In this special episode of Deal Talk with 7MA, Partner Tripp Davis leads a discussion on navigating M&A as a business owner or operator.
For the panel discussion, which was part of 7MA’s ACCESS Conference 2021, Tripp is joined by David Lewis, Founder and CEO of DemandGen (acquired by BDO) and Partner at BDO Digital; Andy Fay, Chief Revenue Officer of Innovasource (acquired by Energizer); and George Young, Founder, CEO, and now Managing Director of Kalypso (acquired by Rockwell Automation).
This panel of sellers have all navigated successful exits — some in the midst of the COVID-19 pandemic. In this episode they’re sharing first-hand lessons from their own experience in M&A and first-hand insights from the process.
The panel touches on all aspects of the M&A deal process — finding the right partners, working with a trusted advisor, navigating the emotions, and preparing your team once an acquisition goes through.
“I didn't go into the process expecting whether we would go down the private equity route or the strategic route. I really was open to both,” David says of getting acquired. “At least I thought I was; you really do some soul searching when you have people at the table.”
He continues: “When we had 22 offers, the majority of them were private equity, and there were about five strategic offers. And what made sense was it was very clear that I wanted a platform for the business that would catapult our growth.”
When discussing the sale of his consulting firm to Rockwell Automation, George admits being a little “naive” and “narrowly focused” early in the process. He shares how working with 7MA paved the way for a different kind of exit: “I think one of the things that you (7MA) helped us do was not go exclusive. Let's keep this thing open. Let's create the market.”
Tune in to the episode to learn more about the acquisition process directly from business owners.
Name: Tripp Davis
What he does: Tripp is a Partner with over 20 years of investment banking and advisory experience. He joined 7 Mile Advisors from Hyde Park Capital Partners, where he served as head of the Business Services, Technology, and Communications group while advising companies in a variety of industries on M&A and capital raising assignments. Previously, Tripp served as Vice President at DecisionPoint International and began his career with Livingston & Associates.
Organization: 7 Mile Advisors
Words of wisdom: “Strategic points, operational points, transactional points and emotional ones are all part of the transaction cycle.”
Name: David Lewis
What he does: For more than 20 years, David has been a pioneering innovator in digital marketing, and has overseen marketing for some of Silicon Valley’s leading technology firms. David and his team at DemandGen have been at the forefront of digital transformation. The company was acquired by BDO, one of the nation’s leading accounting and advisory firms.
Words of wisdom: “It has got to be all about your employees.”
Name: Andrew Fay
What he does: Andrew is the VP of Business Development at household and industrial cleaning products company Innovasource, which was acquired by Energizer. He is a dynamic, innovative, entrepreneurial strategist with a 22-year record of achievement and demonstrated success driving multimillion-dollar sales growth.
Words of wisdom: “One of the big things we really wanted to do was have a strategic partner.”
Name: George Young
What he does: George is the Global Managing Director at Kalypso. He has over 30 years of experience in business management and consulting, serving Fortune 500 brands across industries. Kalypso, founded in 2004, is a professional services firm that helps its clients discover, create, make, and sell new products digitally. Kalypso was acquired by Rockwell Automation in February 2020.
Words of wisdom: “There was no option other than to be successful. You couldn't fail twice.”
Top takeaways from this episode
★ Strategic buyers vs. private equity. Andy was careful to ensure a strategic buyer wouldn’t have a negative impact on his existing customer base when he was weighing his options between the two.
★ Take care of your employees. David kept his team top of mind while working on his deal, and once he was confident in the agreement he began to bring people into the fold.
★ Keep your options open. George recognizes that during the first deal attempt his team was too narrowly focused, which limited their options and got him to commit to a partner too early in the process. He recommends considering all the possibilities, even things that might seem a bit silly at first glance.
[0:56] Navigating M&A: 7MA’s Tripp Davis introduced the discussion and the panelists.
[11:40] Selling a company is like getting ready to sell your house: Andy compares preparing for a deal to how you would get ready to sell your house. He advises, “Make sure that when potential buyers come in to look and open up the books, that everything makes sense and everything is in its right place, so that the transaction can happen without an 11th hour Hey, what is this?”
[14:09] A huge change for employees: Take a brief moment to celebrate, but after that point David recommends focusing on your employees and how this change is impacting them. People react to changes differently and you need to be prepared to generate excitement throughout the organization.
[20:03] Radical transparency: George says, “The second time we went to market, we adopted a policy with our people of being radically transparent. They knew about as much as me... Everybody knew what was happening. And so when it (the deal) got pushed, I told people. And there were a lot of people who thought it's not gonna happen.”
[22:23] The value of a coach: A coach can help answer questions along the way, including questions about expectation setting for you and your team.
[25:15] Building value in your firm: When looking to build value in his firm Andy explains that he did a number of things: “We did a lot of work to protect our technology, and to build intellectual property, so it was protected that way. We did a lot of work with licensing and exclusivity with certain brands, or retailers, and certain channels of trade, to really have some guaranteed growth.”
[35:15] When in doubt: Andy says if you end up in the situation where you have multiple offers to trust your gut. You need to think about what it means for you personally, for your executive team, for your company, your employees, and your clients at the end of the process.
[35:59] Change is inevitable: People adjust to change in different ways, and often it’s easier to start with small changes to ease your team into the transition. Begin with little operational adjustments like the phone system or data backup, then make bigger changes as time goes on. Another tip would be to start with positive changes, like introducing an improved 401k offering.
☑️ Let us know what topics you would like to hear about on Deal Talk with 7MA by emailing us at email@example.com.
Deal Talk with 7MA, a bi-weekly podcast by 7 Mile Advisors that aims to give listeners a look behind the curtain of the middle-market Mergers & Acquisitions world. 7 Mile Advisors is a middle-market M&A firm based out of Charlotte, NC, that provides investment banking services and advice on mergers, acquisitions, and private capital transactions around the globe.