Joe Soelberg: Stacking a $1.5M Design Shop into a $5.5M Branding Agency

The Setup Joe Soelberg wanted agency economics without agency risk. His thesis: creative services businesses throw off high SDE margins and, once you win a brand client, the follow-on work (websites, collateral, campaigns, retainers) compounds. He calls it a flywheel. The catch is that creative shops run on tribal knowledge and founder relationships, so the first acquisition had to be small enough to learn on. The Deal (Acquisition 1: SONNY+ASH, March 2019) - Purchase price: $1.5M - Revenue: $1.3M, SDE: $400K - Stack: 10% down, 20% seller note, 70% SBA 7(a) - Business: 3D rendering and design for real estate, hospitality, and home furnishings, founded by two cousins out of architecture school - Team: 8 in Chicago plus roughly a dozen freelance artists in a Bangladesh office Soelberg ran it owner-operator for four years. COVID vaporized the hospitality pipeline in 2020. He pivoted hard into home furnishings (Wayfair and similar), which carried the business to a $1.2M peak and kept cash flow intact. The Deal (Acquisition 2: Point B Communications, August 2024) - Listed at $7.1M, closed at $5.5M - Revenue: $9.1M, EBITDA: $1M - Stack: 5% down ($350K), 5% seller note, 90% SBA (maxed at the $5M cap) - 50-year-old Chicago branding agency, 27 employees at close - Two of three sellers rolled 2% equity each and stayed on as employees; one seller stayed as president running day-to-day Soelberg anchored his valuation on a white paper benchmarking multiples across branding, digital marketing, and media agencies rather than accepting the ask. The SBA lender underwrote his personal capacity using SONNY+ASH financials and tax returns, so the first deal literally funded the second. Operating Moves - On SONNY+ASH, he hired a manager with a design background to take over operations. The business now runs on roughly five hours of his time per week and kicks out about $200K annually. He owns 100% and plans to sell in 18-24 months. - On Point B, he kept the three founders in seat on equity rollover and employment. That preserved client relationships in a business where the seller's name is on the door and senior creatives walk if the vibe breaks. - He converted testing relationships in senior living into exclusive multi-community deals, expanding from 2-3 communities per account to full portfolios of 10-12+. - With the president handling operations, Soelberg put his time on a sales engine instead of project delivery. Where They Are Now Point B is tracking to $12M revenue and $1.25M EBITDA in 2025, roughly 25% revenue growth in year one post-close. Headcount went from 27 to 33. SONNY+ASH is a cash cow in runoff, positioned for sale. Total enterprise across both: a sub-$2M personal cash outlay controlling ~$7M in transacted EV. Operating Lessons - Buy small first, buy bigger with the first deal's financials. Your tax returns from deal one are the underwriting packet for deal two. Treat deal one as a credentialing exercise, not the destination. - Max the SBA cap when the EBITDA supports it. 5% down...