The Handbook: The Operations Podcast

What 11 Acquisitions Taught Dom Hawes About M&A

• Harv Nagra • Season 1 • Episode 35

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From the outside, M&A can seem like a clean transaction – a new parent company, a logo change, a cheerful announcement.

But inside? The reality is messier. Integration. Culture clashes. Reporting headaches. And a long list of decisions that determine whether the deal actually works.

Dom Hawes has lived both sides. After his own agency was acquired (badly), he went on to build Selbey Anderson – a marketing services group backed by private equity, designed from day one to scale through M&A.

In just 30 months, he led the acquisition of 11 agencies, growing the group to £22M in revenue. In this episode, he pulls back the curtain on how that actually happens – and what too many people get wrong.

Here’s what we dive into:

  • Why leadership – not just profit – is the #1 factor Dom looks for in an acquisition
  • The red flags that make him walk away (including founders who say “I’m not a numbers person”)
  • What makes integration hard – and how to avoid derailing morale
  • The systems decision Dom regrets – and how it made integration and reporting harder later on
  • How to be “sale-ready” in today’s tougher market

Whether you’re looking to sell or simply sharpen up your ops, this one’s a must-listen.


Additional Resources:

Follow Dom Hawes on LinkedIn: https://www.linkedin.com/in/dominichawes/ 

Check out Selby Anderson: https://selbeyanderson.com/ 

Follow Harv on LinkedIn: https://www.linkedin.com/in/harvnagra/ 

Get the key takeaways from the podcast in your inbox. Subscribe to The Handbook: The Operations Newsletter: https://www.scoro.com/podcast/#handbook 

This podcast is brought to you by Scoro, where you can manage your projects, resources and finances in a single system.

Dom Hawes:

The business I built, got bought and it was really badly handled. I mean, catastrophically badly handled by the people who bought it. And I ended up leaving. And so when I came into this business, a lot of how badly it had gone informed how I felt an acquirer needed to behave. So a lot of the things we're gonna talk about today, a lot of the decisions we made about how you handle integration, how you handle cultures coming together, how you handle different types of people, was informed by how badly I had felt I had been treated by the business that bought my business.

Harv Nagra:

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Dom Hawes:

Yeah, sure. partly for those who are watching on video, it's age. Um, but also, look, I, so I had been an agency at the beginning of my career. I spent six years in agency there, and then for a year I ran my own, I ended up pivoting that into a product company rather than a, rather than a services company. But I always liked the marketing services space. I like creative people, I like strategists. I like the kind of people that hang out in agencies. and I like the work. I mean, the work's really challenging. So, so I always saw it kind of as a bit of a spiritual home. But when I looked at who I was, by the time I ended up coming back to agency and I spent 17 years out of agency, um, I'm not an agency person, so my time in between had been spent consulting, and doing corporate finance work. So I came at this, I guess from more of a corporate finance angle than I did from an agency angle. So, although marketing is the golden thread through my career, I'm not an agency person and any of the agency people in our group will tell you that. so, so when I came back to it is very much looking at how do we build scale super fast. it, it was a different age then obviously, 2017, 2018 when we were putting the business plan together

Harv Nagra:

Mm-hmm.

Dom Hawes:

worlds apart from where we are in 2025. Um, but the decision to go buy and build was about speed. Really speed to get to scale. and realistically, if you wanna start an agency from scratch, then try and turn it into a platform to seek investment. That's a five. Unless you are very lucky. The outliers can do it in two or three years, but for the majority of people it's five years and. And I wanted to get ahead faster than that.

Harv Nagra:

hmm. really interesting. can we actually jump back a little bit before,'cause you were saying that you were kind of new to agency, but you had kind of, the golden thread was marketing. So, where did the inspiration come for you that this is what you wanted to get

Dom Hawes:

Well, so, so I started my career actually in the military. I did six years in the military and then I left there, took me a year and a half to get into an agency and I had to start in the post room. but I worked my way out from there and I spent a total of six years then in agency. And I really enjoyed the work and I loved it. I left really,'cause there was, it was the time of the.com boom. so it's about the millennium, just before the millennium. and I joined a startup and then I did a bit of venture capital work. so I kind of morphed out of agency life anyway. So then in 2001, I set up an agency again, focused on early stage startups, but within a year I wanted to run a product company, not a service company, but that was enough. So, but I understood the, that I understood the concept. So then I set up a product company and I did all the four Ps, their product, price and, place and promotion. We had to do all of those things. We ran an ex import export business. so, so I was doing marketing all that time. But, when I looked at, so I knew I wanted to do a buy and build, that's the starting point. I knew that we were gonna buy and build something. And I looked at all sorts of different categories and when I looked at marketing services, then there was a certain part of the market that was very underserved. So if you were a big agency, the networks were snapping you up. If you're a really small agency, you're too small to sell, but there was that trap bit in the middle where you're doing at that stage it was kind of between about half million and one and a half million in ebitda where you'd struggle to find someone to buy you. and at the same time, the demographic of, agency owners that are getting older and they need somewhere to go. So they're either gonna close it down and a load of people are gonna lose their jobs, or they've gotta find someone to buy it. and I'd been through a sale in 2012. That was the last year I was in, in the business I built, got bought and it was really badly handled. I mean, catastrophically badly handled, um, by the people who bought it. And I ended up leaving. And so when I came into this business, a lot of how badly it had gone informed how I felt an acquirer needed to behave. So a lot of the things we're gonna talk about today, a lot of the decisions we made about how you handle integration, how you handle cultures coming together, how you handle different types of people, was informed by how badly I had felt I had been treated by the business that bought my business.

Harv Nagra:

Really, really interesting. Rather than picking at what was badly handled, let's see some of that organically

Dom Hawes:

Yeah, yeah.

Harv Nagra:

as we go through some of this process, but I will revisit that towards the end if we don't cover it and see if there was anything else that you didn't get a chance to, to, to talk about. so. I guess I'll start by asking what makes an agency attractive to you as a buyer? Is there a profile that you're looking for? you're talking about this kind of middle, kind of, Goldilocks zone, in terms of size, specialism, financials or leadership. What is it that you look for?

Dom Hawes:

Well, we're in a very different world now than we were then when I was doing it. we bought a lot of agencies quite quickly. but there was a particular economic climate there. We're in a very different world now. and I was building to a vision that has changed since then. we've had to change how we think about the future based on the way the world is.'cause it is very different now than it was in 2017, 2018. So we were, we set out to build scale, scope, and reach. And so scale i.e. numbers of people, scope, i.e. we wanted to cover the full range of promotional activity, and reach being geography. So, but we were always focused on a certain number of vertical markets, predominantly business marketing, predominantly in complex intermediated or very heavily legislated businesses. So we liked the messy stuff. but given those economic circumstances we had then what I really needed, what I looked for mostly was leadership. So I was interested in acquiring agencies that had a strong team who could help me build the group. that was my number one. I mean, like everyone, you have a, I think if you set out to buy, you've gotta work out what's important to you and what's gonna help you fulfill your strategy. And I think also the more you do, the better you get at them. and particularly if you're acquiring a lot or many companies in a shorter space of time, people know that you are on the acquisition hunt. So opportunities start presenting themselves to you too. I mean, there are some table stakes, actually, I should say, there are some table stakes, right? So number one is the agency's gotta be profitable. It

Harv Nagra:

Mm-hmm.

Dom Hawes:

to be profitable that, we are not in the turnaround business and we were trying to move at speed. So what a profitable business is our investment profile was, we may touch on this later, but our investment profile looked for long established stable businesses. So although we managed to raise a significant amount of money to start, it wasn't a bottomless pit. So our appetite for risk was reasonably low. so we were looking for long established businesses that were profitable. good client tenure, good people, tenure, agencies that we knew we could buy and that would continue trading at or at similar levels as they were trading beforehand. And then we would try and apply some of our secret sauce to help them grow, strip out a bit of cost, improve profitability. That was kind of our. That was kind of our thesis. so, but the table stakes are profitable, good client list. And the other hygiene factors, there are, actually Moore Kingston Smith publish a list of 10 value drivers in agencies and we pretty much looked at five or six of those straight off the bat. So

Harv Nagra:

Hmm.

Dom Hawes:

quality of revenue has gotta be a good quality client. It's gotta be a good quality contract, it's gotta be profitable. it's gotta be in the right sector. Like the agency has to have a focus, a clear specialty. So we were in the business of specialism. so there's a bunch of stuff that was like hygiene factors if you like, but the deciding factor was often the leadership.

Harv Nagra:

Right. And, tell us a bit about that. what does good leadership look like? Or what were you looking for exactly?

Dom Hawes:

Well, I think a clear understanding of strategy, what it is, but also what it isn't. so. Good leaders often present themselves and their agencies very well. They position well. They understand what that means. They have an inbuilt ability to get the operational side of things. They get it, they understand it. I like my leaders to be polymaths as much as possible. They need to be good at a lot of different things. I think where you have people who have come up very strongly through one discipline and have ended up in general management, but don't have general experience. I think it can be difficult. So, you know, as a good leader of an agency, you need to understand, finance and obviously marketing, but marketing for yourself as well as for your clients, not the same thing. you need to have the honesty. I think it's intellectual honesty to be able to apply the same things you say to your clients, to your own business. you need to understand systems because, a good agency will almost invariably run on a good system. And part of that is human systems and part of that is the technology systems that underpin them. I think you need to have really strong principles and ethics, which speaks to culture. so, being a leader is not an easy thing to do. It's a very difficult, it's a very difficult job to do. so we bought 11 in the end. I think I must have met 250 agencies,

Harv Nagra:

Wow.

Dom Hawes:

probably over the period of that sort of two and a half, three years. And not all of them had, issues or problems. Some of them were too big, some were too small or whatever. But quite often you'd meet an agency where you had a really good team. But there was just something about the leadership that I just didn't like, we didn't, we didn't gel, we didn't click.

Harv Nagra:

Hmm. Really interesting there. There's a couple of things that I just wanted to highlight, something you said about having a clear understanding of what strategy is and isn't, which I, I, I just wanted to point out, because of the episode that's gonna go live right

Dom Hawes:

Okay. Okay.

Harv Nagra:

that's where our guest spoke about that exactly as well,

Dom Hawes:

Okay.

Harv Nagra:

need good governance and part of that is having clear idea of what you are in the business for and what you're not. So, so I love that. the other thing about good leadership, um. there's this kind of common thing that someone started a business because they are good at what they do perhaps. and they've become an accidental founder.

Dom Hawes:

Yeah,

Harv Nagra:

what you're saying here is you need to have moved past that and have a really strong understanding of operations and, even good systems and stuff like that. And those are all things that we talk about here on the podcast quite often. So I'm just gonna ask about that in a little bit more detail. Is maturity of operations, something that you would assess.

Dom Hawes:

So, so what? I mean, look, this isn't my, this isn't my learned wisdom that was received. I learned it from other people and it's, it is reasonably well known that there are ceilings. As you grow an agency or any people based businesses, there are ceilings that you hit as you go along the way. So, the numbers may be different now, but when I was looking around the million 1.2 million pounds in revenue number, that's the maximum one person can manage as a founder-leader with, without getting really good systems in place and then delegating and having someone else run them. And, the job of a leader is to build a system and then hire someone else to run it. It's not for them to run it, that's not the job of a leader. That's that,

Harv Nagra:

Right.

Dom Hawes:

that the leader should then be building the next engine that someone else can go run. That's how you get growth. but, and then, so if you've got two founders, that number's about 2.3, 2.4 million, something like that. So, so if you don't have. Really good systems in place. You just can't grow beyond that. You, something keeps falling over, whether it be client loss or your profitability starts eroding, or you start hemorrhaging people you know there. there'll be something, there'll be a symptom. The cause of which is operationally you are not strong.

Harv Nagra:

Mm-hmm.

Dom Hawes:

when you are doing what we did on M&A where we believed one of the things we could bring was some operational rigor

Harv Nagra:

Mm-hmm.

Dom Hawes:

wasn't necessarily a red flag for us. That could almost be seen as hidden value, like great agencies, super bright talent. Operationally, not necessarily super strong. That's something we can fix. I think it's easier to fix some of the operational issues than it is attitudinal or culture issues.

Harv Nagra:

we've been talking about some of the things that make, a, an agency, or a business attractive to you as a buyer. Let's talk about kind of some of the red flags, and

Dom Hawes:

Yeah,

Harv Nagra:

to it there in your last answer, but what are some red flags that would make you immediately say, okay, this, we're not gonna

Dom Hawes:

there are loads. There are loads.

Harv Nagra:

even if the client list, their numbers look

Dom Hawes:

Yeah. So there's loads. I think the number one is if you don't have a meeting of minds, if you meet the, if you meet the vendor and you can't like, or trust or want to work with them, you have to want to work with people. It depends on your model. So, so we, we had different acquisition models depending on the stage of life founders were at. And when we very first started, we were, we did a few re kind of retirement sales. Actually, I much prefer younger founder led sales where they want to come and be part of a bigger platform.'cause that's where we get our next generation of leadership from. So you're gonna have to wanna work with them and, you know, that integration piece, working with agencies post acquisition is really hard, so you need to make sure that the people are people you absolutely want to be hanging out with. So that's number one. Number two is during the process of acquisition, it's very easy for agencies to lose focus and focus on the transaction, not on their business. And so the numbers start tanking mid transaction. That's a, that's a massive red flag and a number of fell over for that reason, like the thing stops performing. on the same level. really important is total transparency and things like if someone listening is selling their agency, when someone asks you for numbers, get them to them really quickly. Because that just shows someone like me who's buying that, you've got your shit together. If it takes you three weeks to get numbers together, I know it's gonna be horrible working with you. So there are some behavioral things like that. One of the other big red flags, I was thinking about this morning as I was on the way in, which didn't seem to at the time, but if an entrepreneur says to me, I'm looking to de-risk, or I'm looking to take something off the table,

Harv Nagra:

Mm-hmm.

Dom Hawes:

for me that's a challenge because I don't want necessarily to be the one they de-risk into. De-risking implies that they've had their best years, they're a bit worried about the future. So they've gotta take some money off the table before things start going wrong. So I'd be very cautious if you're selling. Giving a reason that you want to de-risk, I'd be very cautious. So someone like me who's buying, you want to buy a growth story, you want to buy an agency and believe that you can help'em get 12, 15, 20% growth year on year by applying good systems, putting systemized sales in place, tweaking margin, looking at, all the things that you can do to improve a business. so I mean, most of the red flags actually are people base, actually, it's things that come out in conversation while you're talking to people. and they in inevitably come down to, can I or can't I trust this person?

Harv Nagra:

Yeah. so let's go get into that process a

Dom Hawes:

Yeah.

Harv Nagra:

Dom, for the benefit well, of myself and any listeners who have never been really close to an M&A deal, what does that process actually look like? So, I guess you kick off with some conversations, all the way through to the kind of signed deal. can you just

Dom Hawes:

Yeah.

Harv Nagra:

some of that?

Dom Hawes:

So actually we need to step up one level, I think before that first. So there are different ways, obviously, of deals coming about in the first place, or potential deals coming about in the first place. So some people would go and speak to a broker, or advisory company. And there are specialists and there are non-specialists. they'll give you an idea of the value of your agency and they'll help you set up, they'll talk you through the process. So the first thing is understanding how you end up in a process. So for some people it's deliberate. They're gonna a point and they're gonna work with somebody. for others they're get approached. so they're gonna letter through the post or an email or a phone call from a broker saying, I represent X and they're interested in buying you. So that's kind of a different thing if you are going to market deliberately yourself. the first thing you need to do is put together an investment memorandum, a document explaining who your business is, what your numbers look like. An a teaser document, which is an anonymized two or three page document that basically is gonna be sent out far and wide by your agent. So, so if you are being approached, you won't need an IM, but if you are going to market yourself, you will need an investment memorandum. then the first thing, so the way I used to run it and I, I can't talk to how no one else does it, but I've been on, I have been on both sides of the table. The first thing is a chemistry meeting. So you get together to say, Hey, do we like each other? Do our businesses have anything in common? Can we see some synergy? Is this a conversation that we think is worth continuing? And you can have that meeting really before you make any big financial disclosures.'cause that's about people and understanding and market and strategy and opinion and all that networks and all that kind of stuff. like most relationships, you get a very good opinion in the first meeting, whether you think it's gonna work or not. then after a chemistry meeting, I would then ask for a proper financial disclosure. Like if I think it's worth continuing, I'd ask them to put together a Dropbox or a data room of some kind. So,

Harv Nagra:

Mm-hmm.

Dom Hawes:

uh, a data room is literally just a Dropbox or a folder on the web that everybody can access. And in there you'd put detailed financial results, probably anonymized lists of your people. So you can see how teams are structured, probably anonymized client lists at this stage, even though you're under NDA, if you're selling to anyone who's vaguely competitive, you probably still wanna have that anonymous. So at that stage, what I'm trying to work out is what's the shape of the business? How do the numbers work? How many people does it take to generate this revenue? How profitable is that business? how are the overheads structured? Is this a business that is in control of the money it's spending? So those are the questions you're trying to answer. And then, so I'd normally look back for three years of numbers. from those numbers I'd do evaluation. and the valuation is always based on the same premise. Doesn't matter how you value businesses, there are lots of different ways of valuing them. You can do a revenue multiple, you can do an EBITDA multiple, so earnings before interest, taxation, deductions and amortization. you can do discounted cash flows. There are loads of different valuation methods, but they're all based on the same premise. And I think people misunderstand this a lot. When you sell an agency, no one is paying you for the years you have already put in. So if you think you've put 15 years in and this is your payday and that's what you are being paid for. Ah, ah, you're wrong. You are being paid for the cash flows that company acquiring you is gonna get in the future. So your job is to convince them that this is an agency or a business that can produce long into the future for them, because that's what they're buying. So the multiple of ebitda, for example, is based on the multiple you get is based on their confidence of your cashflow in the future. It's a really important distinction to make that, and EBIT does a useful proxy for cashflow in that instance, which is why it's often used as the multiple. So, so the valuation is gonna be an indication of how confident your acquirer is on your ability to produce in future, and that will be a factor of how well you have sold. Your business. So how, what quality is your revenue? How good are you at growth? What does your sales engine look like? How good is your operational engine? Do you understand where your profit comes from? How tightly do you control your expenditure? What's your culture like? How good are your people? All these things

Harv Nagra:

Mm-hmm.

Dom Hawes:

those will all be factored into what comes down to quite a simple valuation. so then once you've got a valuation, what I would normally, what I would seek to do, is, so the valuation method that we use predominantly would be an a multiple of ebitda.

Harv Nagra:

Mm-hmm.

Dom Hawes:

I would then first seek to agree what we're going to use as our reference ebitda. It can be a three year average, a two year average. It can be a weighted average over a period of time. It depends on the structure of the deal. Many different ways of agreeing that number. and then I would apply multiple to that. And then if we can agree the number. I would then produce what's called heads of terms. And the heads of terms is a document. it's not a legal document in its own right, but it's a briefing document that once it's signed has some legal implications. IE once you sign the heads of terms, you go generally go exclusive for the person you're talking to. and if you pull out for no good reason, you are often on the hook for some fees because as soon as it's signed, professional advisors get involved.

Harv Nagra:

Okay.

Dom Hawes:

But lawyers will then take that heads of agreement, heads of terms, sorry. And then they will use the terms in that to draft the share purchase agreement, which is typically the document that you will use to paper the transaction. You then go into due diligence, and that's gonna last somewhere between three and four months. Now, I'm assuming. I'm assuming we're talking about small businesses, so they're not gonna come with their own due diligence ready made, bigger businesses would do that. so we get a financial, legal people, all sorts of due diligence. And then somewhere between three and six months after signing the heads of terms you can expect to complete the deal. then once you complete the deal, you get a bunch of money or shares depending on how you structure the contract. and then that's done.

Harv Nagra:

Okay.

Dom Hawes:

So that's typically how the process works. And I think the shortest we did was about three months, and the longest was about seven.

Harv Nagra:

Okay. We will go into what it looks like post-acquisition, but I wanted to come back to something I dunno if I missed it, but you said you apply a multiple what is that multiple and what is

Dom Hawes:

Well, it depend, well, it depends. So the multiple is a representative of the quality we see in that business. And there'll be typical industry range. I'm a little bit outta date now, I would think a small business. So 500 to 800 EBITDA is probably at the moment in the three and a half to five and a half range, maybe. A million plus, you might be in the kind of six to seven or eight, but it's a tough market right now. What's important to understand is, is while there are sort of industry norms, the most, the most important thing is what is the business worth to the company acquiring you? and so the price that they offer you is going to be a reflection of how much value they think they can create for themselves, probably over a three to five year period.

Harv Nagra:

Got it.

Dom Hawes:

So if someone comes back and offers you a multiple you think is derisory, doesn't mean they don't think your business is good necessarily. If they did, they probably wouldn't offer in the first place. It probably means either they can't see how they can get value out of you to justify a higher value, or you haven't sold that value very well.

Harv Nagra:

Thanks for helping me understand that a bit better. Hey all, just taking a quick break to ask whether you've heard of Operations Nation. It's the global community for ops leaders of all stripes, they've got a buzzing slack space. I know that because I'm a member myself, A COO course and an annual conference that's coming up on the 20th and 21st of October in London. Go to operations nation.com to learn more and use code. SCORO for£30 pounds off conference tickets. Now, back to the episode. So I think you were saying that you, acquired 11 businesses in about two and a half, three years.

Dom Hawes:

Yeah.

Harv Nagra:

so let's talk about that post-acquisition process. Um, what does that look like?

Dom Hawes:

It depends business to business. So different people acquire in different ways, so, if you take like a typical private equity platform, so a private equity house invests in typically an established agency that's been around for 10 or 15 years, they've got two, two and a half, 3 million ebitda. Their revenues are north of 10 million. That's the platform. So when you get acquired into them, you are generally subsumed into them. You lose your brand, you adopt all of their systems, you adopt all of their operating procedures, you become part of their outfit. that's typical. In our case, we were not seeking to do that. So when I sold my company, as I mentioned earlier, very early into the transaction, they changed a bunch of stuff that didn't really need changing. Like the business wasn't broken. They changed the board, they changed the operating procedures, they changed the product mix that we had, and it just didn't make any sense. so when we got into this business, knowing how risky M&A is and it's really risky, it's a very easy thing to get wrong. Yeah, we took a view that we didn't want to change much in the businesses when we bought them because actually the transaction itself is really disruptive. And so we needed to give them the best chance of getting into that new environment as quickly as possible.

Harv Nagra:

Right.

Dom Hawes:

now that I think we took too relaxed a view on that actually in retrospect. in fact, I know we did that. So there are some things that you would want to change and some things you wouldn't wanna change. So I wouldn't wanna change the name above the door. I wouldn't wanna change unless we'd pre-agreed it. I wouldn't want to change, any of the key people. but I would potentially want to change the systems that they're using to do the day-to-day operations because it, especially if you're acquiring a lot, you don't end up with systems all over the place. it's quite tricky now. I think we had the view then that as long as we could API into the systems that they were using, we, and we could get the data out, then we'd be fine. The reality is you need people to operate systems day to day. And people don't work like APIs. They don't take data. They like to understand you click on this and it does that. And particularly if you're thinking about kind of some of the operational backup and the accounting work that needs to be done, it's hard to operate four or five different systems at the same time. So, especially if you're centralizing any resources. so I think in retrospect it's important to set expectations, pre-acquisition of what's gonna happen immediately post. And I think one of the, one of the complications here is how you structure your deal. So typically, if one company is buying another company, unless they're very cash rich or they're doing a share swap. There'll be a bunch of cash that's paid at close and then there'll be a period of time that isn't earnout that'll be performance related. So in our case for example, we typically paid 50% at close and deferred the rest over three years based on performance.

Harv Nagra:

Okay.

Dom Hawes:

you're buying a company then saying it's up to you how much you earn, depending on how you perform, it's really hard then to go and say, oh, but by the way, you have to change this and that.'cause they're gonna go, well, hang on a sec, let's get, you're telling me that I, I've gotta maximize my earnings. I like the systems that I have, which is why I have them and therefore why would I change them?

Harv Nagra:

Right.

Dom Hawes:

And so you need to think very carefully about that. Both if you're being acquired or if you're acquiring, be careful at the remuneration systems you put in place. Don't have unintended consequences in your operational systems.'cause often they do so. So it's just something to think about. now I think in our case, we probably could have had we been. More transparent and actually frankly, had we had more of an idea of what we wanted the optimal system to be, to say, right, this is how we operate. When you join, these are the club rules. This is what you must do. we didn't do that. And hey, look, we've gotta buy. It's just, otherwise you end up having, inefficiencies and you're just deferring difficult conversations.

Harv Nagra:

Mm-hmm. Mm-hmm. That, that is really interesting because, you do want efficient reporting, like you were saying, and, relying on APIs when everyone's using

Dom Hawes:

Yeah.

Harv Nagra:

in the group is using something different. I is, I can imagine quite painful and inefficient. I guess my, my question is this balance between change

Dom Hawes:

Yeah.

Harv Nagra:

then the implications of that versus not. I am a bit confused about what the right answer is now.

Dom Hawes:

Honestly Harv I'm not sure there is a right answer and that's the problem. I think that's the problem. So I think a lot's gonna depend on the culture of the company that is joining the new company.

Harv Nagra:

Mm-hmm.

Dom Hawes:

if you are very tech savvy, if the company's culture is very tech savvy and they can pick up and adopt a new system. Like if you think about most systems these days, they're built to be intuitive. And although they'll be some training, there'll be self-service portals and all sorts of other things. Now, if your culture is that you don't like technology and you're still in business, you're lucky. But if your culture is that you don't like technology, and you have to be trained to do everything, you're gonna find changing your ERP or your agency management system really hard. And if you are, if you don't have a system and you are having to adopt one, you. And you don't understand that when you adopt technology, it's a two-way process. Like you take the technology as far towards a human process as you can, then you change the human process to meet the technology. Now, if you don't do that when you're trying to integrate, and I've been there with one of our agencies, you get 18 months down the line trying to adopt technology and it just fails because you can never replicate exactly what the human systems were. And by the way, the human systems, they're not perfect or even ideal. They're just, they are what they are. So I think a lot depends on the mindset and the culture of the company being adopted. Now, in an ideal world, in an ideal world, everyone works on the same systems from day one. And I guess if you were gonna be really smart about it, like you pretty much know three to four weeks before a transaction happens, I. Then it's gonna work'cause you iron out all the problems and and it, again, that depends. It's a cultural thing.'cause quite often founders don't tell their teams until the transaction's absolutely done.'cause they're worried that something might fall over. And if it does they don't wanna send up false signals or say, Hey, we're for sale and everyone leaves. but if you do have that kind of open culture and we had, we did acquire a few where that was very open and everyone knew it was happening, then you could, I suppose, start some training beforehand so that on swap over day, everyone just come, comes to work and they have a new, a new system. But you know, the things that mustn't change are the quality of service to the customer. The feelings of security potential and growth for the people and the culture of the company itself that gets acquired.'cause if that changes too quickly, the people leave. And if the people leave, the clients leave. And then you lose the business.

Harv Nagra:

Mm-hmm. Mm-hmm. One of my questions is we've talked about systems, but how much, how much would you. Would you get involved in the operational side of things beyond that? so hiring practices and just kind of methodologies and things like that? Or is that kind of this is meant to be working and that's why we're

Dom Hawes:

Well,

Harv Nagra:

so we're

Dom Hawes:

again, it, well, my instinct is to the latter, right? Why would you buy something if it isn't working? And it depends. Everyone's obsessed about synergies when it comes to M&A, it's oh, because that's what the private equity guys look for. and they matter. Of course, there has to be a rationale, right? But the rationale is often not just about synergy. It could be about capability, or there are loads of reasons to buy another company, loads of them. and not all of them are about, can we squeeze 1.2 out of, out of one? so in an ideal world, everybody operates in a similar way, but there's a big tussle there between those are people who like to centralize and those who want to decentralize. Now, I've always been a decentralize. I believe decisions are best made closest to the customer. but there are some things that make sense to centralize. So things, your back office functions, particularly if you're doing lots of this stuff, finance, human resources, the it management, that kind of stuff makes sense to centralize. There are other things that are agency specific that you don't necessarily need to centralize. So, we tried early on centralizing our CRM. it didn't work. we spent a lot of money on it. That didn't work. so, so now we operate in an environment where the agencies get a lot of choice over what they do. they broadly operate to the similar, to a similar cadence. so we do monthly management accounts and everyone has the same sort of KPI structures and all that kind of stuff, but how they get to their numbers is kind of up to them. but I think it depends on, on, on how you are defining the culture of the vehicle you are trying to build. So, as I said, I was very decentralized. I would probably, were I doing this again, I'd probably come a little bit more back from being totally decentralized. It would make, it makes sense to have a common technology backbone,

Harv Nagra:

Mm-hmm.

Dom Hawes:

these days. So that when we started in 2017, we knew AI was coming. It was in our original business plan, but we didn't necessarily understand the applications of LLMs. We were thinking more about, algorithmic enhancement and mass personalization and that kind of stuff. The LLM thing we didn't see. And with the capability now of. Of LLMs to help you analyze data and provide that agent layer on top of all of your data. It kind of makes sense. It really kind of makes sense to have a common backbone.

Harv Nagra:

Mm-hmm. this question maybe is kind of not the smartest one. My, my question was gonna be around how quickly do you expect reporting to be consistent in the format you require and that kind of thing. I guess you would expect that from day

Dom Hawes:

Yeah, pretty much. Yeah, pretty much. Although you, yeah, you say that, we're having a tussle at the moment with one of our agencies who still wants to keep reporting as they did four years ago when we bought them.

Harv Nagra:

Okay.

Dom Hawes:

So, so, so what happens is they produce in their original format, and our accountants then change it into our format. It just makes unnecessary work. so, so it's not a dumb question at all. I would expect it from day one. and we use absolutely standard best practice, but it's weird and wonderful how other people do their management reporting,

Harv Nagra:

Mm-hmm.

Dom Hawes:

and what they measure. So, you

Harv Nagra:

Right.

Dom Hawes:

know,

Harv Nagra:

Loads of questions coming up for me, so I, I am kind of getting derailed from my discussion guide, but there's also, like, the accidental founder

Dom Hawes:

yep.

Harv Nagra:

And you were mentioning that part of what you look for is strong leadership and this kind of understanding of operations and finance. Do you find that you need to do an education exercise on financials and kind of standardizing that

Dom Hawes:

Yeah, I, let me talk broadly about the sector and the type of agencies rather than my particular experience.'cause that might be too personal. Look, I think there are a lot of people who don't get into this business'cause they're strong in finance and I think that's a weak spot. So, they're strong creatively, they're strong strategically, but they don't do numbers. I think it's really hard to run a business if you don't do numbers. And I think, I learned, that, look, that was me in the year 2000. There's a book called Accounting for Non-Accountants and I read it and then you start practicing it and you get good at it. It's like everything else. you, if you make the effort and you learn, you get good at something. And I'm now reasonably good at numbers or at accounting. but it staggers me how many people in our sector go, oh, I'm no good at numbers. And just think it's okay to say that. It's a bit like an Uber driver coming to work saying, oh, they're good at I'm, they're good at cars. if you're running a business is, ultimately numbers. It is about making sure that you are making the right financial decisions to keep the people who are turning up every day and running your business for you to keep them safe. And if you don't understand numbers. So yeah, I'm gonna, I about to go off on one, but I won't. yes, I think it's a problem in the sector generally, but if I came across somebody who really didn't do numbers, that's another massive red flag. I wouldn't buy them.

Harv Nagra:

Okay. Okay. Yeah. one of our recent guests, Marcel Petitpas, was talking about how you get to even a certain point or a threshold within the business itself, where you just need to make sure that everyone is speaking the same language and has a common understanding of all this terminology and stuff like that. So I

Dom Hawes:

I,

Harv Nagra:

that that's

Dom Hawes:

I think that's important. I think there's another view though, which I've come across where the leadership assumed that other people in the business aren't interested in the numbers. It's oh, why would they want to know they're a designer or they're a this, or they're a that, but you should always share the numbers anyway. Right? If they wanna ignore them, let them, but give them the choice.

Harv Nagra:

Yep.

Dom Hawes:

I'm a big, I'm a big fan of being transparent.'cause if you really want to take an agency and make it grow, it's not gonna grow because of the found it's gonna grow.'cause the whole team

Harv Nagra:

Mm-hmm.

Dom Hawes:

behind it and they understand the importance of the systems and the processes and everything else. So, sharing those numbers is part of that process of actually becoming a mature business.

Harv Nagra:

Absolutely. And I think the risk is probably that if you think your designers don't need to know, they're doing their thing, but they're missing the point of how

Dom Hawes:

Yeah.

Harv Nagra:

or what they're in it for and why you can't be over servicing. So in fact, it, it would do you

Dom Hawes:

Well, so,

Harv Nagra:

order

Dom Hawes:

so here's the funny thing there. There's an assumption of designers don't mind because for them it's about the creativity. But show me an artist, an artist, artist who isn't aware of the value of the painting once he or she's completed it, they know their numbers inside out'cause that's how they eat. so, so, you know, creatives also can care about numbers.

Harv Nagra:

Absolutely. Right. So let's talk about, kind of culture. you were talking about kind of not wanting to spook the team that's being

Dom Hawes:

Yep.

Harv Nagra:

having everyone leave and stuff like that, you know, but when it comes with, uh, when you acquire a business, you know, there's merged units, changed governance, culture change, stuff like that. My question is how does that impact morale and, how do you make changes without kind of destabilizing everything

Dom Hawes:

Yeah.

Harv Nagra:

what you were saying earlier without, losing what made the agency successful in the first place.

Dom Hawes:

So I think there are two or three things that you can do here if you're going out to acquire another business. Number one is think ahead. so put some content on about how you behave in acquisitions on your website.

Harv Nagra:

Mm-hmm.

Dom Hawes:

Make it very clear how you think. So we, we started a podcast where we talked about acquisitions and the process that anyone who knew they were coming to us could listen to. And that way they'd get, they'd hear us in our own voice, talk about

Harv Nagra:

Nice.

Dom Hawes:

what it meant, and we wrote blogs and we were on LinkedIn being very vocal about the kind of people that we were and the kind of process that we operated. So the first thing is you can get ahead of it by producing content and letting people find it themselves. secondly, you probably wanna have a conversation with the company that you're acquiring to find out about their culture and how and when they want to talk to their people. the seniors probably want to be let in in advance so that you can have a proper communication plan. and so it can be cascaded properly. And then the third piece is once you've done the transaction, I think is getting in front of the new team as quickly as possible. So we would always, pretty much on transaction date appear at the agency. It would be announced the transaction happened, and we would tell'em a little bit about the company that they had now joined. And then we'd have a warts and all, any questions you wanna ask? And in all instances, apart from one that worked really well, in one of them, the very first one we did, I said, right, so any of your questions you wanna ask, um, fire away. And some guy turned around and said, what makes you think you've got the right to fire me? I

Harv Nagra:

dear.

Dom Hawes:

said, I'm really sorry, I'm really sorry. And it was like, okay, firstly we don't, that's not how we operate. But yeah, that was a bit hostile, but most of them went really well. And actually people appreciate that kind of transparency and openness. so I think yeah, you can create some assets that people can find themselves. They're gonna trust their own leadership more than they trust you. So make sure they're well briefed, and then make yourself available as soon as possible after the transaction, and be as open as you can.

Harv Nagra:

Really good advice. Dom, like the biggest lesson that you'd say you've

Dom Hawes:

Hmm.

Harv Nagra:

from, buying and integrating over the years?

Dom Hawes:

set the house rules early,

Harv Nagra:

Okay.

Dom Hawes:

I think, actually I'm gonna go more basic than that. I'm gonna go much more basic than that. So, so the, my, my head is telling me that the most important thing is to set the house rules early, but there's something more visceral than that, which comes to your heart. Trust your gut. There's a couple of transactions that didn't go well that I had nagging doubts about that I thought were. Paranoia or insecurity or something.

Harv Nagra:

Okay.

Dom Hawes:

And now they didn't necessarily fail, but they didn't go to plan and exactly what was I was worried about came to pass. So I would think trust your gut when you meet people and when you meet the leaders of those agencies, your first instincts are probably correct. So don't ignore them.

Harv Nagra:

Really good advice. we're coming towards the end. I've got a couple more

Dom Hawes:

Sure.

Harv Nagra:

the first is, for businesses that are wanting to sell, what would you say they should be focusing on now to be more sales ready? does anything from your point of view jump out?

Dom Hawes:

You, yeah. Quality of revenue, it's all about at the moment in this market, I think it's all about revenue. Well, obviously you need to be making a profit, right?'cause the profit is gonna be how you get valued. so in terms of the mechanics of your business, I think I. Focus on your revenue and your quality of revenue. Get as much'cause that's, people like me when they come along will want to know how watertight that revenue is. That's what we look at. how much revenue can I see for the next three years? But there's something, again, more basic than that. I've got a head and heart thing going on at the moment So the head is saying revenue, the heart now is saying be very clear about why you want to sell

Harv Nagra:

Mm-hmm.

Dom Hawes:

what you want outta the deal.'cause it's quite easy to get lost when you get into that whole transaction. It's flattering when someone wants to give you loads of money to buy your company. Be very clear what it is you want and why you are selling your company. I think.

Harv Nagra:

Excellent. My next question, Dom, is going back to what you said at the beginning, there was something about you saying that you've gone through a process that was very badly

Dom Hawes:

Yeah.

Harv Nagra:

could you, could you summarize that for us then? What was so badly handled where you kind of developed your own

Dom Hawes:

Yeah. So,

Harv Nagra:

again?

Dom Hawes:

well, the business buying us didn't really want our business. They just wanted the revenues from it.

Harv Nagra:

interesting.

Dom Hawes:

that was a, that should have been a red flag. I ignored my gut the night before the deal. I didn't sleep at all.'cause I was really doubtful about the person buying us. I didn't trust her. and I was right not to. the, within the first month and a half, quite a lot in the business was changed. That didn't need to be changed.

Harv Nagra:

Yeah.

Dom Hawes:

didn't really make any sense. the business received no attention or love from the company that bought us. The cash was taken out, to fund other things, or the f sorry, the cash went out to fund other things. I don't wanna imply anyone took it.

Harv Nagra:

Mm-hmm.

Dom Hawes:

cash went out and, and it didn't get put back. and so what happened was I was then told by the people who bought us, well, this business isn't viable. Well, no shit, Sherlock, all the cash has gone out of it. so you're gonna need to put into administration and we're gonna rescind the deal. and yeah, so I think number one, there was no strategic fit. There was no good reason why they wanted to buy us other than the revenue. They needed a story to tell their own investors. Bad idea to do that deal, do. My gut told me not to trust the person who was running the deal. and my lawyer told me not to do the deal, but I ignored both my gut and my lawyer. I had other people pressurizing me to do stuff. And then number three, the behavior of the senior team that bought us post-transaction was terrible. they was just really bad. yeah. So I ended up, I ended having to sell a house to get a, to get myself out of that deal. So it was bad. So, so coming to this one, there were things like, number one is, unless there's a good reason or we tell you the name's gonna stay above the door, right? We're buying you because you work and therefore we're not gonna mess around with you. But we would like you to do the following things in time.

Harv Nagra:

Yeah.

Dom Hawes:

on to a common platform, except there'll be some centralized services, except we're moving into a growth culture. So there's, so there was some. Some rules, but above all it was to always, always, always to treat people like adults. Never infantalized, never bully them. And we've, we've lived, we've lived up and been true to that.

Harv Nagra:

Great. So we've been talking very much about the business being acquired and that kind of experience, but, you were talking about raising funds. Where does that come from if somebody does want to acquire another business? Is it kind of your, your own,

Dom Hawes:

Well, it depends on, yeah, so quite a lot of people build cash in their businesses over time. because in case they sell, I suppose they can take it out tax efficiently, or they wanna buy. So one, you might be able to develop or grow your own funds. two, you can use debt to buy. Quite a lot of companies use debt. There are venture credit companies out there. they typically, you need half a million pounds or more in EBITDA to be able to support that. But there are levels of debt that you can get to do that. you could look at, I mean, debt is obviously risky. You could take external investment that's hard to find. Or you could do a deal whereby you are, doing some kind of a paper swap. So it's some cash, some shares. typically though, because you are a trade sale will typically be levered. So if you are buying a business for 2 million pound or million pounds, let's say, your closing requirement on day one will be half a million quid. if you're paying 50% down. So, so actually, if you break the chunk down of what you wanna buy and you look at how much cash you need to get there, then often you can find creative ways to get the money. The best way to do it, of course, is to earn the money first and then spend it.

Harv Nagra:

Mm-hmm. You talked about earlier that, the market's worlds apart from when you

Dom Hawes:

Yeah.

Harv Nagra:

started, up, so obviously some things come to mind for me, but what is worlds apart? what's

Dom Hawes:

So, well, in 20 17, 20 18, we'd come out of the 2008, 2009 slump. And since something like 11 or 12, it had been six, seven years straight line growth, everything was growing. so anyone who started and sold an agency in that period. Knows how to sell something when the tide is rising.

Harv Nagra:

Mm-hmm.

Dom Hawes:

Um, and then in 2020 we had, COVID obviously, and we had lockdowns, which is very disruptive. So, not many people didn't lose at least a part of their business. We lost some sizable pieces, travel and tourism, all that side of the business just went. So we had a little bit of that kind of business. then we have in 2022, war and inflation and interest rates and budgets and all sorts of stuff. And now we've got like the most extraordinary, I think I, I listened to a, an internal, presentation that I've made actually last night. the pestle analysis, political, economic, social, technological, et cetera, et cetera. All of them are off the charts, like the political system around the world is mad. Like we are in the middle of a, whether we're technically in a recession or not, I dunno, but we're in the middle of a horrible recession. The social unrest, wherever you look at it, AI is completely changing the world. Like all of the things that we used to take for normal are now mad. Everything's mad. So we're living in this extraordinarily volatile world where you can't guarantee that what you had last month is what you're gonna get next month. We just don't know. And I, and that's what I'm talking about, that's why it's so hard now to do the things that we could do with ease in 20 17, 20 18.

Harv Nagra:

Mm-hmm. Is the agency space a good business to be in? Looking at

Dom Hawes:

It depends who you are. It depends who you are, I think, doesn't it? I think it's really tough at the moment. I think agency's really tough, in, in housing, offshoring and AI are all denting. Like the business is changing. It's fundamentally changing.

Harv Nagra:

Mm-hmm.

Dom Hawes:

but I think it needed to, I think, I. The whole digital marketing stuff that started appearing post Millennium has led a lot of agencies into doing, production, performance, that kind of stuff. And there's probably a cheaper or better way of doing it these days. So we know part of it's evolution, part of it's revolution. I think if you get it right, if you're very tech enabled and you are very data led and you are good in your ai, it's a great space to be in. If you're not, I would look elsewhere.

Harv Nagra:

you're in

Dom Hawes:

Yeah.

Harv Nagra:

and how do you see the next few years in the agency

Dom Hawes:

Well.

Harv Nagra:

know, things like,

Dom Hawes:

I'm a bear, I'm afraid I'm a bear. I see it being exactly the same as it has for the last two or three years. You know, the, the, the, our government's not going anywhere. The American government's not going anywhere. There's no sign of peace in the Middle East or Ukraine. interest rates, I suppose, are stabilizing, but, where's the confidence gonna come from? And even if it does come from anywhere, pretty much most of the Western world is bankrupt at the moment. I don't wanna be too depressing,

Harv Nagra:

Mm-hmm.

Dom Hawes:

indication we might see some economic growth, but there's not much indication that big confidence is gonna recover. so, so where I am at the moment, everything's gotta be stripped bare. We've gotta get into survival mode.'cause I don't see an improvement. In the next two to three years necessarily. Now that doesn't mean there's not opportunity. There's always opportunity and well run agencies are doing extraordinarily well. I saw there were five in the Times top 100 this week. Five marketing slash sales agencies. we've got agencies in our group who are knocking it out of the park, but they've all got good discipline. It's all about that. Yeah,

Harv Nagra:

Yeah. and that's kind of been my view recently is that more than ever focus on profitability and efficiency and all that kind of

Dom Hawes:

Yeah.

Harv Nagra:

is critical. You can't just

Dom Hawes:

You gotta be commercial. You've gotta be overtly commercial.'cause no one's gonna hire you'cause you make pretty pictures. They're gonna hire you'cause you are gonna help them make more money. That's why they hire you.

Harv Nagra:

Absolutely. Absolutely. Dom, this has been super enlightening, so thank

Dom Hawes:

No, it's been fun. Thanks. Uh,

Harv Nagra:

wants to reach out to you and get any advice and things like that, where can they reach

Dom Hawes:

well you can find me on LinkedIn, Dom Hawes. so you can find me there. that's probably the easiest place. Yeah.

Harv Nagra:

excellent. So that was Dom's take on scaling through M&A and as someone focused on operations, there were a few points that really stood out to me. First, Dom put it bluntly: If you're in a leadership role at a service business and say, I'm not a numbers person, that's a problem. Your team relies on you to make sound decisions and without a grip on your numbers, that's almost impossible. He also made it clear that strong operations make a business more attractive. The goal isn't to acquire a company and start meddling or clean up their mess, it's to bring in businesses that already have a strong handle on how they run, and maybe make some tweaks to consolidate with the group. Speaking of consolidation, I also noted Dom's reflection that not standardizing systems early on was a mistake. When every business in the group is using different tools, it becomes harder to centralize reporting, coordinate on finance and run efficiently. So that was good advice. In many ways, a lot of this connects back to what Sam Wood said in the last interview. Clear strategy, strong governance, visibility, and accountability are what make your business scalable and sale ready. So whether you're on the buy side or the sell side of a future deal, the operational foundations matter. The quality of your revenue, the maturity of your systems, the consistency of your reporting, it all plays a role in how attractive your business is and how well it integrates into something bigger. Alright, if you'd like a copy of the key learnings from this episode in your inbox, then sign up for the Handbook newsletter. The link is in the episode notes. The newsletter always goes out the week after the episode. Lots of more great content coming your way, guys, help us grow the audience. Please rate the podcast on Apple or Spotify and share the podcast with your networks. I really, really appreciate it. That's it for me this week. Thanks so much for joining us.

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