Many businesses have multiple lines of revenue or products. What happens if you want to sell one, but hold onto the other?

That was the case for co-founders Will Critchlow and Duncan Morris, childhood friends who became business partners when they launched an SEO agency called Distilled in 2005.

Fifteen years later, they had an opportunity to sell it. But they didn’t want to part with a software they’d built alongside the agency.

The ownership structure of the business — it had about 30 shareholders, including many employees — also made the deal tricky.

For Critchlow, navigating the mental gymnastics of these complications was the hardest part of the acquisition.

He got stuck on negotiating because the deal included a different outcome for himself than it did for his employees.

“If I think it’s a reasonable price per share for my shares, then I think I trust myself that I’m making good decisions for the whole team,” he told They Got Acquired. “Where I found it really difficult was when it wasn’t symmetrical.”

Was he pushing hard enough to get the best deal for his colleagues, while not pushing so hard he could compromise the deal?

“It would be stressful enough if it was your own money, but it wasn’t my money,” he said of points where his deal was necessarily different than that of minority shareholders. “In the end, we struck the right balance.”

From childhood friends to co-founders of Distilled

Growing up as schoolmates in the UK, Critchlow and Morris knew they wanted to start a business together.

They met when they were 11 years old, Critchlow said, and honed their entrepreneurial chops as teens: starting a cricket coaching camp and later forming a website building service.

They each finished university, moved to London and started working, but they never gave up their dream of co-founding a company.

So at age 25 in 2005, they left their respective jobs and started working in Morris’s front room, stuffing envelopes with mailers to advertise the service they decided to offer: helping companies increase website traffic.

“It felt low risk back then,” Critchlow said of the early days building Distilled. “It was like, ‘Well, worst case we’ll have to go get a job again.’”

But they didn’t have to find jobs again: Search engine optimization in 2005 was a lucrative market.

Over 15 years, Distilled grew into an international agency with more than 50 full-time employees based in London, Seattle and New York. They also became industry leaders: Critchlow’s team created DistilledU, an online SEO training program, and the digital marketing conference series SearchLove in locations like London, San Diego and Boston.

Critchlow told us that looking back, one of the most significant parts of running Distilled was helping employees become industry experts who could speak from those big stages at SearchLove.

“The stories we remember, and the kind of meaning that it brought to our work, was folks who we felt like we played some part in either accelerating their career or helping them switch careers — helping them achieve great things,” he said.

Critchlow added that some Distilled alumni went on to become chief marketing officers, vice presidents of marketing or entrepreneurs themselves.

That care for employees was front and center for Critchlow’s negotiations when the opportunity for acquisition came along.

Getting acquired and spinning off SearchPilot

The sale started with an email. In 2019, Critchlow heard an industry friend’s digital advertising agency, Brainlabs, had raised private equity money, so he sent him a note of congratulations.

Daniel Gilbert, CEO of Brainlabs, wrote back that the purpose of that money was to acquire specialist agencies like Distilled.

At that time, Distilled’s revenue had reached mid-7 figures. They also had 40,000 to 50,000 newsletter subscribers and dozens of agency clients, according to Critchlow.

After 15 years running an agency, Critchlow was open to the sale. “I was ready to move on from the agency life,” he told us. With clients in multiple time zones, “basically you go to bed and you wake up every morning with the end of yesterday’s problems.”

But the deal ran into logistical roadblocks: Critchlow was not ready to sell the SEO testing software they had created as a business unit, DistilledODN. It took creative structuring and careful negotiations, but they figured out how to split off the SEO testing tool, renaming it SearchPilot. Brainlabs owned a stake in that part of the business initially, and the founders later bought them out.

Pandemic starts two months after the Distilled acquisition

Two months after the deal closed in January 2020, Critchlow’s negotiations were put to the test. The COVID-19 pandemic wreaked havoc initially, but over time, the SEO agency within the Brainlabs structure steadied out and performed as expected.

“That year actually looked nothing like anybody envisaged: Instead of being this steady line, it was all over the place,” Critchlow said. “Luckily the deal I had negotiated was robust to that.”

Morris and a dozen Distilled employees spun off with SearchPilot, but Critchlow worked six months full time to help Brainlabs integrate the roughly 50 Distilled team members who transitioned over. The pandemic made for a far more stressful six months than expected, but then he tapered down to part time and eventually focused completely on SearchPilot.

“It was really good that I had the next thing in SearchPilot at the point that I was selling my baby,” he said. “I think if I’d sold the whole thing, had an earn-out and then stopped dead, I wouldn’t have known what to do with myself on that next day.”