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In/Organic Podcast
E26: Agency Valuations & Structuring 201a w/Ayelet Shipley
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Summary
In this episode, Christian Hassold and Ayelet Shipley delve into the complexities of agency valuations, exploring the interplay between buyer and seller motivations, and discussing real-world scenarios that illustrate various deal structures. They emphasize the importance of understanding the unique dynamics of the agency market, including the factors that influence valuations and the creative structuring of deals to meet the needs of both parties. In this conversation, Ayelet and Christian delve into the intricacies of business valuation, particularly focusing on earn-outs and creative deal structures. They explore how earn-outs can bridge the gap between current cash and total enterprise value, especially in lower EBITDA scenarios. The discussion also highlights the dynamics of larger deals, emphasizing the importance of timing and the need for sellers to recognize good opportunities in a fluctuating market. The conversation is rich with insights on how to structure deals that meet both buyer and seller needs while navigating the complexities of agency acquisitions.
Takeaways
• A deal occurs in the overlap of buyer and seller needs.
• Creative structuring can lead to better outcomes for sellers.
• The agency market is dynamic with many new entrants and exits.
• People, client relationships, and capabilities are key assets in agency valuations.
• Valuations can vary significantly based on market fit and potential.
• Understanding the motivations of both buyers and sellers is crucial.
• The agency landscape is evolving with increasing deal velocity. Earn-outs can be a strategic tool in business valuation.
• Trust between buyer and seller facilitates smoother transactions.
Chapters
0:48 Introduction
1:59 Why Agencies Are Built and Sold
8:03 How Buyers Assess Value
12:10 Cash Upfront vs. Long-Term Upside
14:28 Real-World Deal Scenarios
15:02 Scenario B: Traditional 80/20 Deal
19:33 Earnout Treatment in Valuation
21:21 Scenario D: Creative Deal for Smaller Agencies
26:27 Performance-Based Payment Adjustment
29:23 Why Larger Deals Are Different
32:41 Wrap-Up
Connect with Christian & Inorganic Podcast
Christian's LinkedIn: https://www.linkedin.com/in/hassold/
In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast
In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured
Connect with E26 guest, Ayelet Shipley on LinkedIn
https://www.linkedin.com/in/ayelet-shipley-b16330149/
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E45: M&A Frenzy in the AI Era
31:28|In this episode, co-hosts Ayelet Shipley and Christian Hassold delve into AI related acquisitions, particularly focusing on outsized valuation multiples and whether they are sustainable or extensible to the digital agency sector. They discuss the valuation multiples seen in recent AI focused acquisitions led by Meta, Nvidia, Cvent, and OpenAI, and opine on the race for talent in the AI era. The conversation highlights the evolving landscape of agency capabilities in the face of AI advancements and the potential for consolidation in the market. The hosts also explore the future of digital agencies and the opportunities that lie ahead for strategic acquirers in the AI domain.TakeawaysAI is driving significant M&A activity in the tech sector.Recent acquisitions show high valuation multiples for AI companies.The trend of acquiring talent over products is prevalent in AI M&A.Digital agencies must adapt to the changing landscape influenced by AI.There is a potential consolidation in the agency market due to AI advancements.Strategic acquirers are looking for speed to market through AI capabilities.The valuation of AI startups is often based on capital raised rather than revenue.The market for AI capabilities in agencies is still developing.Founders may need to be realistic about their exit multiples in the current environment.The future of digital agencies will be shaped by AI innovations.Chapters00:00 Introduction to AI Trends01:03 M&A Activity in AI05:16 Valuation Multiples in AI Acquisitions11:00 The Talent Acquisition Race15:18 AI's Impact on Agencies19:07 Future of Digital Agencies25:01 Opportunities in AI AcquisitionsConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured
E44: Inside a Social Media Agency Pioneers Exit: Earnouts, Post Close, Lessons Learned
28:46|In this episode of the Inorganic Podcast, co-host Ayelet Shipley interviews Carrie Kerpen, a pioneer in social media and co-founder of Likeable Media. They discuss Carrie's journey from starting a social media agency to successfully exiting the business. Carrie shares insights on the importance of profitability, setting exit goals, choosing the right M&A advisor, and negotiating earn-outs. She reflects on her experiences and the lessons learned, particularly for women entrepreneurs, and emphasizes the need for community and support in the business world.TakeawaysCarrie started Likeable Media in 2007, one of the first social media agencies.The initial focus was not on exiting but on building a profitable business.Setting a target exit value can help guide business decisions.Timing and personal readiness are crucial when deciding to sell a business.Choosing the right M&A advisor can significantly impact the sale process.Negotiating earn-outs requires careful consideration of control and reporting.Reflecting on the exit process can reveal areas for improvement.Building a community for women founders can provide essential support.Women entrepreneurs often face unique challenges in the exit process.M&A can be a powerful tool for business growth and problem-solving.Chapters0:00 Introducing Carrie Kerpen1:05 Founding Likeable Media 3:33 Early Growth & Cash Flow Challenges5:22 Becoming CEO and Focusing on Profitability6:37 Market Shifts & Productizing the Agency7:21 Building a Brand through All the Social Ladies9:07 Financial Stability & the $20M Exit Goal 10:43 Knowing When It's Time to Sell12:55 Choosing an M&A Advisor vs. a Banker15:36 Price vs. Timing After the Exit18:22 Negotiating & Protecting an Earnout22:02 Life After the Sale23:12 What Carrie Would Do Differently24:51 Acting Like a Platform and Rethinking Capital25:58 The Exit Gap and The Whisper Group27:45 Closing ThoughtsConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredConnect with guest, Carrie Kerpenhttps://www.linkedin.com/in/carriekerpen/
E43: State of Holdcos and What it Means for Independents w/Chloe Cotoulas of Everos
37:43|SummaryIn this episode of the Inorganic Podcast, co-hosts Christian Hassold and Ayelet Shipley chat with Chloe Cotoulas, Partner at Everos Group and an investment banker with a diverse background in advertising and finance. On this episode they discuss Chloe's unique career path, the evolution of holdcos in the advertising industry, and the impact of market trends on large-scale independent agencies. The conversation also explores the future outlook for deal activity in the coming quarters, emphasizing the importance of AI and experiential marketing in shaping the industry.TakeawaysChloe transitioned from a creative background to investment banking.The convergence of creativity and business is crucial in today's market.Holdcos are facing challenges due to changing market dynamics.AI is reshaping the advertising landscape and agency operations.Experiential marketing is becoming central to brand strategies.The enterprise value of agencies is often misrepresented in the market.Private equity is increasingly interested in the advertising ecosystem.Founders are reconsidering their exit strategies in light of market changes.The importance of financial performance in upcoming deal activity is paramount.Prompt engineering is emerging as a valuable skill in the creative industry.Chapters00:52 Chloe Cotoulas' Presidential Writing Experience05:07 Chloe’s Career Path from Creative to Finance10:04 Holdco Shakeups, IPG–Omnicom, & WPP17:26 How Market Turmoil Impacts Independents19:03 New Buyers & Founder Mindset 22:38 Selling to Holdcos vs. Challenger Networks24:15 The Rising Trend of Experiential + Social30:19 Deal Flow Outlook for the Next Two Quarters32:45 AI Opportunity: Differentiation & Acceleration33:24 AI Risks, Defensibility, & Prompt Engineering36:51 Closing Thoughts Connect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredConnect with guest, Chloe Cotoulashttps://www.linkedin.com/in/chloe-cotoulas-92082861/
E42: Deal Reveal - Wpromotes' Acquisition of Giant Spoon
34:43|In this episode, co-hosts Ayelet Shipley and Christian Hassold discuss WPromote's acquisition of Giant Spoon. They delve into the intricacies of the acquisition process, emphasizing the importance of trust and the contributions of a strong deal team. The conversation also touches on market reactions to the acquisition and the importance of post-merger integration planning. The hosts conclude with reflections on lessons learned and future goals for the newly formed agency.TakeawaysThanksgiving cooking hacks can lead to perfect meals.The acquisition of Giant Spoon by WPromote is a significant industry move.Trust and communication are crucial in the deal process.Shared expectations workshops can enhance collaboration.Having a partner to navigate complex P&Ls is critical to navigating technical financial discussions in a deal processMarket reactions can provide insights into industry perceptions.The integration process should be planned from the start.Maintaining brand identity is important post-acquisition.Future goals and objectives are vital for continued growth.Chapters00:00 Thanksgiving Reflections and Cooking Hacks02:12 Major Acquisition Announcement: WPromote and Giant Spoon05:05 The Search for the Right Agency: A Corporate Development Journey10:08 Navigating the Deal Process: Trust and Communication17:31 Building Trust: Shared Expectations Workshop21:30 Challenges and Insights from the Deal Process25:05 Market Reactions and Industry Perspectives29:21 Final Thoughts and Future GoalsConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredEpisode ReferencesAd Age Deal AnnouncementGE’s Opening Day Commercial by Giant Spoon
E41: KPMG Tech M&A Conf & SaaS M&A Market Update
39:10|SummaryIn this episode of the In/organic Podcast, co-host Christian Hassold shares insights from the KPMG Technology M&A Conference, discussing the current landscape of mergers and acquisitions, particularly in the tech sector. In this episode, Christian shares highlights from the conference, including the pervasive influence of AI on M&A decisions, the challenges and opportunities presented by the AI investing landscape, and the importance of creative deal structures in navigating the current market dynamics. The episode also covers the “operator's dilemma” faced by CEOs - that is, the rise in peer pressure to do M&A, and what are the best practices are from leading strategics. Finally, Hassold provides an overview of current B2B SaaS deal activity and market trends based on Pitchbook data.TakeawaysThe KPMG M&A Conference provided valuable insights into current market dynamics.AI is a major factor influencing M&A decisions and strategies.VCs are increasingly making investments in AI startups without getting governance rights, and not always checking the underlying economics of the businessThe operator's dilemma highlights the challenges that CEOs face in mergers and acquisitions (M&A).Corporate development roles are seeing a significant increase in demand.Top CEOs simplify their M&A strategies to focus on core problems.Deal activity in the tech sector is on the rise, indicating a healthy market.Earnouts are becoming a significant component of deal structures.Chapters00:00 Introduction and Context of the Episode02:50 Insights from the KPMG M&A and Tech Conference06:04 AI's Pervasive Influence on Tech and M&A08:54 The AI Investing Landscape11:40 Deal Structures Sparking Innovation16:42 The Operator's Dilemma in M&A21:48 Corporate Development and Deal Activity24:38 Priorities in M&A for Corporates vs. Private Equity29:19 Case Studies of Successful M&A Strategies32:59 Market Update on Deal Activity and EarnoutsConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredEpisode ReferencesKPMG M&A Conference AgendaKPMG 2025 Deal Market Study (buyer priorities)Kirkland & Ellis M&A Bring Down Report 2025 (earnout data)
E40: The Art of Tuck-in Deals w/Brian Burt of Canopy Management
37:31|SummaryIn this episode of the Inorganic Podcast, co-hosts Ayelet Shipley and Christian Hassold welcome Brian Burt, founder & CEO of Canopy Management. In this episode, we discuss Brian's entrepreneurial journey, with an emphasis on his principles for building the business and expanding through highly accretive tuck-in M&A transactions. Brian also shares the importance of cultural fit in successful integrations. He then discusses the challenges and opportunities presented by AI in the retail media space, emphasizing the need for omnichannel marketing strategies. The conversation underscores the importance of momentum in business and the role of performance-based incentives in sustaining an entrepreneurial spirit within acquired teams.TakeawaysCanopy Management has grown without external investment, focusing on mergers and acquisitions for expansion.The need for operational efficiency and scalability drove the first acquisition.Cultural fit and shared values are crucial in successful acquisitions.Integrating new teams requires clear communication and defined outcomes.Performance-based incentives help maintain entrepreneurial spirit in acquired teams.AI presents both a threat and an opportunity for the agency space.Omnichannel marketing is essential for modern e-commerce success.Building a strong personal brand aids in building an acquisition funnelMomentum in business is key to successful integration and growth.?Chapters00:26 Brian Burt’s Background 02:38 Growing through M&A 12:31 Culture Fit and Founder Alignment13:09 Integrating the First Acquisition16:36 Defining and Executing Acquihires20:45 Evolving the Playbook23:46 Incentives Pods, and Integration Strategy27:44 Scale Synergy and Sustainable Growth31:28 Market Outlook: Retail Media Omnichannel and AI37:14 Closing Thoughts and TakeawaysConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredConnect with guest Brian Burthttps://www.linkedin.com/in/brianburt1/
E39: The Future of Omni & Retail Media w/Jeff Cohen
43:15|SummaryOn this episode of the Inorganic Podcast, co-hosts Christian Hassold and Ayelet Shipley are joined by guest Jeff Cohen, newly minted Chief Business Development Officer of Skai, former Principal Evangelist for Amazon Ads, and in general a seasoned operator with an extensive background in commerce and tech. In this episode, the hosts and guest explore the current state and future vision of omnichannel commerce. Their discussion spans the immediate and long-term prospects of retail media agencies and the defensibility of these businesses based on their commonly observed category-specific expertise. As a part of this discussion, they talk about notable retail media agencies including Podean, Cartograph, and Envision Horizons. The conversation emphasizes the need for agencies to adapt and innovate in a rapidly changing market.TakeawaysE-commerce is growing at a rate of 6-8%.Retail media is experiencing growth rates in the low to mid 20s.Omnichannel connectivity is crucial for brands.Brands often underutilize Amazon's audience capabilities.Organizational silos hinder effective marketing strategies.Audience planning is essential for successful media execution.Agencies should act as partners, not just service providers.The future of retail media agencies is evolving rapidly.AI can significantly enhance operational efficiency in marketing.Chapters01:01 Introduction & Why Omnichannel Commerce Matters02:40 Jeff Cohen’s Journey04:46 The Growth of Commerce Talent05:58 Defining Omnichannel Commerce07:39 Are Brands Underutilizing Amazon’s Potential?11:58 Balancing In-House and Agency Collaboration14:21 Audience Planning: The Core of Retail Media18:31 How Retail Media Agencies Differentiate and Mature22:00 The Future of Agencies with AI & Tech34:07 Inside Skai: AI Tools and Omnichannel Evolution37:25 Platform Strategy & The Broader Tech Landscape 40:40 Closing Reflections & TakeawaysConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredConnect with guest Jeff Cohenhttps://www.linkedin.com/in/jeffreycohen/
E38: Valuations Deep Dive w/Matt Bodnar of Eidolon Capital
40:41|SummaryIn this episode of the In/organic Podcat, co-hosts Christian Hassold and Ayelet Shipley welcome guest Matt Bodnar, founder and managing partner at Eidolon Capital. Matt is a business owner and investor with substantial experience using M&A as a lever to acquire and grow businesses. In this episode, Matt discusses how he has leveraged his intellectual interest in valuations and deal structuring to execute creative and accretive deals. Further, Matt discusses the importance of understanding earnings and multiples in business valuation, the impact of size on valuation, and the challenges of customer concentration. Additionally, he provides strategies for sellers to maximize their exit value, emphasizing the need for thoughtful analysis and potential acquisitions to enhance business value.TakeawaysValuation can be simplified to earnings and multiples.Size significantly impacts business valuation multiples.Customer concentration can negatively affect valuation.Sellers should consider adding businesses to increase value.Earnings adjustments can significantly influence business valuation.Understanding market perceptions is crucial for sellers.Agencies offer unique opportunities for cross-selling and growth.Chapters00:00 Coffee Preferences and Brewing Techniques02:54 Restaurant Business Insights and Challenges05:42 Valuation Philosophy and Business Insights14:44 Valuation Fundamentals: Understanding Multiples22:12 Earnings and Adjustments: The Art of Valuation34:20 The Size Premium: Why Bigger is Better38:12 Customer Concentration: Risks and Strategies41:53 Maximizing Exit Value: Key Strategies for SellersPepperdine Capital Markets Report discussed on the podcasthttps://digitalcommons.pepperdine.edu/gsbm_pcm_pcmr/Connect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredConnect with guest Matt Bodnarhttps://www.linkedin.com/in/mattbodnar/
E37: DealCon Roundup Part 2: Earnouts in Agency M&A
17:55|SummaryIn this episode of the Inorganic Podcast, co-hosts Ayelet Shipley and Christian Hassold discuss the complexities of earnouts in agency acquisitions in the context of discussions covered at DealCon 2025. In this episode, Ayelet and Christian explore the reasons earnouts are used, the difficulties in negotiating them, and the importance of maintaining operational control and alignment between buyers and sellers. The conversation emphasizes the need for clear expectations and mutual understanding to navigate the intricacies of earnouts effectively.TakeawaysEarnouts are often used to bridge valuation gaps in acquisitionsBuyers typically dislike the complexity of earnouts but find them necessaryAccording research, significant percentage of earnouts (>55%) are never paidNegotiating earnouts should ideally happen early in the deal processOperational controls are necessary for buyers and sellers to achieve earnout targetsCultural alignment between buyers and sellers is essential for successEarnouts should generally not exceed 15-20% of the total transaction valueProtracted earnout negotiations can lead to deal fatigue, which can pose risk to deal timeline or completionChapters0:26 Introduction to Earnouts1:05 Why Earnouts Are a Key Topic1:34 The Purpose and Function of Earnouts02:21 Common Uses of Earnouts in M&A3:45 Challenges in Structuring Earnouts5:58 Pipeline Credit and Control in Earnouts10:24 Negotiating Earnouts & Deal Fatigue12:05 Maintaining Seller Control for Earnout Success15:15 Cultural Alignment in Earnout Negotiations14:41 Structuring Earnouts Strategically16:29 Key Takeaways on EarnoutsConnect with Christian and AyeletAyelet’s LinkedIn: https://www.linkedin.com/in/ayelet-shipley-b16330149/Christian's LinkedIn: https://www.linkedin.com/in/hassold/Web: https://www.inorganicpodcast.coIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured