When Is the Right Time to Use Acquisition as a Strategy for Rapid Growth? with Manish Dudharejia | Ep# 713
Have you ever considered an acquisition to accelerate your agency’s growth? What are the advantages compared to organic growth? Do you have the necessary resources to navigate the acquisition process? Today's featured guest discusses his ongoing acquisition process, outlining his reasons behind this move, sharing why this felt like the perfect moment for an acquisition, and how he kept his peace of mind during this time-consuming process.
Manish Dudharejia is the founder and CEO of E2M Solutions, one of the largest white label services agencies with clients all over the globe. Manish is a friend of the podcast who’s been on previously talking about big decisions agency owners need to make and sharing hiring tips for agencies.
This time, he discusses his agency’s recent acquisition of a white label WordPress development company, adding over 80 new team members and 100 new clients to their existing roster. He explains the decision-making process behind acquiring rather than solely building, emphasizing the need for rapid growth and expansion in serving over 300 clients globally.
In this episode, we’ll discuss:
Strategic acquisitions as a strategy for agency growth.
Acquisition vs. organic growth.
2 tests for cultural compatibility.
The Lion Framework.
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Strategic Acquisition as a Fast-Track to Agency Growth
Manish has been building E2M for the past ten years and recently embarked on a new phase in his journey by adopting acquisition as a growth strategy. Why now? One of the key reasons was the ability to acquire clients and add new team members rapidly.
When it comes to rapid expansion, acquisition stands out as one of the most effective strategies for an agency. Manish had a clear objective to increase his agency's scale by 50% over the next three years. While organically achieving this was not impossible, it would have been time-consuming and presented its own challenges, so an acquisition made sense.
By acquiring an existing company, E2M was able to instantly add 80+ new team members and over 100+ agency clients to its portfolio. This immediate influx of resources and clientele allowed E2M to scale up its operations significantly and achieve its growth goals much faster than if it had pursued organic growth strategies.
Ultimately, Manish’s goal of dominating his niche in a short amount of time required a big investment and he opted to make a big move that would take less time. This way, combining forces with another company in the same space allowed E2M to strengthen its market presence and establish itself as a dominant player.
The Biggest Appeal of an Agency Acquisition
For Manish, the biggest appeal of an acquisition is that it’ll bring your agency new customers and, especially, new agency talent. Building a strong team is no small feat, and the process can be disheartening. However, acquiring a company with a skilled team already proficient in the area where Manish aims to expand can significantly expedite his agency's growth and heighten its chances of success.
Of course, is not as easy as finding a great team and adding them to your company. It's crucial to consider the cultural fit between the acquiring and acquired companies. Culture plays a pivotal role in the success of an acquisition. Misaligned cultures can lead to integration hurdles, increased employee turnover, and ultimately impede the success of the acquisition. Therefore, gaining a deep understanding of the company being considered for acquisition is essential. This understanding provides valuable insights into its operations, culture, team dynamics, and overall potential for success.
In Manish’s case, he knew exactly what to expect, having established an eight-year relationship with the owners of the acquired company that provided a clear understanding of its internal workings, team dynamics, and overall performance. This familiarity allowed for a smooth transition and integration of the new team into his agency.
Vetting Acquisition Targets: 2 Tests for Cultural Compatibility
There are two big tests to pass before embarking on an acquisition process.
Ask yourself if you can take an entire month off from the business and find it has grown when you come back.
Learn how they work. Do a test project with the company you’re planning on purchasing. This way, you can see first-hand how you would work together. Regarding this second step, Manish goes even further and prompts agency owners to ask themselves if they would invite the CEO of the company they want to purchase to have dinner at their home since most likely they will be a reflection of their company culture.
Finally, Manish also mentions the importance of having a strong leadership team in place before considering an acquisition. Two years ago, he wouldn’t have embarked on such a time-consuming endeavor as acquiring a business since he still didn’t have the proper support and was more involved in the day-to-day tasks of the business. Having a capable team supporting him through the integration process helped increase their chances of a successful acquisition.
Optimize Your Work Time Using the Lion Framework
Agency owners often feel the pressure to maintain a constant 100% effort, fearing that any time off will lead to everything falling apart. In reality, taking time away is not just an opportunity to recharge, but also a chance to evaluate what's not working and what is, ensuring you have the energy to address any issues upon your return.
Moreover, your attitude and energy will dictate your team’s overall attitude to work. A pissed-off owner who hates their job will likely lead a frustrated and exhausted team that lacks initiative. This is why Manish takes his time off seriously. After removing himself from day-to-day operations, he enjoyed a freedom he hadn’t seen in years.
However, the acquisition process brought him back to 18-hour workdays and numerous critical decisions. During this time, he made a point to take daily walks, allowing himself to recharge and gain the clarity needed to face the next day's challenges.
According to the Lion Framework, which Manish shared at a recent mastermind event, taking time for self-care is not a luxury but a necessity. Rest time is crucial not only for personal health but also for sustaining productivity and creativity as a business owner. It serves as a vital tool in preventing burnout, maintaining mental clarity, and enhancing overall well-being. In this sense, Manish emphasizes the importance of surrounding oneself with a supportive team and community that offers encouragement, guidance, and assistance during difficult periods.
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