Army8 merger with Campuswell: The Who, How & Why with Nate McKelvey

Roberto Popolizio, Interviewed Nate McKelvey, Co-Founder & CEO of at Army8, a digital marketing agency based in Boston that has recently joined forces with Campuswell, a health wellness program dedicated to US and Canadian students.

Nathan will tell us the story behind this merge, and how he plans to leverage Army8’s expertise in online marketing and web development to further Campuswell’s growth. It’s a great opportunity to learn why merger and acquisition is such a popular trend in marketing right now, as well as why so many fail it.

Stick around if you want to learn the power of business acquisition from a marketer with 20+ years of experience.

Introductions first. Who is Nate McKelvey, and what is his professional background?

Nate has over 20 years experience in entrepreneurship, online marketing, Web and application development. He founded a luxury private jet charter service in 1999 which won several awards including #66 in the Inc. 500, the Dell excellence in customer service award, Deloitte and Touche Rising Star and Fast 50 awards and was once featured in a front page story in the Wall Street Journal in 2005 for his efforts in combating click fraud.

In 2009 he founded my first digital marketing agency which is now called Tentacle who primarily serviced franchised brands where he developed technology to monitor brand activity across thousands of social profiles, coordinated brand guidelines across hundreds of franchisee groups and managed over $10 million in annual digital ad campaigns.

In 2019 he founded army8, a virtual digital marketing agency which helps small to mid-sized companies build and execute scalable growth strategies.

And what’s the story behind this merge between Army8, a digital agency, and Campuswell, a wellness program for students?

I’ve known the founder of CampusWell, Tom Piovoso for over 20 years and in 2019 he became an early client of army8. At that time CampusWell was an established publisher of health and wellness content for over 200 of the top colleges and universities in the US and Canada. We were hired to help improve utilization of their core product which helps these schools promote the health and wellness content to students. We ultimately came up with a plan to move content from written blogs to video content and we pushed the video out through digital ads on social media and YouTube. The result was a 200% to 400% improvement in student engagement which increased CampusWell’s client retention substantially.

Tom and I realized at this point that these new promotional capabilities could be leveraged beyond health and wellness messaging. The combination of the authentic video content they produce plus the digital ad targeting could be even more valuable to school admissions offices to help them attract new students. This is when we realized a merger was in both our best interests combining army8’s promotional capabilities with CampusWell’s content capabilities.

What are the potential benefits and drawbacks you see in a merger like this one?

Benefits:

• Economies of scale, were able to cut some expenses with duplicate functions such as accounting, legal and administration.
• We are able to move much faster with better access to capital and a larger staff.
• Our capabilities are much broader and stronger.

Drawbacks:

• Focus – we have to limit the number of business opportunities the combined entity can pursue to keep everyone rowing in the same direction. In this case we decided to stop the growth in new army8 clients so we can focus on our existing clients so we can focus on the growth of CampusWell first.
• Internal communication – It gets exponentially more difficult to keep everyone informed as headcount grows. We are fortunate that Tom is an EOS Integrator and we immediately implemented the EOS system as soon as we announced the merger internally.

What were the key components of the acquisition process?

• Trust – We were fortunate that Tom and I had a 20+ year relationship prior to the merger so trust was already in place. We also had 3 years of working together as a client/vendor relationship so the two teams already knew each other.
• Culture – Tom and I have a very similar management style so the transition has been seamless for us and Tom’s experience with EOS has made culture a top priority to combine the two companies.
• Communication – Keeping everyone on the same page through a lot of change isn’t easy, but EOS has a structured way of achieving success here which Tom has pushed from the beginning.

What makes an attractive M&A target for a seasoned online businessman like you?

I’ve never had a big win from a merger partner or investor I didn’t fully trust. Trust is the most important attribute I look for in any M&A deal. If I don’t have trust, it’s human nature to want to control the deal as much as possible through contracts which delays the negotiation process, builds animosity which makes execution more difficult, and prevents the two teams from fully trusting each other and integrating as one team.

I like merger partners, investors, or acquisition targets who I’ve known for a long time and have a lot of business dealings with. We then can work the napkin agreement which we can take to a lawyer together. It simplifies the process and prevents the animosity build-ups which can be so detrimental to the execution phase of the deal.

What are your KPIs to define a merger success?

They don’t change much from our core operating KPI’s prior to merger. Ultimately, I just want to know how much the merger has added to the bottom line. I want to see combined books where I can see Revenue, Profitability, Expenses, etc. I may look for a few KPI’s to see how our teams and specific customers are performing by comparing them pre and post merger such as: Revenue and Profitability by Customer, or team performance KPI’s such as Customer Retention Rates, Sales Conversion Rates, Etc. .

In your experience what are the common reasons why many M&As fail?

• Bad cultural fits and/or a lack of trust between the partners.
• Financial surprises which come out post merger, i.e. sales drop dramatically post merger or as new eyes get into the books, new liabilities are discovered, back taxes as one example.
• Key employees never sign off on the deal, or get surprised and leave post merger. This is usually a sign of lack of trust with the team and/or lack of communication as the merger proceeds.

Some argue that M&A is a tool and not a strategy. What’s your take on that?

I have watched others try to use M&A as a strategy, rolling up dozens of private jet companies as one example where it fell completely apart for the same reasons I explain above. In this example they attempted to roll up operating companies who all had their own unique contracts with customers, varying technology and owners who held all the important relationships, and the FAA regional offices who regulated the market. It fell apart as quickly as it came together with technical nightmares as they attempted to consolidate into one system, customers who didn’t want to change the unique terms and conditions they negotiated, owners and key employees who left the business and the client relationships left with them, and an FAA that couldn’t get access to the reports they needed because the technology integration didn’t work.

I’m sure that merger looked great on paper, but in practice is an absolute mess.