afford at the time, so very early on he invested in having a remote working model with a team that could work from anywhere in the country. It shaped the way his agency works and its culture because he acknowledges that not everyone likes or can work remotely. Finding those types of people that shared this vision really helped build their culture. The second biggest decision was niching down to focus on the healthcare vertical, where the agency really found its footing and scaled to the point where he could sell the agency.
2. Making the decision to sell. Roy always envisioned a strategic partnership for his agency. He knew it was in his future but just needed to figure out how it would work and what would be the right time to pursue it. Jason helped him by pointing out some things he needed to work on, which provided some time to add another layer of value for clients. He also had time to consider what he didn’t want to lose with the deal, and the type of relationship he expected from this partnership. All of this ultimately led him back to Jason and to the partnership that would enable him to still be in charge of day-to-day operations.
3. Taking your passion wherever you go. If you ever have to start again from scratch remember to take your passion with you. Passion is commonly depicted as what we do, “that isn’t necessarily true,” Roy says, “It’s who you are.” At one point in his career, he made the transition from the music industry to digital marketing. There is seemingly no correlation between both, but Roy argues what made the difference and helped him succeed in a new industry was taking a passion for helping people with him.

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E2M Solutions: Today's episode of the Smart Agency Masterclass is sponsored by E2M Solutions, a web design and development agency that has provided white label services for the past 10 years to agencies all over the world. Check out e2msolutions.com/smartagency and get 10% off for the first three months of service.

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Finding a Strategic Relationship That Fits Your Agency Growth Goals

{These transcripts have been auto-generated. While largely accurate, they may contain some errors.}

Jason: [00:00:00] Hey, Roy, welcome to the show.

Roy: [00:00:04] Hey! Thanks, Jason. Thanks for having me.

Jason: [00:00:06] I'm excited to have you on the show. So, uh, for the ones that have not heard of you yet, tell us who you are and what do you do?

Roy: [00:00:13] Yeah, so I'm the CEO and founder of Noodle Wave Media. We're a full-stack digital marketing agency focused on the healthcare vertical. I've been doing that for 11 years. Prior to that, I was in the music industry as a music producer, and I've got kind of that entrepreneurial spirit so I flipped a couple of the businesses along the way. Father of two amazing boys and a passionate creative and marketer.

Jason: [00:00:44] And how did you get started and how long ago did you start your agency?

Roy: [00:00:49] Yeah, so I started it probably in 2000, around 2010. I had just kind of rotated out of the music industry and I'd spent 10 years there writing music for artists and I got signed to a production deal in New York and I was running the artists for my idols, and then I did a stint in Korea.

And then I decided, you know what, I'm kind of done with this it's time to start something new. And I realized at that time I’d been in the content game for 10 years. I thought, boy, combine that with using ability to create content and find a thread that resonates with people and tie that to helping small businesses, cause I had a marketing education and experience already, that could be something.

And so I started that 10 years ago with that exact premise of leveraging content to help brand build brand equity for clients. But at that time, like, and you'll know this, Jason, like that wasn't a thing, really. Large brands we're doing that, leveraging YouTube and all kinds of other platforms, but the small business owner didn't really have access cause they just didn't know how to do it.

So I started it at that time with that premise in mind. And I just remember people thought, yeah, but like who's going to search for a content marketing agency like that just seems offbeat and really way off the normal path, because you know, their traditional brick and mortar agency was the way to go. I don't know, but I think it's going to be something.

And of course, we all know that content marketing became the thing and we've been on a steady increase in incline from there, leveraging that idea that kind of the small to medium-sized business owner doesn't realize that the biggest piece of equity that they have is the knowledge in between their ears and the experience that they have.

So we just provided them the platform and support to do that. And here we are 2021 and... 22 geez 22. I lost the year. I think we all lost a couple of years there.

Jason: [00:02:43] We all did lose a couple of years. What was the biggest deal that happened to your agency or what's the most exciting thing to you and why when you were growing your agency?

Roy: [00:02:56] I definitely would have to say that I built the agency on the remote working model or distributed model, however you want to call it. And I did it really out of just trying to solve problems. You know, I couldn't afford office space. Like I just didn't have the cashflow, but then also at the same time, I was like, does it really even make sense for me to have an office? Because it's just going to eat into my margins.

This is just the way that I thought at that time that well why can't I just hire a bunch of people who live wherever, but are super talented and have them work on these projects with me.

It ended up of course, being very prescient and not until COVID hit that everybody else got it. But of course, leading up to that, that trend was already there, right? So COVID obviously the big pull ahead, but I would be championing this whole remote working lifestyle and people just didn't get it.

Like it was another thing that people thought I was crazy. Like, well, you need an office, right? Cause you need to have clients come and see you. I was like, I don't think so. I don't think I need that.

And for us, that ended up probably being the single most important decision that we made as an agency, just to keep that. And my vision was always, can I scale this? Could it be like from one man band man show to like 10 staff, then how about 20? How about 30 then? How about a hundred? How about 300? Keep going from there.

And that's just kind of, what's continued to happen today. And of course, when COVID hit people are like, oh, okay. I get it. That makes total sense. And now at a global scale where we're doing this thing.

Jason: [00:04:22] I love the remote thing because you know, you can recruit way out far, you know, all over the world rather than just driving distance. And then also too your team works a hell of a lot harder because they're not in a commute. I remember when I had an agency in Atlanta, I had some people that were in a car for two hours a day that could have been doing other things, having fun, relaxing, working on the business, maybe.

Roy: [00:04:50] Yeah, totally. Yeah. And that was the real value proposition. And actually, I don't know if a lot of people realize this though, maybe now they do, but at that time have... being in a remote working model, only certain people would thrive under that environment.

Like you and I would probably both know like people that just, they need to be around people. They need to be in an office. And that works for certain people and that doesn't work for other people. So, um, it ended up becoming a pretty cool automatic filter for developing a culture of people who worked the same way, who thought the same way who had the same kind of time management skills and critical thinking skills.

So just again, like when I say that that was the single most important decision, not only from an operational standpoint but like from a culture standpoint, from a productivity standpoint, like you mentioned, it had a lot of trickle-down effects, you know, making that choice.

Jason: [00:05:41] Other than, you know, doing the remote, working and figuring that out. What's the most important thing that you learned running your agency the past years?

Roy: [00:05:50] Uh, for sure. The other thing would be probably niching down in this specific vertical that's super key. I always knew that at some point that I would want to either exit the business or develop a strategic partnership.

I knew we didn't have the, necessarily the resources or the kind of client base to be a bigger agency. And our, my strategy was always to be part of a bigger agency. So I just thought about like, what would make us attractive to an agency that already has, and does everything? And for us that would just be to let's find a specialty, let's niche down. And it kind of just organically happened.

Like I didn't set out to build a company that like provided marketing services to the oral health care space. It's not something that you like set out to do necessarily. It was just through relationships. And as I kind of saw that continuing to grow in our reputation as, okay, we've got to double down on this vertical.

So by niching down two things happened. One, yes, we prepared ourselves for an eventual exit where we gained domain expertise in this one vertical. But it also, from an implementation standpoint, when we ran campaigns, it was just so much easier. Like there was no learning curve.

Over the years, we developed expertise in orthodontic, dental care, pediatric dentistry. All these different verticals. So we knew that our target audience. We knew what the client did. We knew what the value propositions were in general at all we had to kind of do was hunt for the nuance of that specific client in that specific geographic area. We compress the discovery process time to really short period of time because we know the industry, right?

So that was the other kind of key thing for us.

Jason: [00:07:32] Awesome. And eventually, you sold the agency. So why did you decide to sell? And kind of walk us through that process as well.

Roy: [00:07:41] Well, it's funny because my own personal journey was thinking about, you know, when is it time to kick in the strategic partnership that I always envisioned would need to happen? What time does that look like and when does that need to happen?

And as I was going through that journey of searching, I found you through that journey, which was so funny. And, uh, you know, kudos to you and your funnels and your content and having stuff out there that allowed other agency owners to discover that.

And I learned a lot just from reading some of your content about what I needed to do to prepare but also engaged you in a conversation at that time. You were gracious enough to entertain just a quick chat and let me know that there's some things that maybe I need to work on. And so, I think for me personally it was just knowing that it was time for me to add another layer of value to the clients. But also being real with myself in terms of what I wanted out of my lifestyle.

There's kind of a, like, I could easily say I could grow this business and then exit, you know, in the next five years if I wanted to, but what’s the cost, right? Like what am I giving up in terms of my lifestyle in order to do that?

I think when we get into leadership conferences or we talk with other entrepreneurs, we talk about the KPIs and the metrics and the sales figures and all that stuff. But oftentimes we don't talk necessarily about what's the livestock cost. What is the other side of that coin? And I think for me, it just wasn't worth it to do it alone.

And that was the point when I said, okay, it's time to find a strategic partnership. And that's what sent me on that journey. And it's funny because it didn't happen for two years, right? Like I started it and I thought about it and I marinated on it. I think at the time you were like, Hey, there's some things you work on.

And then two years later, I was like, hey, I worked on these things. What do you think? And then the conversation continued from there.

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Jason: Yeah, I always, I tell agencies the ones that have visions for possibly selling because too, like if you get to a certain point and you may not want to sell. It's not right for everyone. And sometimes Thomas and everybody at Republix gets mad at me cause I'll talk people out of it sometimes. But like you shouldn't sell, you got everything you want.

And then sometimes the other people were like, no, I want to take chips off the table. I want to sell, I want to do other things. I want to have a life after selling the agency. And I'm like, okay, cool. And I'm glad that you came back because I always tell people, start relationships with the people now that you think could buy you later on.

And right? Like we talked two years prior and then we were able to, you know, strike up a deal, and I'm so excited that we were able to do that. And too many people think about, well, I'll sell when things are bad. I'm like, no, no, no. You're not going to get what you want. You're not going to be happy afterward. Cause it has to work for both parties.

Sell when things are really good.

Roy: [00:11:42] Yeah, totally. Yeah. And it was interesting, I liked what you said about relationships because I did explore, you know, going the broker route and people had approached me over the years with that, uh, let me just entertain some of these conversations, but there wasn't that like relationship aspect, it was very transactional in a sense.

And at that point, I was like, wait a second. I got to reach back to Jason. Cause we had a conversation about this before. Like I actually kinda forgot because I, you know, there's all these other opportunities coming down the pipeline and then it just so happened that it was the relationship-based connection that ended up working out, right?

Jason: [00:12:16] Yeah. I mean, that's what I tell everybody is like your net worth is what your network is. You know, and the people that you know, and you hang out that you trust and they trust you. I mean, that's why we've been doing the mastermind for so long. It's about getting the right people around so you can create those relationships over time.

What surprised you going through the acquisition? Was there anything that surprised you?

Roy: [00:12:43] Oh, for sure. Yeah. It was a lot more challenging than I thought it was going to be, right? Like, I know you had prepared me with a couple of kind of points about this is going to be a lot of cows. And of course, Thomas and the team at Republix, they've been through it a million times and so they knew what was going to happen.

Like they're preparing me, like it's going to get busy, but it's very challenging to switch the hat between all of these corporate finance and other aspects of your business that perhaps, I mean, some industry leaders and agency owners might know that stuff really well, some don't and they leave it to their bookkeeping and accounting team.

I think it's wise to have a breadth of knowledge across all of those disciplines, right? But to the extent of like doing the deal, managing lawyers, managing accountants, and then in a very active way, more so than you would normally running your business. And then on top of that, running your business, right? It became pretty challenging. So it was, I knew that it was going to be weighty, I mean, it's such a deeply personal decision that you make.

So there's that, that's the other component like there's this emotional attachment to going through this process and then you're like doubting yourself or like is this the right time? Should I be doing this and that? And then there's negotiating aspects.

This is all these emotions that are happening, right?

Jason: [00:14:05] It's my baby. How can I sell my baby?

Roy: [00:14:09] It’s my baby, how can I…? And then you have people saying you shouldn't sell this and other people be like, oh, you should totally do it, that's amazing, right? So I think what I wasn't prepared for was the emotional rollercoaster that I was going to go through with that.

But in the end, what happened was, you know, luckily that it was a, I could see it through like this, this, this storm and on the other side of this storm is the breakthrough and the completion, and then it kind of winds down. So I think for any agency owner, that's thinking about selling, there is that storm you're going to, it's going to get tougher. It's going to get busy. You're going to go through the storm and then you will eventually come out that other side.

Even if you don't sell the business, you learn a ton of about your business along the way.

Jason: [00:14:48] Why tell people…? Cause there's lots of people that reach out and be like, oh, we want to buy you. And then they right they’re, they're scumbags. But I say like for legit people, you should go through the process because like you said, Roy, you're going to learn a ton. And then you're going to really know, because I went through it a couple times before we actually sold in order to learn more about like, what do they need?

So then when we finally did go through it for real, we had everything like, here it is, here it is. Boom, boom, boom. There is still that emotional roller coaster. I think I flipped a coin to decide if I was going to do it or not. Like, literally it was like 50, 50. It all worked out really well.

What was the turning point for you? Because you know, you're going ups and down. Yes, no, yes, no, yes, no. What was the turning point for you when you were like, all right, I'll do it? And how close was it to the close? Was it like the night before?

Roy: [00:15:44] Yeah. Like if you talk to Thomas, he'll say, yeah, this is one of the, the more messy negotiations that we had gone through because there was just so much back and forth and, you know, I was really fighting to have peace with the deal.

So I was fighting for things that I wasn't necessarily happy with upfront, but, you know, I prayed through it. I'm a man of faith and that was one thing that Thomas and I really connected on was, you know, that spiritual component, but praying through it a lot was really important for me. But I think at the same time, the turning point was some of the things that were happening in the periphery of my life at that time.

And in the periphery, like the business metrics made sense, everything lined up. I love the guys at Republix. I was really connecting with them. All of those things lined up and I have kind of like a laundry list of things that I think any person that's selling their business should check off in doing any deal.

But the real pivot for me was things that were happening around me. Like, my son, more of it, but a good friend and his brother passed suddenly, you know, like that was huge. Like, again, I'll go back to the things like cost, and this is just my own experience around, like, what was the cost? What is the cost? Cause everything has a cost. There's a, there's an upside, but there's a cost to getting that.

And so for me, it was really like those periphery things that had me say, okay, you know what? I think life is pointing me in this direction to do this because I want to free up myself to be more present as a father, more present as a husband, kickstart some things that I, uh, ventures that I've wanted to do just haven't had time to do.

So all those like soft lifestyle components really had an impact. I think it's just important to consider that iike for me anyways, it was one of the biggest transactions I'd ever have to do from a business perspective. It's not just about the money, you know? It's what are you gaining from this?

And if it's equitable on both sides, then it makes sense. It should make sense, right? Because if you just think about the money part of it, you might make a decision that you regret later, right? You have to really be happy with the deal at the end of the day. And I think for people that are chasing the money, they might be unhappy because they'll sacrifice like working with a buyer who you don't really like, but they gave you the best offer.

And that's not always the best decision to make when you're doing the deal. You got to really like the people you're going to work with because you're going to continue, hopefully, to work with them. So it's just those kinds of factors that kept it in my decision-making process.

Jason: [00:18:07] What's life like now?

Roy: [00:18:09] You know what? Nothing's really changed other than I just feel more at peace with everything. You can relate to this, like being in leadership, being an owner of a business and in leadership position is a pretty isolating lonely place because, I mean, even your spouse may not be able to understand truly what you're going through unless they were, uh, agency leader or owner before.

And so I think for me, I needed that sense of community and I needed a team of people to bounce these agency's specific leadership, specific ideas off of, and being a part of our Republix has provided that.

I still run the business on a day-to-day. That was really key, I think, for our communication to clients and the staff that I still be at the helm, and that's still part of the plan. So at least from a day-to-day, it hasn't really changed, but the weightiness of full ownership has lifted. And that's actually freed me up to be more open and be more inspired.

And you think even bigger than before, you know, like we're now joint, doing joint pitches with other agencies to bigger clients that we didn't have access to before, on one hand. And even clients that we did have access to do have access to, we can pitch better ideas.

So that's, for me, such a huge accomplishment, not only in building a business from nothing to where it is today, where, like you say, most businesses think about selling when they're on the downspout and then they go bankrupt, right? Like 80% of businesses fail. So we're in that small margin of businesses that have been successful.

So that's a huge accomplishment for me. And I'm kind of walking around with a little extra pep in my step, having achieved that and now scaling the team and growing the business in a way that I feel really confident that we can set it up for the next 10 years of growth.

Jason: [00:20:03] Yeah. And when you have that pressure off, you're not really worrying about money anymore. You can make decisions based on just what you feel rather than, oh, I need to take this deal.

And what people don't realize is when you actually start making that switch… If you did that in the very beginning, you would have grown five times as fast, and everybody always thinks they're were like, you guys have money. So it's easy for you guys to say that, but you know, looking back, if I could tell myself again on that, I'd be like, dude, start with that from day one.

And you know, in the very beginning it might be a little tougher, but later on, it'd be that much.

Roy: [00:20:45] Yeah. You know, like, I, I, at least for us, like we have pre, we have pretty good margins for the last 10 years. Like w like, as a corporation, we'd never had real money issues, like we didn't have debt. We operated in, you know, with a 45, 50% margin.

So decision making around money for the business was never an issue. I think for me personally as well, it wasn't necessarily the money that makes me, cause you know, when you get a liquidity event like that, you have all kinds of other problems after that, right? Like, so…

Jason: [00:21:14] Lots of cousins coming out of the woodworks.

Roy: [00:21:16] Yeah, right? Yeah. Yeah. Ray Ray from way back in the day who you haven't talked to in 20 years or, you know, like, or just managing it at all, it poses other situations. But I think it's, you know, there's something unique about calling yourself, the singular owner, where every decision comes down to you. And again, nothing's changed. I'm still making every decision.

Like Republic's is really great that way in the sense that they really want you to work autonomously, but at the same time have be part of this bigger vision. So I'm still managing the business, but there's just this underlying weight of that's been lifted because you feel like you have support, right?

There's other people who have been through this a million times that know what you're going through, as opposed to like, boy, I feel like I'm really just kind of going through this on my own and no one really understands. And so that part of it was really huge for me.

Jason: [00:22:09] Awesome. Last question, if you had a billboard and you could put anything on it, what would it be? What would it say?

Roy: [00:22:18] Oh, that's great. That's great. I love that question. Uh, it would be this: Take your passions with you.

Jason: [00:22:25] I like that.

Roy: [00:22:26] What I mean by that is a lot of people get caught up in thinking, I gotta find my passion, I gotta find my passion. And passion often gets related to what do you do? Which isn't necessarily what your passion is. It's who you are.

And that thing can be taken with you to whatever it is you're doing in the moment. Whether that's, you're a problem solver, whether that's your, you want to make a human connection, whether you want to give to people, whether you want to build people up, whether you want to, it doesn't matter what it is. Just know that you can take it with you wherever you go.

I took what I do in the music industry to digital marketing to help orthodontists and dentists, you know, like it's just, there's nothing correlated other than what my passion is to solve problems. And that was my billboard. That's what it would it be.

Jason: [00:23:18] I love it. I love it. What's the website people go and check out the agency outside of Republix?

Roy: [00:23:24] Sure. Yeah. It's noodlewavemedia.com. Noodle like as a bowl of noodles, wave, wave media.com. I would say that.

Jason: [00:23:32] Awesome, man. Well, Roy, thanks so much for coming on the show.

And if you guys enjoyed this episode, make sure you subscribe, make sure you comment. And, uh, if you want to be around other amazing agency owners where we can see the things that you might not be able to see, because just like Roy was saying, like it's very isolating making your own decisions and maybe you wanted some help with that. I'd love to invite all of you to go check out digitalagencyelite.com.

This is our exclusive mastermind for very experienced agency owners. Go there now, and until next time have a Swenk day.