Scott Gardner and Dennis Hahn of Liquid Agency did what most founders would do. They hired a well-regarded specialist M&A advisor with real credentials and a strong track record in their industry. The relationship was friendly, the credentials checked out, and buyers were circling. Years later, no deal closed and the founders had lost time they can’t get back. The lesson isn’t “advisors are bad.” It’s that even the right-looking advisor can be the wrong one for your firm.
What you’ll get from this session:
- The questions Scott and Dennis wish they’d asked before signing
- Why a specialist’s rolodex can quietly limit your buyer universe
- What “running a real process” looks like vs. fielding inbound
Why it matters:
- Credentials alone don’t equal fit
- Inbound interest is not a sale process
- The advisor you pick shapes every option you’ll ever have
Greg Alexander: Hey everybody, this is Greg Alexander. You’re listening to the Pro Serv Podcast, brought to you by Collective 54. If you’re new to this show, we aim to do 3 things for you. We aim to help you make more money, make scaling easier, and make an exit achievable. And this show is dedicated to founders and leaders of Boutique professional services firm, so if you’re in the expertise business. Meaning you market, sell, and deliver expertise for a living, this is for you.
And on today’s episode, we’re going to talk about how to choose an investment banker? Or what might… some might call an M&A advisor. And, most of the members of our community, when they get to the exit stage, they’re gonna build out an advisory team, and one member of that team is an investment banker. And most of our members of our community have never, never exited before, so when they’re making that choice, they’re doing it for the first time. And it’s a very specific thing, and it’s a very important selection. And if we get it wrong, it can be costly, both in time and dollars.
And joining me today are our two members of Collective 54, Scott Gardner and Dennis Hahn. And they are the leaders of Liquid Agency. And, they are great members, because today they’re gonna share a cautionary tale. You know, these role model sessions come in two flavors. Cautionary tales, because we learn from our mistakes, and also success stories. Because we learn from our victories, and it takes, a real commitment to the community to be willing to come on this show and share a cautionary tale publicly. So, Scott and Dennis, we are very grateful for your time this morning.
And, for those that don’t know you, I know you’ve been in our community for a while, but we do have some new members, would you please provide a formal introduction, and Dennis, you’re first on my screen, so why don’t I start with you, and then we can go to Scott.
Dennis Hahn: Sure, thanks, Greg. Thanks for having us. Yeah, so I’m Dennis Hahn, I’m the Chief Strategy Officer at Liquid Agency, partner at the firm. Scott will be introducing himself in a second. I’ve been a Collective 54 member for, gosh, I think 4 years now? So, a while. And I’ve learned a lot, and glad to be here, and glad to be sharing our cautionary tale, but also looking forward to sharing our success story later, so…
Greg Alexander: I agree.
Scott Gardner: Yeah, thanks, Dennis. Thanks, Greg. I’m Scott Gardner, I’m the CEO and co-founder of Liquid, a 25-year-old young, pro-serve firm that helps clients build category-leading brands. And, yeah, it was interesting to reflect back. I… last night, I put together a little bit of a chronology and said to Dennis to make sure we weren’t tripping over each other.
It was a little painful to look at the journey, because I think you talked about, you know, pain was money and time. I think it was more the time than the money, because we still performed okay, we’re here, but we invest a lot of time on some paths that were wayward journeys that you can’t get back.
Greg Alexander: Yeah. Okay, so, I mean, I appreciate you preparing it and, you know, documenting the chronology, which is where I was gonna start, so why don’t you take us back in time, you know, to when you decided that maybe it was time to exit, and you decided to hire an advisor? And, Scott, why don’t I direct that question at you, and then, Dennis, you can chime in with color commentary where appropriate.
Scott Gardner: Yeah, yeah, so as I mentioned, we’re 25 years old, and I founded Liquid with another gentleman. We both had our own, kind of, creative firms, and we were merging together, and we got acquired by another roll-up back in 1999, and after a year of that, it, you know, we… they said, you’re gonna get rich and famous. We didn’t… we said we got famous, because we didn’t get rich. We had to roll out of that. We were able to start Liquid, and we had a really good start. We built the agency on the legacy of, kind of, Intels, launching Intel inside, that program, and their microprocessor brands. That led to, like, engagements with Microsoft, HP, Cisco, Google, I mean, you name it. We started in tech, we expanded beyond, picked up clients like Walmart, Nike, GE, and that’s kind of how we had this great rise. Got pretty… got a lot larger, big run-up, and then at some point, my original business partner, kind of started to become disillusioned with the business. He and I owned half of it each, relatively. And about 10 years in, we kind of got to a certain size, and about 15 years in, built… got big, business adjusted, and he wanted to exit. So I had to figure out how to exit him from the business.
That was painful, but we survived that. We’re actually still friends, which is a key, key thing. At that time, I was approached by a group out of London that did global M&A, came out of a lot of the legacy, just very focused on the advertising, marketing services business, and they approached me at a time where I was really interested to kind of take the asset and look to monetize it. And when they met, they had good credentials, I liked them, and I just basically we said, okay, let’s do this. We started this advisory. Pretty basic program. We paid about $3,000 a month for their services. I did find they were, you know, some guys that had a lot of success a little older. I found a little bit, for me, a mentor relationship with our North American advisor. You know, forged really a friendship with him, and really went to him for a lot of advice, outside of the normal advisory. And that’s how it all started.
Greg Alexander: Yep, okay. So, let’s step us from there. So, eventually, they probably took you to market, you know, after all that kind of prep work. What happened?
Scott Gardner: Well, initially, the business was in a little bit of this, you know, I thought I was kind of doing a little bit of a reorg, and I realized at that point in our time, we were reinventing Liquid. After 15 years losing the founder who led Lead Creative. We were really reinventing. This is about the time that actually Dennis had joined Liquid as well, because we had acquired his firm, we were competing against his firm, in the same space. They did a lot of really amazing strategy work. We relied on strategy heavy on creative, so we kind of formed a union. And so we were kind of in the process, like, we have to reinvent Liquid. It helped to have the advisor there. They looked at a lot of our original work, which they liked. But it wasn’t like an immediate, let’s go to market. It was like, let’s figure out a path to kind of get to that place, and then it’ll happen.
And, so there was never really a specific timeline, nor did they drive one. I think they kept saying, hey, just keep performing better, you’ll get there. The other caveat that I remember looking back is, for whatever reason, Liquid had a lot of good, you know, good equity in the marketplace, a lot of buzz because of our clients, so we were always being approached by the hat agency holding companies, and we talked to WPP, Omnicom, and you name it, Publicis, somebody was always kind of kicking our tires, and that’s where, when the advisory was there, we were still having kind of those discussions, and at the same time, fielding other ones. But there was really never… they weren’t very… let me just say, they weren’t very formal. They were really informal in how they did everything.
Greg Alexander: Yep. Okay, so there’s a couple of learnings in that story that I want to inject myself into here, just to maybe zoom out of the Liquid example, just capture these learnings for members. So the first is, is that M&A advisors or investment banks, and you can use those terms interchangeably. You know, they are like the rest of us. I mean, they’re a professional services firm, and they’re looking for clients. And some of them take on advisory work, you know, as a way to build a pipeline of clients that they can eventually sell in the future. This is not always the case, but it is a good rule of thumb. That you should never conflate the two. So if you’re hiring an advisor to help you with the strategy of your firm and the growth and scale of your firm, etc, that’s a certain type of firm. And then there’s an investment banker whose expertise really is in selling the firm. My advice to members was I would separate the two, and I would not hire an M&A advisor slash investment bank to do the advisory work, and then eventually bring you to market. They’re two very different things, and it sounds like Dennis and Scott had a good experience on the advisory side, but that is the anomaly.
You know, what happens is, the way that the investment bankers make their money is they make a big fee when they sell your firm. And they should, because they take the risk, they’re on a performance contract. If they don’t sell your firm, they don’t make anything. But it’s a very large fee when they make it, you know, well into the seven figures. So when they’re collecting a small retainer, in Liquid’s case, $3,000 a month, it’s really not their primary focus, and that type of advisory work is better when it comes from somebody else, where that’s their core business. So that’s the first learning that I would just take away.
The second learning, which is a much bigger question, and happens very often within our community, is that because Liquid had a gold-plated client list, they had the big, you know, giant firms in their space, advertising, marketing, etc, knocking on their door, saying, hey, would you be interested in joining us? And that puts the first question on the table, which is, should we hire an advisor or not? You know, should I just try to sell my firm myself to the people that are expressing interest? Or should I hire an investment banking firm and run an auction? So, maybe I’ll direct this to you, Dennis, because it sounds like you entered the picture right at this time, and I want to get your voice on this.
Dennis Hahn: Well, it’s funny you say that, Greg, because the original premise of the advisor that we did bring on was to create an auction. That was their pitch, right? So we liked that idea, we were like, oh, that sounds good, but it didn’t really play out that way, and I feel like we had lots of, you know, dates with companies like Censure and others that we were talking to. I guess we were, in the back of our mind, hoping that maybe the right deal would just come along, and it would be so great that we would just go for it, and it’s sort of a timing-is-everything kind of play.
So I think maybe that’s kind of how we were sort of approaching it, with the relationship that was in place. I’d say in retrospect, though, and what I would like to see going forward is more of the auction approach, because I think it’s… it’s… you need to be more intentional about the exit process. I think we were pretty casual about it, in retrospect, and looking ahead. Having a more formal process, more formal timing, better expectations of what we’re trying to achieve, I think we can create a better investor event, if you will, and get more buyers to the table to give us more options. I think it’s about optionality at the end of the day that we’re really looking for.
Greg Alexander: That’s a good word to use here, optionality. And let me jump on Dennis’ comment here, just to frame this up for the broader audience. My point of view is, if you are optimizing for price in terms, running an auction is the way to go. If you’re optimizing for speed, ease, you know, as little disruption as possible, then maybe you don’t run an auction, and when somebody comes calling, maybe you negotiate directly with them, and you don’t run an auction. Now, if you don’t run an auction, you’re going to get a smaller price. It’s just the way it goes, because there’s just not as much competition.
And this is where investment banks really earn their fee, because running an auction is a formal process, and that’s what Dennis is talking to. And it’s a very specific project — with timelines, budgets, tasks, team assignments, deliverables, milestones, I mean, it is a project. And from stem to stern, it’s approximately about 12 months, from when you sign an engagement letter with an investment bank to the time the wire hits your bank account. Sometimes it goes a little faster, sometimes it takes a little bit longer, but that’s what it is.
And it’s a very specific thing. I mean, imagine reaching out to several hundred potential buyers, you know, sending them marketing materials, having qualification questions. And the investment banker’s job is also to make it as painless as possible for you. I mean, you don’t want to take management meetings with 60 firms. You might want to take management meetings with 10 firms, you know, 10 highly qualified firms that the investment banker has vetted for you, and so on and so on.
And when you’re going through this process for the first time, you don’t really know it. Because you haven’t been through it, so you don’t… you don’t have… a perspective on the totality of the work. And that’s what Dennis and Scott experienced. You know, they were with an advisor that really wasn’t running the auction process. But they, at that time, because they had never been through it, they didn’t know. They thought that’s the way it is. But now that they’ve been through this, they understand the contrast of what a real auction process looks like.
But Scott, let me get your perspective. You know, do you, in your view at this stage, do you think running an auction is the way to go, or do you think negotiating directly with somebody who’s expressed interest is the way to go?
Scott Gardner: I absolutely think the auction’s the way to go. Seen as what we did before, which is a lot of dating… I mean, we talked to legitimate companies, and we were… we had literally talked to the main Bard Accenture when they were buying a lot of agencies, and she said, I love your positioning, I love everything about you, you’re just too small. She goes, I can’t fire up the lawyers if you’re at $40 million, and we are at, like, you know, $15 million. So… so I… we did find a lot of, you know, interesting dates, but a lot of roadblocks. So I think we’ve since repositioned, you know, especially recently, starting last year, we kind of did pause the advisory and just said, let’s forge our own path. Actually a lot of repositioning the company, some of it due to Dennis getting into Collective 54 early, this is my first year, so I’m newer to the group, but I’ve been learning through Dennis what he’s learned. So, I definitely know that we’re interested in getting the right mix, and having things ready to go, and following a process like you just dictated.
Greg Alexander: Yep. Okay, so now, if you’re somebody like Scott and Dennis, and you say, okay, I’m gonna run the auction process, and I understand what that means, now it comes time to choosing the right investment bank, the right M&A advisor. This is a difficult decision, because there’s a lot that goes into it. So, looking back on your experience, you know, you did a very logical thing, you know, a brand name firm reached out to you, they had great credentials, there was chemistry there, they were providing mentoring advice, you know, they set up a lot of dates, etc. So it felt like you chose the right firm. But, you know, hindsight’s 20-20, and you look back on it now, and you’ve realized that you didn’t choose the right firm. So, what were the learnings from that?
Scott Gardner: Well, one, not to… not to knock too much on this, but they didn’t really set up those meetings. Those people came after us. So, we were reacting to a lot of incoming buzz about the business, and then we would just bring them in. Or if anybody reached out to me, before I would take my own calls with any… it was, you know, all kinds of… you never knew who it was, a broker, it was a PE firm, you never know, but then I just had them say, talked to them first. It gave me a little bit of in-between. The one thing that I go back to is I… I just feel like… look, we’re busy running the agency. I just want more detail. Like, they would tell us to do things. It’s like, go do this. Or, like, they did help us reset our P&L originally, but ironically, we didn’t get the rigor of, like, running P&L with strict EBITDAs and adjustments. And adjustments are huge when you own your own firm, right? We’re doing that now, and you can see the valuation opportunities when you look at, kind of, the funny stuff that, you know, a self-owned business owner can run through to their advantage, but at the same time, you can strip those out in the value process. So we didn’t really get coached a lot on the details. It was kind of like, just go get them, Tiger, like, you’ll get better, you know? Which was great. The other thing I learned, too, is that look where they come from. This group had come out of selling agency to the traditional hold codes, the legacies.
Which only left you one path. We never talked about micro-private equity, we never talked about the second-tier, kind of, information hold codes, or other investment strategies. Like, we acquired some firms on our own, but what if we got a little bit more money and bought a bigger one and moved it, right, years ago? Those are the things that I think about, like, why didn’t we think more creatively about how do we engineer the firm for success? The other challenge we had is, as much as, you know, Accenture wanted us to be bigger, you can’t become 40 million services overnight in running organic growth. So we thought about M&A, and we’re always trying to grow the business, but look, our business is wrought with, you know, marketing services and clients for less loyal, it’s wrought with all kinds of pitfalls and change, right? So… so we were kind of like… kind of not growing at the moment. We’re recapping where we are. And then the weird cautionary tale for me is they thought we can get bigger faster by this idea of opening up a non-operating hold co. And this is where the path really… Dennis, you can feel this pain, too. The idea that we would, you know, we couldn’t afford to buy a lot of these firms that were the size we wanted, so we created a non-operating hold coat, Liquid would run it, two classes of stock, get everybody to commit, although we don’t own them. And that basically started around 2019, kind of around the time that Accenture said we wish we were bigger, and they said, oh, we’ll do this, we’ve done it before. And I personally spent years trying to find the right partners, you know, build another brand, a new business, you know, a new structure. I was running the Holdco more than I was running Liquid, or trying to balance the two. Dennis, you remember those days.
Dennis Hahn: Well, yeah, and I think that’s when we realized, when we just decided to part ways with the advisor, that we’ve just been going down the wrong roads, and Scott was getting other advice along the way. But Greg, to your original question about, you know, like, my view on the lesson is, you said something really smart earlier, like, you want to separate your advisory from your investment banker, and I think that’s really wise advice, and I think if you’re gonna hire an advisor, you need to vet them as rigorously as you’d vet a buyer, and we didn’t do that, you know, we just took somebody that approached us. We connected, we clicked, it seemed great, like, and they’d had credentials, and we went with it, right? But we didn’t run a competitive process, we didn’t really benchmark them against alternatives, we didn’t really consider alternatives, and I feel like we would not make that mistake again, let me just put it that way.
Greg Alexander: Yeah, well, I mean, you know, hard lesson learned. I mean, we’ve all made that mistake before. Couple of big lessons there, and let’s double-click on these. So, when choosing an investment bank or an M&A advisor, size of your firm matters tremendously. For example, the advice that Dennis and Scott got about a non-operating Holco, that’s not appropriate for a boutique professional services firm, in my opinion. That’s a strategy that a much larger firm might run. It’s way too complex for what’s needed. You know, it was pointing a bazooka at a mosquito, so to speak, right? So… but somebody that came out of that world, you know, understands that playbook. You know, and they’re a hammer and everything’s a nail kind of thing, right? So, my advice to members that are listening to this, you know, you want to choose an advisor that knows, you know, what it means to run a small services firm, and what it means to sell a small services firm. There’s a playbook there that’s specific.
The second thing is specialist versus generalist. So… Scott mentioned something that’s really important. And that is the concept of the buyer universe. So, there’s two schools of thought. One school of thought is you hire a specialist. So, in Dennis and Scott’s case, somebody that understands the advertising and marketing world. And there’s advantages to that. You know, they understand who the buyers are in that space, they understand the comps, the types of deals that get done, what the terms are, what the valuations might be. But there’s also cons to that, which is tunnel thinking, you know, saying, hey, this is the way it’s done here, and this is what’s possible.
And when you expand the buyer universe into private equity firms, a lot of marketing agencies are now being bought by consulting firms. A lot of marketing agencies are being bought by technology firms. A lot of marketing agencies are being bought by family offices. A lot of marketing agencies are being bought by their employees, or the management team versus a management buyout. There’s a million ways to sell a boutique professional services firm.
And the benefit of running an auction with a professional investment banking firm who’s a generalist, not a specialist, is they’re going to get your deal exposed to a very wide buyer universe. Lots and lots of buyers. And what’s good about that, when you are the founder, is you get, you know, a real understanding as to what the true market is for your company, as opposed to a narrow view. Now, that’s a lot more work. And it takes a lot longer, but that’s what a professional investment banking firm does. That’s their bread and butter. Instead of, you know, somebody picking up the phone and calling Scott and saying, hey, Scott, are you interested in selling your firm? And then you send that lead to the investment bank. That’s not a lot of value. The value is really when the investment bank says, hey, I got 25 people that want to talk to you, and then from 5 different buyer universes, let’s go scan the entire market. I’m going to deliver the market to you. You tell me what your reaction is. That’s a big, big difference.
And I gotta say that I’m not suggesting to people that are listening to this that one’s better than the other. It’s very situational. In some cases, hiring a specialist is the way to go. In some cases, hiring a generalist is a way to go. It’s very unique to the moment in time. So, Scott, after listening to my discussion there between a specialist and generalist, what is your perspective here in, you know, May of 2026? What’s best for you, do you think, a generalist or a specialist?
Scott Gardner: I’ve thought about this so much, because you brought this up the first time we met. I mean, I’ve only known the specialist, right, my whole world, because I’ve met other people, but I do agree that I believe I’ve seen other people have amazing exits, even in our space, in non-traditional buyers.
Greg Alexander: Yeah.
Scott Gardner: Right? Some really amazing ones, and to your point, in-house. I mean, we had some… a small agency we bought years ago, and their founders eventually left and started a firm, and they were bought by Salesforce. Many years ago. Got a great, great multiple. So yeah, I’m definitely open to the idea of the generalists and seeing what they can look at, because I assume we also not that we have just a short list of, like, 10 people we can call right away, because the market’s changed a lot from those original buyers that talk to us at those companies, but I’m sure the generalists can still get us into some of the specialist buyer niches that we already know of, right? We were approached by a micro-private equity firm that we were courting when we had the Holdco, and, I like them. It’s a… it’s a very buyer-friendly, it’s a more founder-friendly micro-private equity, if that’s a real thing, but a lot of accolades from PitchBook and Inc, great track record, I like the leadership, and they’re still out there, right? They still like us, like, hey, go figure out, now that you’ve taken that Holdco model and changed it, we like Liquid. Go come back. So, of course, we can go to our generalists and say, hey, why don’t you reach out to them? And they, again, they’re not… they’re not even, industry specialists themselves. They’re more… they’re in broader markets.
Greg Alexander: Yeah. Dennis, what’s your perspective on generalist versus specialist?
Dennis Hahn: Well, I… My feeling these days is generalist, only because the market is just so… our industry has changed drastically, and you just read the headlines, and the hold codes are struggling themselves. And the world has opened up so much beyond them, as we’ve been talking about, so I feel like we don’t know what we don’t know. We don’t know who the right buyer is gonna present themselves with the right offer. And again, I go back to optionality. I feel like we… the more options we have on the table, the better deal we’re going to get for ourselves in the end, and our employees. So I feel like that is what I would put my stake in right now.
Greg Alexander: Yeah. You know, and I think this is probably the case for most of Collective 54 members, because the professional services industry, you know, 54, which you guys are in. I think it’s 5418, which is the sub-segment. But the whole industry is going through a massive transformation right now because of artificial intelligence. You know, and, you know, you’re competing with people that you probably never competed with before, you’re partnering with people you never partnered with before, you’re serving clients you never thought would have a need for your services. I mean, there’s the lines between, you know, this type of firm and that type of firm have never been more blurred. So in that scenario, there really isn’t a lot of value in specialists. In fact, there’s quite a bit more value in generalists, because talking to all those potential people is where the interesting conversations happen.
You know, remember that, members that are listening to this. When someone buys you, they’re buying the future, not the past. You know, they’re… they’re saying, I’m gonna own this business for 5, 10, 15, who knows, maybe 20 years. What’s the world gonna look like? So what’s happened in the past in the traditional conventional wisdom, is less and less relevant, particularly in a moment of great disruption like the moment that’s happening right now.
And what’s wonderful about that is somebody like Liquid that has a gold-plated client list, that’s a huge asset. You know, I might be, I don’t know, a consulting company in supply chain, you know, I’m just picking a crazy example, and I might say, I want to serve those clients. And, you know, I can’t get in to them on my own, but if I acquired Liquid, you know, I’ve got, you know, I can walk through the front door because of all the reputational capital they’ve built up with those clients over time. And even though those two service lines might not even be next to each other, it’s the relationship that matters. So, that’s an example of all the different possibilities, right?
Well, I mean, this was a wide-ranging conversation. I could keep going on and on and on, but the podcast is meant to be a sampling of what we will discuss on the member call. So I want to save the additional questions to the private Q&A that we’ll have for members. But, it was a really interesting story, and I can’t tell you how incredibly relevant it is. I’m having this conversation with dozens of members. You know, we just celebrated our 60th exit at Collective.
Dennis Hahn: All that.
Scott Gardner: Yes.
Dennis Hahn: Jessica’s business, yeah.
Greg Alexander: And it’s just, we’re so happy for all these people that are having these exits. I mean, we’re in the golden period of professional services, and it’s a good time to exit right now, and making this decision. You know, which investment bank to hire is step one. Then you gotta decide the lawyer, then you gotta decide the accountant, then you gotta decide the wealth advisor. I mean, you gotta build a team to do this, but really the captain of the team, so to speak, is the investment bank, so on behalf of the community, Dennis and Scott, thank you for sharing your story with us, and we look forward to our Q&A that will be coming up shortly.
Scott Gardner: Great. Thank you, Greg. Appreciate it.
Dennis Hahn: Thanks, Greg. We’ll see you soon.
Greg Alexander: All right, couple of closing calls to action. So, if you’re a member, please attend the private member Q&A that we’ll have. Look for that meeting invitation. If you’re not a member, and after listening to this, you think our community might be relevant to you, please go to Collective54.com and fill out an application. We’ll get in contact with you. But I appreciate the attention you’ve given me today. I know how busy you all are. I don’t take that lightly, so thanks for your attention. Until next time, I wish you the best of luck as you try to grow, scale, and someday exit your firm.