Acquisitions can be a game-changer for scaling your business, providing access to new markets, capabilities, and talent. However, making the right acquisition requires a clear strategy and a founder’s perspective on what drives success. Join Sam Shepler, founder of Testimonial Hero, as he shares his journey of leveraging acquisitions to accelerate growth. In this session, you’ll learn how to identify opportunities that align with your vision, navigate the acquisition process, and unlock synergies that enhance your business. Whether you’re exploring acquisitions for the first time or refining your approach, this session will provide actionable insights from a founder who’s been in your shoes.
TRANSCRIPT
Greg Alexander: Hey, everybody. This is Greg Alexander, the host of the Pro Serve Podcast and founder of Collective 54. If you’re not familiar with this show, it is dedicated to founders of professional services firms. So if you’re in consulting, IT, marketing, or anyone who markets, sells, and delivers expertise for a living, this is for you. We specialize in the boutique, which we define as the number of billable employees between 10 and 250. On this show, we talk about scaling, obstacles to scaling, growing, obstacles to growing, maybe someday selling your business, etc. On today’s episode, we’re going to talk about acquiring firms instead of selling your firm—being on the other side of the desk—and as a way to grow your firm and reach your potential through making acquisitions. We have a member with us. His name is Sam Shepler, and Sam is the founder and CEO of Testimonial Hero. He has recently completed an acquisition and has dreams to do many more of them. It’s a big part of his growth strategy, and it’s pretty new because, up to this point, he was growing like the rest of us, just organically. I wanted to have Sam on the show and have him share with our members why he decided to do this, what his strategy is, how it’s going, etc. So with that, Sam, would you please introduce yourself?
Sam Shepler: Thanks, Greg. It’s a pleasure to be here. I’m Sam Shepler, founder and CEO of Testimonial Hero. We are a customer storytelling agency, so we help mostly B2B companies easily create social proof like video testimonials and, now thanks to our acquisition, written case studies as well, to help them build trust and close deals faster.
Greg Alexander: Okay, very good. So let’s talk about this recent acquisition. From my understanding, this is the first time you’ve done an acquisition. Is that correct?
Sam Shepler: I would say so. We actually did two acquisitions in Q1, and these are the first two material ones in terms of revenue footprint size. We did some very, very small ones before, but for all intents and purposes, yes, these two were the first legitimate ones.
Greg Alexander: Okay. So after focusing on organic revenue for all these years, you’ve now switched or added acquisitions. Why now? Why are you doing this today?
Sam Shepler: Yeah, it’s a great question. It took me a little while, but once I was fully committed to my business and decided I didn’t want to run a lifestyle business, I really wanted to go through that lifecycle of growth and scale. I realized that acquisitions are an incredibly powerful tool. If you’re really committed and want to grow the biggest business, you owe it to yourself to look into and consider acquisitions. That was the real thing that precipitated this decision—me wanting to swing bigger. In our situation, we acquired a new capability. All of our revenue was from video services, and we acquired a written case study capability. Immediately after the acquisition, we were doing $40,000+ a month with that new line of business, which is significant for us as a $4 million company. Maybe we could have spent years trying to figure that out on our own, or we could buy that capability that aligns with our strategic roadmap and skip a ton of steps to implement it immediately. Essentially, we got there faster.
Greg Alexander: Okay. And how did you train yourself on getting good at this? Because buying a firm comes with risks, writing checks, dealing with cultures, etc. You were not an expert in this area, but you’re becoming one. How did you learn how to do this?
Sam Shepler: Yeah, it’s a great question. I’m still learning. I’m looking at a new deal now and bringing what I learned from the last deal to the table. Every time I look at a new business, I learn more, so there’s a constant evolution. My model is always to lean on advisors, whether it’s my peer group in Collective 54, yourself, or other advisors in my life. I try to figure out what’s what, bring it to my advisors, and say, “Here’s what I’m thinking. You’ve done 10 acquisitions, Mr. Advisor. What am I not seeing here?” I just ask for help from people who know a lot more than me, and I’m not afraid to pay them for their time to do that. I have a lot of advisors.
Sam Shepler: In addition to Collective 54, I have other advisors. I’ve just found people and said, “Hey, you seem like you know what you’re doing. We’ve never met. Can I pay you for an hour of your time?” Most people are like, “Don’t worry about it; I’m happy to chat.” So, I think just leaning on people who’ve done it is the biggest thing. I love to learn; that’s another thing. It’s very fulfilling to me, and I get excited by just learning. I’m very curious, like many of us entrepreneurs are.
Greg Alexander: And how are you finding your deals?
Sam Shepler: The two deals we did in Q1 were what would be basically known as proprietary deals. I found them; they weren’t on a broker marketplace. They were just relationships I had built over a really long period of time. One of them I had been talking to about potentially acquiring for multiple years. The timing was never right, but eventually, some things happened in their business and life, and the timing aligned. That was the key thing—I had a vision for it happening a couple of years in advance. We stayed in touch, made sure they knew I was always interested, and after a couple of years of back and forth, the timing finally aligned.
Greg Alexander: Adding half a million dollars to your top line on a $4 million business is quite a bit of growth. I’m doing the math in my head—you probably had to write a decent-sized check to make that happen. How are you financing these deals?
Sam Shepler: It’s a great question. Without getting too much into the specifics, just for confidentiality for the sellers, both of the deals we did had at least some level of distressed elements to them. Because of that, we were able to put in creative deal terms where we didn’t have to bring that much to the table. For one of the deals, we brought about $100,000 to the table. For the other, we didn’t have to bring anything to the table but took on some of their deferred revenue and liabilities. There were also revenue share components, where we paid a percentage of revenue over a set period of time. That’s another lever we’ve used in these two deals that I think is interesting.
Greg Alexander: The big learning here is that, in this case, and I think for the majority of our members, bad is good. Distressed is a great opportunity when you’re dealing with smaller firms, maybe lifestyle firms. The lifestyle owners might have tried to scale the business but couldn’t for whatever reason, decided they don’t want to do it anymore, and can’t sell. If you’re the “white knight,” you’re in a position of strength. You can buy low, fix the issues, and sell high down the road. In Sam’s case, buying capability shrinks the timeline. He wanted to get into written case studies. He could have built that internally, but it might have taken one, two, or three years. Instead, he made the right acquisition and was in business overnight, contributing positively to his P&L. I wanted to call that out because a lot of times, our members might think, “I don’t want to buy that business; it’s a bad business.” But that’s the reason to buy it—because it’s a bad business, and your value add is turning it into a good business. There’s lots of opportunity for those who want to be aggressive in that space, which sounds like what you did and plan on doing. My last question is about your strategy. Up to this point, you’ve been buying capability. Is that where you’re headed, or are you looking at things like geographic expansion or access to new marketplaces? What is the strategy?
Sam Shepler: It’s a great question. In our situation, we happen to be a geographically expanded company. Most of our work is done purely remotely on the video side, so we don’t have geographic limiters right now. It will probably continue to be about buying new capabilities, particularly for cross-sell and growth opportunities.
Sam Shepler: But just to also hit on the kind of distressed deals side of things, I think you raise a really good point. The key thing for us was we knew how to address the problems and challenges. We had faced those same exact problems and challenges a few years before, and we solved them in our own business. We were confident in solving them again. It can either be a really bad distraction or a great opportunity, and it’s all about your ability to execute. For us, we felt very confident executing because we had already solved those problems for ourselves.
We also had the team. For me personally, as the owner of the firm, the strength of my leadership team and the team as a whole, especially the leadership team involved in the integration, was crucial. I don’t think I would have done this if I didn’t have full confidence in my leadership team to integrate everything post-close. That’s not my strength. My strength is not in the nitty-gritty details of integrations. My strength is seeing the opportunity, getting the deal done, and looking for the next deal. Honestly, if it wasn’t for my team, nothing would have worked post-integration. So, I think having the right team is such a key part. After the deal is done and the integration starts, that’s when a lot of the real work begins.
Greg Alexander: Yeah, and then if you screw that up, you can lose key employees, you can lose key clients. I mean, that’s where the rubber meets the road, so to speak. That’s a good reminder that you have to think through what it really takes to integrate this acquisition. Do I have a solid plan? Do I have a team that can execute the plan? That’s a good reminder.
Greg Alexander: Alright, very good, Sam. We’re going to keep these to 15 minutes. You’re going to graciously participate in a private member Q&A session. There are a lot of members I have weekly office hours with, as you know. You and I have participated in that. They come to those calls with, “Hey, I’m thinking about doing a deal. What do you think?” There’s a lot of interest in this area. I wonder if it’s because of the economic cycle, particularly in some segments. Yours, in particular, marketing, is under duress right now. As the great Warren Buffett once said, and I’m paraphrasing here, “When things are bad, that’s the time to strike.” So, there’s an opportunity to do some deals here. I’m sure our members have a ton of questions for you.
Greg Alexander: On behalf of the membership, thanks for being on the show today. We look forward to the Q&A session.
Sam Shepler: Thanks, Greg. My pleasure. Looking forward to talking with everyone.
Greg Alexander: A few calls to action to conclude with: If you’re a member and you want to participate in the Q&A, look for the meeting invite, and you can ask your questions directly to Sam. That’ll be a one-hour session coming up shortly. If you’re not a member but after listening to this, you want to become one, go to collective54.com, fill out an application, and someone will get in contact with you. If you’re not ready for either of those two things and just want to learn more, I suggest you read my book. It’s called *The Boutique: How to Start, Scale, and Sell a Professional Services Firm*, written by yours truly. You can find it on amazon.com.
Greg Alexander: Until next time, I wish you the best of luck as you try to grow, scale, and someday sell your firm.
Note: This transcript was generated by Zoom.