CEO Jeff DeGarmo sold his digital marketing agency for more than 5x multiple EBITDA

Jeff DeGarmo from Tulsa, Oklahoma joined the podcast to share his entrepreneurial journey. He's a USC and University of Colorado graduate with degrees in aerospace technology, Navy veteran, father of five children (ages 13-30), and triathlon enthusiast who accidentally discovered the sport through friends. Career Transition Jeff made an interesting pivot from a highly technical aerospace background to digital marketing. While serving in the Navy at Tinker Air Force Base, he taught himself web development during the early internet boom (mid-1990s). He left the military in October 2001 (just weeks after 9/11) to join an advertising agency as a web developer, though his initial contract was cut short due to the economic downturn. Building the Business Starting in 2003 with five partners (later reduced to four), Jeff and his team built a digital marketing agency that evolved from 90% web development into a full-service agency specializing in destination marketing, placemaking, and travel/tourism. The partnership worked because each partner had distinct roles:Jeff: Technology, finance, accounting, HR, payrollPresident: Business development and networkingChief Creative Officer: Creative output oversightFourth Partner: Messaging, strategy, and content developmentThe Exit Process Key Achievement: 5X+ EBITDA Multiple. The company was sold for over 5 times EBITDA - significantly above the typical 3-4X average for most businesses. Timeline & Process:Initial Goal: Find an investor to grow from 20 to 50 employeesMarket Process: 7 months from engagement to LOITotal Timeline: 10 months from broker engagement to closingFinal Offers: Two LOIs - one partial buyout (retaining 5%) and one full acquisition by a public companyDeal Structure50/50 split: Cash upfront and earnout over 3 yearsEmployment agreements: 3-year terms for all four partnersProtection clause: If terminated, partners still received 50% of earnout paymentsGraduated earnouts: Based on KPIs with upside potentialKey Lessons & Advice On PartnershipsFour equal partners can be challenging but worked due to complementary skillsSuccess required shared values and ability to "leave egos at the door"Clear role definition prevented conflicts over decision-makingOn Using BrokersHighly recommended but emphasized being selectiveBrokers provide valuable market reality checks on business valuationNegotiate broker agreement terms carefullyLook for brokers with "heart of a teacher" to guide through unknownsOn Due DiligencePublic company acquisitions involve extensive due diligence (internal and external accountants, attorneys)Communication strategy is crucial: Plan how to tell employees, vendors, and customersContract review essential: Ensure customer agreements have transfer clausesTransparency helped: Took entire team to meet potential buyerPersonal Outcome Jeff left after 9 months (rather than completing the 3-year employment agreement) due to role redundancy and cultural differences, but his protection clauses ensured he still received earnout payments. He noted this timing was fortunate given COVID's impact on the business in years 2-3.Current Activities. Jeff now works in business brokerage, helping other entrepreneurs prepare for and execute exits. He emphasizes that businesses should be "prepared to exit from day one" and does volunteer work helping veterans acquire existing businesses through the ETA (Entrepreneurship Through Acquisition) space. Key Takeaway: The most impactful moment was the sense of relief on closing day - not just from personal financial security, but from the responsibility of providing jobs for 20 families, highlighting the weight successful business owners carry for their employees' livelihoods.If we can help you build your business before the sale, let me [email protected] for listening!