Acquiring Minds: Quitting Consulting to Buy a $1M SDE Agency
Release Date: May 26, 2025
Introduction
In this compelling episode of Acquiring Minds, host Will Smith delves into the journey of Grant and Julia Hensel, a dynamic husband-and-wife team who transitioned from corporate consulting and entrepreneurial ventures to acquiring and operating a successful SEO agency. The episode, titled "Quitting Consulting to Buy a $1M SDE Agency," offers invaluable insights into acquisition entrepreneurship, highlighting strategic decision-making, partnership dynamics, and operational excellence.
Meet the Protagonists
Julia Hensel serves as the CEO of Lexigate, an SEO agency specializing in personal injury attorneys, while Grant Hensel is the Managing Partner of Entrepreneurial Capital. Their shared passion for entrepreneurship, rooted from their college days in an entrepreneurship club, paved the way for their collaborative venture into business acquisition.
Notable Quote:
"Even as a kid, I was like that kid who would have my parents come to recitals and talent shows that I would put on and of course I would charge them admission fee." — Julia Hensel [04:24]
The Search and Acquisition Process
Grant initiated the search for a suitable business, leveraging his entrepreneurial experience to identify potential targets. Julia, transitioning from a strategy consulting role at BCG, partnered with Grant to operate the acquired business.
Key Insights:
- Consistent Learning: The Hensels searched for nine months, submitting four Letters of Intent (LOIs). Early setbacks taught them the importance of presenting LOIs verbally before formalizing them, ensuring better alignment and reducing the risk of deals falling through.
- Selection Criteria: They prioritized remote businesses with meaningful recurring revenue, a strong and dedicated team, and industries they understood well, ultimately focusing on SEO for personal injury attorneys.
Notable Quote:
"We’re very interested in those [non-SBA] deals... they tended to have far fewer buyers and often more reasonable multiples in terms." — Chelsea Wood [16:40]
Financing the Acquisition
Rejecting the conventional SBA loan route due to their aversion to debt, the Hensels opted for a combination of cash and seller financing. This strategy not only demonstrated their financial capability but also aligned seller incentives for a smooth transition.
Key Points:
- Avoiding SBA Loans: They preferred self-funding and seller financing to maintain control and reduce financial burdens.
- Seller Commitment: The seller’s willingness to meet the team and secure client commitments pre-close was crucial in mitigating transition risks.
Notable Quote:
"We are very comfortable with that and we just liked that there was a component of that to sort of make sure everyone's incentives were aligned for a really smooth transition." — Chelsea Wood [52:09]
Acquiring Lexigate
The Hensels discovered Lexigate on Flippa, a platform more renowned for selling digital assets than established businesses, making their finding somewhat unique. They acquired Lexigate for $2 million, a 2x multiple on its Seller’s Discretionary Earnings (SDE), placing it within the top 5% of Flippa's listings in terms of size and profitability.
Key Highlights:
- Team Excellence: Approximately 60-70% of Lexigate’s team is based in Romania, with additional members spread globally. Their robust operations and passionate team were significant factors in the acquisition.
- Client Retention: Securing commitments from clients to continue their contracts post-acquisition ensured revenue stability and reduced churn risks.
Notable Quote:
"We have around 30 clients." — Julia Hensel [40:12]
Transitioning to Business Ownership
Transitioning from a high-paced consulting environment at BCG to operating Lexigate involved significant adjustments. Julia immersed herself in learning SEO, leveraging her strategic skills to structure and lead the team effectively.
Key Adjustments:
- Implementing EOS: Adopting the Entrepreneurial Operating System (EOS) enhanced their organizational structure, facilitating better goal setting, issue resolution, and team coordination.
- Cultural Integration: Managing a global team required cultural sensitivity and adapting leadership styles to accommodate diverse work environments.
Notable Quote:
"I love getting to work with the team. It's been a truly incredible team." — Julia Hensel [67:58]
SEO as a Revenue Center
Lexigate’s focus on SEO for personal injury attorneys transformed it from a perceived cost center to a revenue-generating asset. By providing measurable outcomes, such as increased client cases through optimized search rankings, Lexigate demonstrated clear ROI for its clients.
Strategic Insights:
- Result-Oriented Approach: Tracking client success through measurable SEO improvements made services indispensable.
- Adaptation to AI Trends: Despite concerns about AI overshadowing SEO, the Hensels’ research indicated that core SEO practices remain relevant for ranking in both traditional search engines and AI-driven platforms like ChatGPT.
Notable Quote:
"SEO is an arms race. You're constantly competing to move higher on the search result pages..." — Chelsea Wood [55:19]
Working as a Couple in Business
Grant and Julia’s partnership exemplifies complementary strengths and effective division of responsibilities. Their mutual respect and clear delineation of roles fostered a harmonious and productive working relationship.
Key Elements:
- Divide and Conquer: Grant focuses on strategic investment through Entrepreneurial Capital, while Julia manages Lexigate’s day-to-day operations.
- Continuous Support: Regular discussions and shared insights ensure both partners are aligned and supportive of each other’s endeavors.
Notable Quote:
"One of the keys to success of our entire marriage has been kind of each taking certain things that we are the primary driver of." — Julia Hensel [81:22]
Insights and Advice for Aspiring Buyers
Grant and Julia emphasize the importance of values alignment, differentiating oneself through operational commitment, and focusing on the quality of recurring revenue. They advocate for genuine buyer-seller relationships over competitive bidding wars driven solely by price.
Advice Highlights:
- Values Alignment: Demonstrating shared values can significantly influence seller decisions and lead to more favorable acquisition terms.
- Operational Focus: Buyers who intend to actively manage and improve the business often stand out compared to those viewing acquisitions as passive investments.
- Quality over Quantity: Assessing client retention and lifetime value is crucial in evaluating the true health of a recurring revenue business.
Notable Quote:
"We reached out through the Flippa platform... he messaged his CFO to say, I think these are the people that are going to buy this business before we even talked about." — Chelsea Wood [42:12]
Future Prospects and Conclusion
Nearly a year post-acquisition, Lexigate continues to thrive under Julia’s leadership, with plans to expand within the personal injury sector and explore adjacent markets. The Hensels remain committed to fostering a positive team culture and leveraging their combined expertise to drive growth.
Looking Ahead:
- Strategic Expansion: Julia is focused on scaling Lexigate’s services within personal injury law and exploring opportunities in other local service industries.
- Ongoing Investment: Through Entrepreneurial Capital, Grant supports new acquisition ventures, fostering the growth of fellow acquisition entrepreneurs.
Final Thoughts: The Hensels’ journey underscores the potential of acquisition entrepreneurship as a viable path to business ownership. Their success story offers a blueprint for aspiring buyers on leveraging strategic partnerships, maintaining operational excellence, and prioritizing cultural fit in acquisitions.
Notable Quote:
"Business ownership is deeply joyful and also deeply hard." — Chelsea Wood [85:05]
Additional Resources
- YouTube Channel: Acquiring Minds
- Episode Summaries: acquiringminds.co
- Acquisition Lab: acquisitionlab.com
- Buy Then Build: buythenbuild.com
This episode of Acquiring Minds offers a rich, detailed exploration of acquisition entrepreneurship, providing listeners with actionable insights from Grant and Julia Hensel’s successful transition from corporate roles to business ownership. Their story highlights the importance of strategic planning, financial prudence, and the value of interpersonal relationships in achieving sustained business success.