Merging With a Peer Agency Can Break Your Growth Ceiling

Many agency owners hit the same growth plateau around 20 to 25 people and try to grind their way past it. Merging with a peer agency you already know can create a more mature business almost overnight, and the same discipline that makes an agency sellable also gives its owner a better life.

I joined Steve Guberman on the Agency Bytes podcast to discuss merging Myjive with Union, staying on through the Valtech acquisition, and what holds agencies back from a valuable exit.

Who Is Albert Banks?

00:00 Steve Guberman: Welcome to Agency Bytes. I'm your host, Steve Guberman from Agency Outsight, where I help founders turn their firm into an asset they can grow, sell or actually enjoy. This week, my guest is Albert Banks. Albert is a 20-plus-year agency veteran, former developer and recovering agency owner. He scaled and sold his own firm, from founding Myjive to merging with Union to being acquired by Valtech. Today he's the founder and principal of Apertus, where he works as a fractional leader and advisor helping agency founders build operationally sound and highly profitable businesses. It's a very similar world to the one I live in, so I'm excited to have you here to share your perspective on where we're at, what's going on in the agency space and how you're making an impact. Thanks for joining me, Albert.

Albert Banks: Thanks for having me, Steve. That was a great intro. It made it sound like all of that was so easy, but it very much was difficult.

Steve Guberman: Twenty years of blood, sweat, tears, sleepless nights and long weekends. Give us a quick, augmented version of my two-second intro.

How Does a Computer Engineer End Up Running an Agency?

01:18 Albert Banks: Absolutely. As you pointed out, I started as a computer engineer. I thought I was going to get a job working in programming, and some people can relate to this these days, but the job market was terrible when I graduated college. So my buddy and I just started doing websites, when that was a big thing to start doing, and rode the Flash wave. I originally said I was going to work for somebody, they were going to pay for my MBA, and then I was going to start my business. I just skipped the first five years of the plan and went straight to figuring it out myself, so I got an MBA on the fly. I thought about going back and getting it later, but everybody said, "You've learned it. At this point you've been successful this long, so just keep going with it, unless you want to make connections.

So I ended up running the business side, sort of the logical partner. It grew into having employees, getting into social media, which was fun, and digital advertising, maturing with account services and strategy, and we even built a production arm to create great content, doing photo, video and animation for our platforms and our marketing. I went through a couple of transactions, including a merger in the local Charlotte market, which allowed me to really focus more on the back end of running the business. I call it all the sexy non-billable stuff: finance, operations, IT, legal, office, resourcing and HR. That also positioned me well when it was time to sell the business, because I had all the answers we needed when we went through that process.

What Happens When You Lose 90% of Your Revenue?

03:18 Steve Guberman: I'm going to dig into a couple of those things. I like that you identified a maturity level where you now have account operations and can start building out different production arms, because prior to that, we're just winging it, and there's a maturity model that happens. It sounds like you did a lot of things. Did you do a lot of things for all people, or were you specifically niched in any verticals?

Albert Banks: When we started, by the nature of the work we were doing, we were positioned, and eventually that went away, so we had to really think about what we wanted to be. Early on, digital was a differentiator, and we worked a lot with traditional agencies. In fact, I tell the story that we went from probably 90% of our revenue coming from agencies one year to almost the opposite the next year, when traditional agencies started taking it in-house. So we really had to get down to what we were. Because my partner was very into creative, visuals and animation, that became our style, so we could rely on our creative chops. But we were always willing to tackle any kind of weird project, physical installations, all kinds of new things. Anytime there was an odd thing people wanted to do, we said, "Heck yeah, let's do it. We'll figure it out." That's what we did our entire life.

Eventually, everybody was a digital agency. What else are you doing? Then we went through a period in 2020 where we lost our biggest client, which was enterprise web, and COVID hit within three months of each other. That was a very challenging time for our team and our staff, for some emotionally, but it was the trigger to make us rethink the business. We repositioned publicly as performance marketing and creative and truly rebuilt internally. We grew our media team, we built the data and analytics team, and we focused more on what the market was really looking for and moved past our web days. That really helped us be in a good spot and be appealing when we went to market to sell.

Steve Guberman: Wow. Did you make those shifts for the near term or with the exit in mind?

Albert Banks: I think the exit was always a potential future at a certain size, so it wasn't deliberately because of that. It was more because of the frustration with project work and the type of work. From a business perspective, media is repeatable and renewable. It can grow and scale. It's measurable, so you can share your performance, you see those results and clients are happy. So it was more of a business decision and where we thought the industry was headed.

Why Split Account Management and Project Management?

06:41 Steve Guberman: Interesting. I don't think a lot of founders or even leadership teams are making pivots like that with the exit in mind. They're just thinking about the near term and what's going on with the market they serve, in your case agencies. There was a disruption. Who knew that was going to happen? Traditional agencies brought digital in-house, and you're out 90% of your revenue. You've got to rebuild it, going direct to clients, and then the repositioning, and how that would hopefully impact multipliers or discount factors for your exit. I don't know that I've ever heard of being too tightly niched being a discount factor in a valuation or an exit. But it sounds like you spent a lot of time operationalizing the things that need to be operationalized to find more value in a potential exit. Talk about what the mindset was and what the activities were.

Albert Banks: As part of that repositioning, we also did a split, and I preach about this, people have heard it before: splitting account and project management. That was key to our success when we went through that public change. Behind the scenes, we hit our heads against the wall how many times on new business? We tried all kinds of different things. But ultimately it's a relationship business. Our best business comes from our current clients, but we were set up in a situation where we weren't able to work on that a lot. By separating the roles, we were able to do that much better.

So not only could we tell the story of the model and the type of services we provide, but we were also set up to have great relationships and long-term clients. All of that was more appealing when we went to the M&A side. We could forecast really well what the next year would look like. We had a good sense of which clients could grow, which couldn't, and which would maybe be appealing to someone who bought us, because there were even more services that could potentially be offered. Having a great handle on that was a differentiator for us, and at least made it a lot easier to have those conversations when the time came.

What Was It Like Staying On Through the Acquisition?

08:06 Steve Guberman: So with the exit, did you go along for the ride? Did you step away? What was that transition like for you?

Albert Banks: It's interesting. It's one of the few moments in my career where I had a choice, in 20-some years. People say you don't run the business, the business runs you, and that was very much the case. I moved from engineer to technical lead, then into a CEO position and then the ops position. I always kept floating to where I was needed, which is totally fine, and that's what entrepreneurs do. But that was the first moment of, okay, there's going to be a change here, so I can decide what I want to do.

I chose to stay along for the ride for a bit. My thought was, I've been at a small to midsize company, so let me see what it's like in a large company. I've done some things behind the scenes that I'm proud of and that our company would be proud of, and I wanted to see if I could do that at a regional or global level. I also felt some obligation, and just love for my team, and I wanted to make sure the transition was smooth for them.

So I led the integration into the larger company, which was very different from Myjive and Union coming together. That was a little more ad hoc, "let's find the best of both worlds," which ultimately was probably not the best choice. Going into Valtech, they were really buttoned up, after a ton of acquisitions: very clear workstreams and people responsible. I learned a lot about what a proper integration looks like, and I was able to make it as smooth as possible for my team and get us into the larger organization. So I stuck around for quite a while to see that through.

Steve Guberman: Love it. So Myjive and Union merged. What were the size differences and some of the lessons you learned? And when you merged that up into the larger organization, what were the size differences and lessons there?

Albert Banks: We were probably 15 to 20 at Myjive when we merged with Union. They were probably 30 or 35, so combined we started to push above the 50 mark. I think at our height we were at or near 80, and that's around when we sold, because we dropped down and grew back up to that size when we merged in. Valtech, at the time, was five or six thousand people. So a totally different size, very much focused in Europe, with a smaller group in the US and Canada, but that's still hundreds of people in North America.

Steve Guberman: Oh, wow. What was the experience going from a small 20-something shop to 50 and then thousands? I've only ever worked in small agencies. What was that culture shift and experience like for you?

Albert Banks: I really enjoyed going from 15 to 50, because we kept bumping our heads against that 20 to 25 mark. Everybody knows these plateaus that are natural in these organizations. It was a way for both parties to jump over their plateaus and get to a size we felt we could operationalize. That's really what happened. We could have teams, layers and structure, and put things in place like a proper mature organization, the things that get swept by the wayside or aren't priorities when you're smaller and just trying to survive. It allowed us to be a mature company, and for me that was really exciting. I think I told some of my new partners, "This is the least stressed I've ever been." It's a little chaotic going through a merger, but knowing we had this scale and some depth made me much calmer as an owner.

Going into the larger organization was a completely different thing. You're part of a much larger ecosystem, getting to know totally new players. We read The Culture Map, because we were dealing with people in different countries, trying to understand how we interact and what the makeup was. A lot of those companies or folks had come in via acquisition, so we heard their stories and understood the company baggage, like we all had. It was a totally different experience in that respect. But I met some amazing people and learned a lot about the further maturity you have to have as an even bigger organization. Just a different world.

How Can Merging With a Peer Break Your Growth Ceiling?

12:33 Steve Guberman: The lesson I really want to pull out: you kept hitting a ceiling with Myjive, and the answer was to merge. Through merging with Union, overnight you became a more sophisticated business. You didn't need to come out of pocket millions of dollars to buy somebody else. You were able to bring two entities together, hopefully with well-complemented verticals, talent and service delivery, and now you've got 50 people under one roof and instantly a more sophisticated business. What did the prep for that look like? Did you feel ready for a merger, or was it, "We're just going to do it and figure it out"?

Albert Banks: Transparently, it turned out both of our prospective partners wanted to exit as well. We both enjoyed having a partner, and there's something to that. If you're a solo founder, I can't imagine. That was literally a moment of choice for me: do I continue on my own, or do I join forces? I always loved having the balance of a partnership, so that was appealing to me. Frankly, we had talked to Union and my new partner a couple of times about coming together for those exact reasons. We were very similar in our service offering, very creative-led on the leadership team, and in the same market, so it eliminated a competitor. And we felt pretty similar culture-wise. So it made a lot of sense when all the factors came together. In fact, he was looking for that sort of acquisition, to jump over his ceiling or grow in a different way than the slow slog we were both on. It made strategic sense for so many different reasons.

Were we ready for it? No. Neither of us had done a transaction before, so we were learning as we went. Like I said, a lesson learned on some of the integration: we didn't step on any toes early on. We thought that was the right way, that we'd figure it out and our team would enjoy that. But it turned out we probably could have just made some decisions and come to the table with a plan, and that might have been a better way to go about it. Financially and operationally, I felt prepared, and he was very buttoned up, so when it came to bringing the numbers, the data and the operations together, we were pretty well aligned. There wasn't a lot of disruption there. It was more cultural, ways of working, reporting structures and things like that we had to work through.

Steve Guberman: It's such an unlock. I always had this peer, who's still running a shop, and we would get on the phone and commiserate and say, "This sucks. Do you want to join forces?" We were saying it to support one another, but we were both creative guys. It wasn't like I was the creative and he was the operational one. There was no real complement in how we approached what we did, so it didn't make a ton of sense. So what were your complements? You went from four partners, through this deal structure, to two. You two must have operated very well together.

Albert Banks: It's funny. We're actually both INTJs, so it was a little surprising that we were so similar. However, I went the computer engineering route and he was a bit more creative. And this is maybe just my nature, but I would always play contrarian. We would think too similarly, so I would purposely take the other view or challenge whatever we were thinking to create that dynamic. We also really leveraged our leadership team. We had an incredible leadership team that was a unique mix of people, and we never really made a decision solo. It was always, here are some options, let's get some consensus, and often our leadership team would bring that additional viewpoint.

So if you're going to have similar partners, you just have to create a situation where diverse points of view are encouraged, considered, thought through and evaluated, and you're making decisions based on that information. Again, I always liked having a partner. I think there's probably a point where there are too many voices. If you get to four or five, that's probably a lot, unless you have really clearly defined roles and maybe a managing partner. But that dynamic was healthy in our case, and very transparent and open.

Steve Guberman: If you've got four or more partners, I don't want to touch it with a 10-foot pole. Even with clearly defined roles and delineations, it's too much. If there are four active partners, I'm a hard pass.

Why Might Your Competitors Become Future Deal Partners?

17:47 Albert Banks: To your point about peers, I've seen it in different organizations, especially SoDA, which I've been a part of, where you form relationships with your peers. Are you competitors? Yes. But you can probably learn a lot more from each other than you lose. That's where I've seen a lot of great mergers or acquisitions come from: people who just know each other, maybe have even worked together or shared clients. So if you're at all thinking about that, try before you buy. Partner with other organizations that are complementary or even similar and see whether there's a match, because you never know. It could be now, or, like in our case, maybe 10 years later you decide to come together.

Steve Guberman: I don't know the data. I'm sure somebody's got it, maybe one of the M&A data houses. But I would wager most acquisitions happen through first and second connections. Even when I'm walking a founder through buy-side outreach and who we want to buy, it's their first and second connections. It's people they know: are you ready to exit, are you looking for a next opportunity? So I'm all for community over competition. You can even play the "know your enemy" card, whether it's from The Sopranos or The Art of War. Embrace the people who are close to you, understand how they operate, and help one another, since a rising tide lifts all ships. Then when there's an opportunity for a merger or an acquisition, it's a known entity. You know their brand reputation and how they operate. You can see their churn rate on employees and on clients, and you're taking out competition. I think that's the right way to roll.

What Does Life Look Like After the Exit?

19:47 Steve Guberman: Fast forward. Now you're some years out from that exit. What are you doing now, and what are you seeing in the agency space?

Albert Banks: Even while I was running Union, pre-acquisition, I was talking with people and helping some folks on the side with their businesses. I learned so much from others who were further ahead on the journey than I was, so I very much want to give back and mentor, and I'd been helping people with their companies on the side. I'm probably unemployable at this point, and I'm so passionate about helping build things, systems and businesses, but I didn't want to own one again, at least not for a while, and have the responsibility of employees. So that was a natural progression for me. It's not unique to me. Others have done something similar, consulting or advising. That's what I do now: help other service firms. Obviously I have a ton of connections in the agency space, but I've found that what I can offer applies to other service businesses. I've helped a business broker and a custom home builder. But most of it is in the creative, technology and production agency space, helping them through the plateaus and challenges I've been through.

It's very much based on my experience and skills. I call it the three doors. First, operations and finance: resourcing, tools, process, people and pricing. Second, employee engagement and satisfaction: focusing on culture, compensation strategies and career frameworks, how you resolve issues, and whether you have a deliberate effort on innovation. And third, support around sale and acquisition. If you're like me, you had no idea you could sell your business, much less acquire another business. I can catch folks up to speed, and do a mock or pre-diligence to stress test their business, or maybe someone they want to go after.

Having been through it, due diligence and integration are such a distraction from running your business successfully. If you can afford to bring in someone like me during that time, it can be really invaluable. Not only the time savings, but the skill and experience, and watching out for the gotchas, because the value of your business can slip if you get distracted during this process. It is long, and I've seen firsthand, and there's tons of research on, how many transactions where the value just doesn't come to fruition because there's not good integration, or not even good planning going into the integration process to follow through.

Those are the bumps I'm trying to help people through on their entrepreneurial journey. Sometimes it's a fractional role. Sometimes it's a project or sprint. Sometimes it's being an executive advisor, almost like a board position. It really depends on where they are and what they're working with. Sometimes it just takes a third party, especially if you have two partners, or just someone from the outside to look at your business differently and have you work on the business. I'm big on that. If you're not ready to work on your business, if you're still just trying to get through it and you'd be distracted just running your business, then that's fine. We can work together some other time. The timing's got to be right to engage a third party. And it's just me. I'm not going anywhere, so I'm happy to wait until the time is right.

How Do You Build a Sellable Business That Still Gives You a Life?

24:12 Steve Guberman: That's an invaluable perspective, because you've got experience similar to mine to help founders see around the corner on these transactions or what they need to do to be ready. The idea of "I didn't know I could sell," or "I thought I was trapped in this thing," or "Once I'm out of the day-to-day, I can buy other businesses." What a cool thing, to open somebody's mind to all these possibilities. So I'm curious what you see as the traps holding folks back from an exit, because there's a lot of exit activity right now. What are you seeing, mostly in the creative, marketing and digital space? When I say agency, I have to specify that now, because insurance agency people started listening. What's holding them back from a valuable exit?

Albert Banks: We talk in our groups a lot about the concept of the lifestyle business, and a lot of times people use it as a negative: "Oh, you're just running a lifestyle business." That has this notion that maybe you're not paying attention to operations very well, or maybe you're not very profitable. I'm a proponent of both: running a good business that is sellable, whether you sell it or not, and that provides the lifestyle you're happy with. For so many years I was stressed and anxious and pushing toward some goal we just decided was our goal. Bigger, better, more, whatever it is, versus thinking about what we wanted our life to be.

I'm not a coach, but I do end up coaching clients around: okay, what do you actually want? What do you want your day to look like? What do you want your life to look like in a couple of years? When do you want to retire? Do you want to hand this off to your kids? Really thinking about themselves a little, because they typically don't. They think about the business and this machine they've got to keep going, and most of them are very dedicated to their staff, so there's that pressure added to their shoulders. For those who have their identity so tied to their business and are choosing goals that just keep up with the Joneses, changing their perspective is one of the first things we can tackle.

Also, they don't have to do everything. I love Who Not How: finding the individuals who are great at the things you don't like to do, much less aren't good at. Often they're not that expensive, or you can get them fractionally or hourly. So it's getting them to think differently about how they go about doing things and the people they have around them. Those are the first few things, without even getting to how they actually run their business. Are they doing the right accrual financials and calculating the right things? Are they measuring? That's where we get into what I call the implementation work, where I help fix the things that can be improved within the organization.

Steve Guberman: You talk about Who Not How, and I'm a big proponent of doing an owner's audit and understanding what you're spending your time on. When you realize how much a menial task is costing your business, instead of focusing on the thousand-dollar-an-hour things, you could pay somebody 50, 20 or even 10 dollars an hour these days to do the things you shouldn't be doing. It's not even that you can get somebody inexpensively to do it. It's what a waste of money for you to be doing it. So build the system and put a person in place, or put a person in place and have them build the system. Get it off your plate and focus on the big picture. Huge fan of that.

Albert Banks: That's right. And unless you're doing that, there's no way you can start thinking about selling or acquiring, because you're still down in the weeds doing the stuff, much less thinking about the big picture. What is our real aspiration? What is our real path forward? You're just trying to get through all the menial tasks you've kept for yourself.

Rapid Fire: Books, Habits and Advice

27:24 Steve Guberman: Albert, this has been awesome. We could talk agency, M&A prep and M&A itself all day long, but to stay true to the listeners, I want to keep it on time. So let's wrap up with a couple of rapid-fire questions. First, what's one of the most valuable business books you've ever read?

Albert Banks: I have to say Traction. I know it's probably a common answer, but as somebody who ran a business and never had an operating system or knew what I was doing, it was a great guide. Whether you use 25%, 80% or 100% of it, it can help you.

Steve Guberman: Traction. And if you're scared to read, you can even get into What the Heck Is EOS?, which is like the CliffsNotes version. What is a daily practice that sets your day straight so you can operate optimally?

Albert Banks: I struggled with anxiety quite a bit running an agency, so I try to meditate every morning, even just for five minutes, to start my day in a different way. It helps me practice being present. I'm very much in my own head and thinking all the time, so that practice is very much a practice. So, meditation.

Steve Guberman: Love it. I second that. Huge fan. And finally, if you look back at Albert Banks 30 years ago, what invaluable piece of advice would you give him based on what you know today?

Albert Banks: There will always be more work to do. So stop, enjoy your life, spend time with your family and your friends, and enjoy your activities, because there's always more work to do.

Steve Guberman: Albert, thank you so much for joining me. I'm grateful for your time, your experience and your wisdom. Folks, check out Albert Banks. You can find him at apertus.co or on LinkedIn. Thanks, Albert.

Albert Banks: Absolutely. Thank you.