50 NDAs → 3 Offers: Why This Agency Drew Buyer Interest

All right. I'm here with Newton, the founder and former CEO of ePropel. Newton, how you doing today?

Good, Andrew. How about you? Great to be here.

Yeah, thanks so much for coming on the podcast and congrats again on the acquisition. I'm super excited to hear the story. But before we dive into that, do you want to just give a brief introduction of yourself for people that may not know you?

Yeah, sure. Yeah. First of all, shout out to Acquire for helping with the process. They definitely were a crucial part of the whole process here. And yeah, a bit about myself. So I'm a Canadian entrepreneur based in Calgary, so that's kind of near Banff in the mountains. And personally, I enjoy building things from a young age. So I started two nonprofits back in high school. One of them are actually still running today, so it's been like 10+ years that's been running. And I think from there I just realized I like turning ideas into reality and I just like building stuff, and that, that, you know, pushed me towards that entrepreneur journey. Um, outside of work, my Christian faith is a big part of my life, so I like to volunteer at my church and stay connected in community. And I'm a former national-level athlete in badminton, so that taught me a lot about how to be resourceful and disciplined. So I, I carry those traits, uh, over in business as well.

Nice. What an intro. You, you got an interesting background. I like it. Uh, tell me about ePropel. What, uh, what did it do and what problem did it solve?

Yeah, sure. So I started an SEO agency called ePropel. Um, I actually We started it back as a side hustle a while back, and then I went full-time in 2020, kind of during COVID and, and we incorporated in 2021. So our main focus is we help local businesses and e-commerce brands to grow through organic search on Google, also known as SEO or search engine optimization. Nowadays it's really interesting too, because with the rise of AI search, we've also been helping clients with like ChatGPT search. Perplexity and, you know, showing up on like AI search results, which has been interesting as well. Uh, and so yeah, it's been quite interesting as well. We've worked with customers across a variety of niches. Um, it's interesting cuz, um, a large portion of my work ended up being in regulated industries like CBD and cannabis retailers because they couldn't run paid ads. Like they were literally banned from running ads.

Mm-hmm.

And because you couldn't advertise on Google or Meta, like SEO became one of the only viable marketing channels for them to acquire customers. So, so that's kind of been an interesting thing to learn along the way. And yeah, along the way, you know, thankful and blessed to build a great team. So we built a fully remote team across North America and the Philippines that handle fulfillment while I focus more on the strategy and overall, like, you know, growth and systems for the business.

Nice. That's really interesting about the industries. I didn't know that. How did you get your first customers? What was the sales or marketing strategy initially?

Yeah, so I didn't know a lot of people, to be honest. So we became cold outreach ninjas. And, uh, yeah, like I remember, I mean, like my first customer was through just like posting my network and then I think someone reached out needing help with website and SEO and I was like, okay, there could be something here. Uh, but I quickly exhausted my network and then, uh, from there I was like, okay, I need to find more people. And the timing kind of worked out well with COVID because I think people were open to like doing business online and, you know, doing business through like video calls. So we started by like, like I remember I would be like cold calling like landscaping companies and I would be like sending Instagram DMs to e-commerce brands to see if we could help them with SEO because paid ads was becoming pretty expensive by then as well. So, you know, e-commerce brands in other areas were looking to other options. And we started by doing some Instagram outreach, a bit of LinkedIn outreach as well. And then what really helped the business take off was actually cold email. So we got really, really good at Cold email. Um, and, um, yeah, like we've, we've done everything from kind of like personalized emails to volume-based emails.

Nice.

And, um, I think it was really interesting too, because like, I think, yeah, like after we had our first, like, you know, we had, we had some clients in CBD and in e-commerce and in like local businesses. Um, like CBD was kind of just random, I think, because we got a referral to help our first CBD client and then they got really good results. And so we put that into a cold email and sent it out to a bunch of retailers and I think timing was also good too, because a lot of them were just given new licenses and it was kind of like a growing space and there was like a bit less competition. So, um, it used to work pretty well, um, at the time. And, um, yeah, that got us, got our foot in the door and helped us land some more clients along the way.

Nice. Tell me more about the cold email strategy. If like another founder is listening to this, are there any tips you could give on cold email or like things that totally don't work, or like a subject line that worked really well for you guys?

Yeah, so I think one rule of thumb is like, um, so one is you want to get high open rates. So you want to aim for like above 50%, because if they don't even open an email, it doesn't matter what you put in it. First of all, so subject line, we did a lot of subject line testing. Um, I was surprised, like even some simple ones like question and stuff like still work pretty well, even though it's kind of generic, but you know, we played around with a couple of different like subject lines. Um, And then in the body of the email, like, I think first of all, like, adding links to your calendar does not work. Saying we do SEO does not work. Like, I think people care less about what you do, but more about the outcome and what you can do for them. So we focus more like, hey, you know, we helped, you know, this other company to get X results. Looks like there could be an opportunity to help you as well. Like, are you open to Learning a bit more. And then once they reply, then we have like a whole follow-up sequence and email tree. Um, so basically like depending on what response they gave, we would send them a response. My virtual assistant would then keep on following up with them until we get them onto a call. So, um, so like, yeah, follow-ups was really key. Like some of the calls and clients we closed, you know, maybe came from like the 5th or 6th, like follow-up after like a month. Right. So, so definitely following up is pretty key with these, these people.

That's simple but huge advice, especially in sales. Like the money's in the follow-up for sure.

Absolutely.

Did you ever get a client that just responded back and said, take my credit card immediately, here you go?

I wish it was that easy, but no. Yeah.

Yeah.

I think, you know, after hopping on a call and they're like, okay, like, you know, this person is legit and like they can tell that like, I know what we're talking about and we have experience, you know, helping others like them. I think that helped to build a lot of trust. And then, you know, from there, some purchase sooner. And it's like we have, we have had some clients who's been with us for like 4+ years that we got from like cold email, actually 5+ years now. Um, that's amazing. And, um, others it took longer, like, you know, maybe others said no in the beginning and then like, you know, randomly 2 years later they were like, hey, we're in now. So, so you never know. Yeah.

The money's in the follow-up. That couldn't be more true. Uh, what was your business model?

Were you charging monthly fee?

Was it like a service project-based? What did the business model look like?

So we operated from a recurring revenue model. So it's like, like a monthly retainer depending on, you know, we had a couple of different like packages, like, so we had like, you know, 3 main packages. And so they would choose a package and then we would auto-bill them at the start of each month for the work that we do for them.

Nice. So you had a great business. You were profitable, you were growing, you had tons of happy customers. What made you ultimately decide to sell a business?

I think what I realized is like I've been running the SEO agency for a couple years and I felt the itch to build something new. And actually, like for some time I actually tried to build like two businesses at once. I kind of built another business alongside that business. And what I realized is one of them ultimately ends up suffering because like I would, you know, basically pause like acquisition and growth for one business and then work on another business, but then, you know, if you don't work on a business, it kind of starts to dwindle down. And then I, then I switched back and forth quite a bit. So then what I realized is like, okay, like it's better to just like fully pass it on. Like I want to make sure that it was in good hands. You know, the SEO business, I've been doing it for like 6 years. It's kind of like my baby. And so I want to make sure someone takes care of, takes good care of the business and has the desire to grow it. And then that allows me to then fully focus on, uh, you know, new, new businesses and projects that I want to work on. Nice.

I think that makes complete sense. It's like that saying, the guy who tries to catch two rabbits catches none. Super common and great reason to sell is if you have one business, you want to start another one, or you have two businesses. We see that quite a bit at Acquire because you're right, one business will suffer while you focus on the other one, which ultimately makes both businesses suffer. So I always think it's best to make a decision and go all in on one business and put all of your effort there. So great job with that. But the Acquire acquisition process, what was your expectations and what did the first couple of weeks look like?

Yeah, so I think Acquire really came at the right time. I feel like I've always had this belief that I thought only software businesses could sell because growing up all I heard was tech stories of founders raising and exiting. So I didn't realize that I can even sell like marketing agencies in the first place. And so how I found out about Acquire, it's kind of a fun story, is that I did some coaching. So I coached some other like marketing agencies on how to grow their business. And then one of my coaching clients actually sold his marketing agency on Acquire. And so it was really cool to see that because I was mentoring him and helping to grow his business to a pretty good size. And then he then successfully exited on Acquire as well. And then after he exited, you know, we stayed connected and then we were catching up one day and then he was telling me about like Acquire and Kai. And then I think he really helped me to be like, okay, well, you can sell a marketing agency and, you know, like you don't have to have like all your ducks in a row as well. Because I think for me, like my expectation of selling a business was like this like huge grandiose thing that you have to like have every single thing together and then you can even like give it a shot. Was like, you know, when he shared his experience from selling on Acquire, he was like, hey man, honestly selling a business is just like selling a house, right? It's like, you know, some are like brand new renovations and, you know, everything is good. Some houses need a bit of renovation and that's okay. And I knew that like I didn't have everything set in a row, but I was like, all right, let's give it a shot. And then yeah, like Kai from your Acquire team has been super helpful in the process because like he was like, hey, like, all right, like here's like the actual things we need, not the 30 other things that you thought you need. And he really helped me to simplify the process and like not get overwhelmed. And like, he literally like walked me through it like step by step, which like helped a ton. And like, I remember when I first listed it, so I think I listed it back in like end of September last year, and then I didn't really know what to expect. I was like, okay, like, let's, let's see like what happens. Like, I'm really glad I did the Guided with Acquire program because like as a first-time Like, as it's my first time selling a business, like, I didn't know anything about the process. So like having someone walk me through it, being like, hey, like, here's, here's like what to expect. Here's, you know, some multiples to go for. Here's like what to look for in buyers. Um, and also like the, the newsletters was actually very, very helpful because I think we did like 2 newsletter blasts, which actually, uh, led to most of the, like, you know, NDAs like that came in. Um, And then so, you know, after each newsletter blast, we have like a, like an influx of, uh, of NDAs. And then, you know, some of them, um, went, went through from there. And then, um, you know, some of them turned into calls. I think we had like 40 to 50 NDAs, but like each newsletter literally brought in like 15 to 20. So like, if you guys are on the fence of doing Guided by Acquire, like you should definitely do it even just for the newsletter and the guidance. It's like, it's already worth it.

So That is a great overview. I thoroughly enjoyed every bit of that. So many parts to break down. One part that sticks out is you mentioned selling a business is kind of like selling a house, and that's definitely true, like, except you don't want the house to be like on fire or anything like that. You can't sell a house like that. But yeah, there's all sorts of buyers. There's buyers that are experienced fixing up houses or adding additional rooms. I'm using analogies here, but I think you get the picture. And then, yeah, a lot of what we do at Acquire is we're experienced in the process. We know what buyers look for. We know what are red flags with buyers, which ultimately helps you get successfully acquired, which is by far the most important part. Tell me about the winning buyer. What stood out about them? Was it their expertise in your industry? Was it the overall offer? Was it the terms? Did you guys just get along really well? What made you decide to move forward with this buyer?

I had a couple of criteria that came to it because I didn't want just like any buyer that offered, you know, the best offer kind of thing. So we actually ended up getting 3 offers and then I moved forward with one of them. I think for me, like I wanted someone that I knew would be able to continue growing the business and like, you know, take good care of the team and clients. So, you know, for me, like, you know, some of my team members have been with me for like 5+ years., and I didn't want someone to come in and fire all of them. So, uh, so I wanted someone that would like, you know, keep on the team and also like get along well with the team. And, um, one thing, one thing that Kai taught me a lot too was like, you know, it has to be someone that you also personally get along with because, you know, after selling the business, there is like a transition period and you're spending a lot of time with the buyers. So, you know, it's, it's best if it's someone that you also get along with, um, as well. Um, and then yeah, like Obviously having the right deal structure, the right mix of upfront versus seller financed, that also was taken into consideration as well. So ultimately I chose the best offer based on those criteria in mind.

Nice. I love that, especially the part about your team and taking care of them. A lot of buyers will completely understand, they'll actually want to work with your existing team. I think that surprises a lot of founders where, sure, there are acquisitions where a private equity firm comes in and literally fires everybody, but that's not always the case. Majority of buyers that we work with, I'd say 99% of them are going to want to take care of your team just as you have. And if that's a concern as a seller, that's always something to bring up with the buyer and just let them know. And it's a great opportunity for you to showcase your team and talk about them and how necessary they are for the business. So really glad you found a fit like that.

It's awesome. Thank you. Yeah, I met the buyer through Acquire, obviously, and I think it's just really helpful to even just have a platform where it's like there's already people that want to buy businesses and there's people that want to sell businesses, right? So it's like, because I think that was another thing I didn't know before. I was like, okay, like where do you even find potential buyers, right? And so it's great to have like a platform like Acquire that provided that. And yeah, like I think ultimately the buyer that I ended up moving forward with, it was like the right fit for him as well because he also looked at a lot of different businesses and then he knew that Well, given the stage of life that he was in, you know, he was— he's a dad, he has kids, like he didn't want to build a business from scratch. He'd rather buy a business and have a team so that he could just get, get moving with it. Right. And you already have like a playbook of like, you know, what works, what doesn't work. So, so yeah, like it ended up working out well on, on both sides. That's awesome.

Sounds like a true win-win acquisition. Those are my favorite to see.

Yeah.

Now that you've been through an acquisition yourself, have you had a friend or another founder come to you for advice? What's a couple of pieces of advice you'd give them if they were looking to sell their business?

I had a couple of friends that started to ask me because I have a lot of friends who also run marketing agencies and they're like, wait, you can sell a marketing agency? I didn't even know that was a thing, right? Because again, like most of us think we can only sell like SaaS businesses. And I'll say some lessons are that, yeah, like number one is like keep clean books. Like, you know, we had our bookkeeping done pretty well. So like, you know, the first thing that people ask for is going to be your P&L and your financials. So it was helpful to have that all organized. Number 2 is that you don't have to have all your ducks in a row. So even if it's like, you know, maybe even if like some numbers are like a bit down or like maybe you don't have like a set sales guy yet, like you can still sell the business. Like it just, it's just a business that needs a bit of renovation, but actually the right buyer sees that as an opportunity. So, so yeah, that's, that's totally fine there as well. One thing I learned from speaking with different potential buyers is like buyers really like recurring revenue and stability. So I think one thing I, wish I knew in hindsight, if I were to kind of do this again, is like, I wish I would have signed my clients onto like longer agreements instead of just like month to month because like we did have recurring revenue, but we didn't have it like in like, let's say like a 12-month contract kind of thing. You know, even though without that, you know, people still stay on for like, you know, 12 months, 3 years, that kind of thing. But like if you do have those set contracts like that, definitely is like a big plus. In the buyer's eyes. So it's like, let's say if you know that you're going to try to exit in the next couple months or the next year, you can already start lining up those, you know, new clients into those contracts. Or like you could upsell current clients into longer-term contracts to prepare for that exit as well. And you can also build it into the agreement that, hey, like the new owner carries on these contracts so that those contracts still continue afterwards as well. So That was like another big learning as well. So a couple of learning lessons there. Just, you know, there's always different specific areas I can dive into, but it just depends on what parts people are interested in.

So that's amazing advice. 100%. A lot of people don't know, but we do help a lot of agencies sell and acquire. That's our number 2 category before SaaS. Interesting. Yeah, because they're great businesses. And if you're able to, you know, plan out in advance and build recurring revenue streams like you were able to, you'll get a ton of interest from buyers. We're seeing a lot of demand for this category specifically. And a shameless plug too is if there's a founder that's listening to this, you can meet with us in advance and we can go over things that you just went over, Mike. You know, is there an opportunity to take a service component and turn it into a productized component where there's recurring revenue and walking through how the contract should be structured, that sort of thing. Because you did mention another great tip, which is you want to have something called a change of control clause in the contract. Because if you sell the business and that change of control clause is in the contract, it could void them. Super easy to add in, but just planning in advance, you can avoid a lot of that.

Yeah, absolutely. Yeah, planning in advance is key. So yeah, definitely if you're on the fence of working with Acquire, just do it.

Right on. You're awesome, Newton. What's next for you? What's the next chapter looking like? What are you building next?

Yeah, so I already started another business and just dove right into it. I also carried two of my team members with me as well., so it's nice to get some help there. Um, yeah, like ultimately, like I'm building something in the creator economy, so it's a completely different niche, completely different service, still in the online space and still in like an area that I know, but just like very different than what I did before with SEO. Uh, but yeah, really excited about the process. It is still kind of early stages, but yeah, excited about what we're building at FirmPath.

Nice. Well, Newton, I'm rooting for you. Congrats again on the acquisition. I hope maybe you'll be back here one day with an even larger acquisition. Who knows?

Yeah, I think the process really taught me a lot and inspired me because And now I can kind of, you know, build, build and kind of plan ahead with that in mind as well. At least have the option. Yeah.

All right. Well, for those that want to follow you online, where can they find you?

So the best way would be on LinkedIn or on Instagram. You can just search my name, Newton Zhang, and then I'm usually the first one to pop up.

I'll put it in the show notes. All right, Newton, thanks again for coming on and congrats again on the acquisition.

Thank you. Yeah, appreciate the time and for being on the podcast as well.