“Michael Spinosa and Scott Greenwall built a successful digital marketing agency named Unleashed that drew the attention of a private equity group called LINC partners,” shares Sam Thompson a Minneapolis business broker and the president of Transitions In Business. “Their story includes selling their business to LINC Partners for much more than they had anticipated with a combination of cash at closing, maintaining equity and a percentage of the sale in an earn out. LINC Partners acquired Unleashed with the intention of having them become their digital marketing agency platform business. LINC Partners plan was to roll up many digital marketing agencies as add-ons to Unleashed.”
Michael Spinosa and Scott Greenwell started a digital marketing agency called Unleashed Technologies at the start of the 2007 financial crisis. Spinosa believes the recession helped Unleashed get started because their flexibility and lower fees enabled them to pick up business from larger rivals who were losing customers amid cost-cutting. By 2019, Unleashed had grown to over $6 million in revenue when they were approached by LINC Partners, a private equity-backed group looking to do a role up of digital marketing agencies.
The big take away from the interview is how to package your service like a product. Spinosa characterized Unleashed as a “very average” digital agency when they first began. Then in 2009, the partners decided to rebrand their solution under their “Growth Package” offering where customers could get digital talent in “dosages” that fit their needs. This packaging allowed Unleashed to differentiate themselves from other digital agencies that billed for their time. This marked the beginning of a great run, which saw Unleashed grow 20% per year with 20% profit margins and 90% client retention.
Unleashed’s “Growth Package” is billed annually, which has enabled them to navigate the COVID-19 pandemic and avoid the worst of the recession.
Spinosa assumed a service business like his would trade at 2.5 – 3 times EBITDA, which is why he was pleasantly surprised to get an offer from LINC Partners of around double that. Spinosa and Greenwell agreed to sell a majority interest in Unleashed and decided to carry some of their shares into a new entity set up to acquire complementary businesses.