Most agency entrepreneurs want their clients to be successful. Happy clients normally mean good business. Bobby Dimovski learned the hard way that, in some industries, a client’s success can hurt their agency partners.
In 2014, Bobby founded 4MJ Social, a digital marketing agency for doctors and physicians – a side hustle that soon became his main source of income. As he honed his service, he scored successively larger contracts and obsessively refined his pitches. In one case, he spent over three years pursuing a single client, which eventually accounted for a quarter of the company’s revenue.
4MJ Social’s marketing strategies eventually helped its largest client get acquired. But as an unfortunate side effect, the buyer’s internal teams stepped into the marketing role, and Bobby’s company got the boot.
“I think that can happen when you do too good of a job,” Bobby says. “Ironically, in sales, we say you want to be in the middle of the pack.”
Luckily, that wasn’t the end of 4MJ. Bobby and company continued to deliver quality results for its clients for years until an illness in Bobby’s family pushed him to take time off. He finally sold the business on Acquire.com. Here’s how Bobby reflects on a decade with 4MJ Social and how he navigated getting acquired in an industry where success isn’t always what it seems.
Say Yes to Everything When You’re Starting Out
Before founding 4MJ Social, Bobby worked as a pharmaceutical sales representative. Chatting with doctors and physicians revealed to him an unmet need for SEO and marketing in healthcare. Most had barely managed to set up a website, much less take the time to make it appear in Google Search results or Facebook.
Bobby had one other advantage over other marketers. Most marketing agencies seeking medical practice clients were turned away by dutiful office secretaries. Bobby, on the other hand, could confidently stride right into a decision-maker’soffice and make his pitch along with his pharmaceutical products.
After convincing a few friendly doctors that they needed a presence online, Bobby helped them set up Facebook accounts and ads. Facebook was much less saturated at the time and marketing went well enough that Bobby’s clients asked if he could do other marketing tasks like SEO. Despite having little prior experience with most digital marketing, Bobby said yes to just about everything. He’d spend his after-work hours researching and implementing experimental new marketing techniques on the fly.
“I fell on my face quite a bit, especially in those first few years,” he admits. “But I learned and sharpened my saw and just kept building from there.”
Bobby chipped away on two fronts. First, he leveraged the network he’d built through sales for word-of-mouth referrals and exposure. His other battle was getting his clients to understand the importance of online marketing. Since healthcare workers are so focused on attending to patients and staying up to date in their specific fields, many of them are woefully unaware of modern marketing tactics and their effects.
“My medical clients were typically five to ten years behind on marketing tactics versus other businesses,” he says. “So getting them to see that value, how it would translate to new patients, was a big challenge.”
Bobby’s strategy was to seek out “decision-makers” – higher-ups with the authority to contract his services – and then pitch his product in clear and simple terms. He just had to get his foot in the door to prove he could deliver. This was easier said than done, especially with one particularly large medical group that took him years to contract.
Ever Pursued a Client for Three Years?
After a few years, Bobby set his sights on one large medical group. It was something of a white whale for him in that they rarely contracted with small agencies like his. Nevertheless, Bobby steadily and patiently sent regular emails and visited their office every month for two years until he secured a meeting with a single doctor in the group.
“It was probably misguided persistence,” he says. “But I went nuts trying to get in.”
After another year of regular follow-ups, Bobby finally got to meet with the CEO, and after a third year of negotiations, Bobby finally hooked his white whale.
“We worked very well together,” Bobby says. “The results were there. There was a lot of learning from both ends, and it was such a productive relationship.”
With one giant contract making regular income, Bobby could hire a team to manage the account and take on some of his outside work. After three years, the client’s growth through 4MJ Social led to private equity acquiring the client. Bobby was initially happy for his longtime customers but was crestfallen when the CEO reluctantly informed him they could no longer work with 4MJ Social.
“The kicker was that the private equity buyer had its own internal marketing teams, so they had to essentially fire us, as the digital agency, through too much success,” he says. “We lost twenty-five percent of our revenue in one phone call.”
While the buyout was evidence of 4MJ Social’s success, it was also Bobby’s wake-up call to the harsh reality of the healthcare world.
“Private equity is growing, especially in the healthcare sector. Mergers and acquisitions are happening daily at this point.”
But Bobby doesn’t reflect negatively on his experience. Rather, he feels that it demonstrates that you can never let yourself get too comfortable as an entrepreneur.
“We built great relationships and friendships; made some money, lost some money,” he says. “There’s been all sorts of highs and lows, but it tells the story of the grind, the success, the struggle.”
Stepping Away From 4MJ
Finally, after almost ten years, Bobby realized he couldn’t dedicate the same attention to 4MJ that he’d sustained. External factors, especially family health issues, took his focus away.
“I could not continue to grow the business myself,” he says. “I had a very lean operation going, so once I was pulled awaya little bit, it caused a bottleneck.”
Looking at the numbers, Bobby realized he wouldn’t be able to hire more staff without growing significantly. “I didn’thave the capacity at that point in time. I looked in the mirror and made what I thought was the best decision for me and my family, and that was to sell.”
Through Acquire.com, Bobby worked with senior acquisition success manager, Ky Pratt. Bobby says Ky helped usher him through many difficult decisions along the way.
“The best thing about Acquire was, for lack of better terms, the hand-holding,” says Bobby. “I would beat myself up over my decisions and Ky was super helpful in not telling me what to do, but just being a resource and giving me what I needed.”
The acquisition process was more difficult than Bobby had expected. Structuring the deal, working out wrinkles with buyers, and filing the right paperwork all took significant effort. But thanks to his diligence and support from Ky, Bobby received several offers that were exactly what he was looking for.
Curious why M&A negotiations can get difficult? Read our masterclass article on the most common deal busters in M&A.
“When I got the LOI from the buyers who acquired the business, it checked every box. Everyone was happy.”
But just when it seemed like everything would be smooth sailing, the buyers’ financing fell through.
“The buyer was scrambling, I was scrambling, and it almost fell apart.”
Still, Bobby wanted to stick with his buyers because he trusted them to carry on the business. Having the right people take over was more important to him than maximizing his financial upside.
“With some considerations between all parties, we managed to put together a new deal that made everything work,” he says. “At the end of the day, I feel really comfortable with the way it’s been set up now.”
Since the acquisition, Bobby has been working on the transition with 4MJ’s new owners on a near-daily basis for the past two months. He’s grateful that he gets to work with people who share his vision for the agency.
“We’re on calls, we’re working with clients, we’re transitioning everything over,” he explains. “The buyers are partners at this point and it’s been great to work with people that get what I’ve built.”
Why Honesty and Transparency Matter in Dealmaking
Bobby acknowledges that maintaining honesty and transparency can be difficult when both sides are trying to close quickly. But ultimately, he feels like these principles helped him come away with the best deal.
“It all started with me just being upfront about everything and not trying to mask information to get every last dollar out of the deal,” he says. “It’s not what’s best for the business, and quite frankly, my conscience. So I just wanted it to make sense for everybody.”
In Bobby’s case, it would have been easy (though dishonest and a violation of terms on Acquire.com) to fluff up his numbers. At the time he was making offers, 4MJ Social boasted three months of project-based work that looked like it would continue – even though Bobby knew it wouldn’t. He knew if he wanted to get a buyer he trusted he needed to give as good as he expected to receive.
Many founders can unwittingly create bad will by forgetting to account for small adjustments in financials. Read our masterclass article on why you should consider recasting revenue before acquisition as a seller.
“It wasn’t monthly recurring revenue, and I wanted to make sure I explained that to people so they don’t come back frustrated, thinking that I was trying to sell them something that wasn’t there,” he says. “It’s easy to make things look a little bit better than they might be to try and squeeze a little bit, but at the end of the day, it just isn’t worth it.”
Acquire.com CEO Andrew Gazdecki, who worked with Bobby, agrees that transparency is paramount when selling:“Surprises can kill deals,” he affirms.
Surprises almost did kill Bobby’s deal: the 4MJ Social acquisition fell through on the same day Bobby was supposed to receive the wire transfer. Because of that experience, his biggest piece of advice is to remember that a deal isn’t done until it’s done.
“Escrow was set. I was counting on that wire transfer a little too much, and when it didn’t happen that day, it was a blow,” he says. “Acquisitions are like sales in many regards, but a deal is not a deal until it’s done.”
Bobby also feels it’s important to set minimums early in the acquisition process. Although he wanted to be flexible for buyers, Bobby wishes he had set parameters like a minimum up-front amount and a maximum term on seller financing.
“I wish I would have been a little clearer with what I actually wanted,” he says. “I wanted it to be attractive to buyers when really I needed to make it work for me as well.”
Finally, Bobby says to talk to everybody. He admits that it can be exhausting having the same conversations with different people every week but believes it’s something you need to do.
“It’s worth it to keep having those conversations and meeting new people. You just don’t know who the right ones are going to be.”
Bobby is currently in the final stages of transitioning his agency to the buyer. After that, he’s looking forward to taking a break and then later starting another company.
“My next company is hopefully my retirement plan,” he says. “So I want to plan it and structure it well knowing all that I know now. I’ll hopefully build it for another ten years, sell it on Acquire again, and then sail off into the sunset.”Thinking of selling your agency on Acquire.com like Bobby? Check out our prerecorded webinar on how we recommend you do it.