In today’s show we’re going to demonstrate how the acquisition of a smaller company can help spark organic growth and the steps to achieve maximum value from the investment.
Our guest is Gary Schwake, Vice President Business Development at ACTIVE Network. Gary is a revenue growth expert who co-founded two companies, taking both from concept to successful exits. Today Gary serves as an M&A expert where he leverages his extensive experience to develop business plans, raise capital, build the teams, grow the companies, and negotiate final transactions.
Gary answers questions out of SBI’s How to Make Your Number in 2018 PDF Workbook, to follow along, click the link and download your own.
Each of the questions below is timestamped for your viewing convenience.
Segment 1: Founding Your Own Company… the Vision, Acquisition, and Integration
- Gary, you have an incredibly journey of leading a start-up and exit not once, but twice. Please share with the audience the tips of the waves of your entrepreneurial journey. 3:40 – 6:00
- How did you think about the commercial motion? For example, how complementary are we going to be if we get acquired by this company? Am I gaining access to new customers that I would never get? Am I getting access to new geos? 6:15 – 9:06
- What are the benefits of bringing a smaller, growth-oriented team into the enterprise? 9:17 – 11:40
- What kind of diligence did you and your co-founder do, as you thought through the optionality of ACTIVE versus alternatives? 11:50 – 13:18
“It’s healthy to really understand the dynamics of the company that’s acquiring you and not just the company, and, in our case, the private equity behind the company, and understanding where you are in the lifecycle of that investment…” 9:50 – 10:07
Segment 2: The Balance of Integration
- In the 1st segment, you shared your vision for beginning with the end in mind. Tell us how you approach an integration and what is the horizon? 15:15 – 17:49
- How do you determine when and what to integrate from the acquired company? 17:50 – 21:15
- Is there anything culturally that you assess now, having the experience that you do, when putting two company cultures together? 21:54 – 23:50
“The first phrase of that integration was thinking through how we could re-imagine the pricing model now that we were part of a company as an add-in sale rather than a primary sale, with access to existing customers,. We shifted from being a new sale to an upsale, an addition to new sale, additional partners, etc. There’s a technical component to that. There’s a sales and marketing component to that. And so that dominated our focus in the near term, really first 90 days or so…” 16:27 – 17:26
Segment 3: Enablement of the Acquisition
- What are the unique planning steps that you put in place to enable a new acquisition? 24:47 – 26:54
- Are there levers you pulled that ensured that the value that was suspected when you went through diligence was realized? How did you ensure that that value was captured? 26:54 – 29:00
- How did your team of people react to the acquisition and how did you manage that? 29:02 – 29:47
“Every time you’re adding a new element to the sales team, assess your customer’s perception of that element. How do they make decisions? How do they evaluate where this fits in the enterprise? What does their cycle look like? It may be entirely different from your core software product or whatever that product may be. And so, if you start by mapping that journey, you’ll be able to highlight the places where that journey breaks. Then you can overcome those breaks by thinking through the objections, the timing, and the expectations…” 26:00 – 26:32
Until next time we wish you luck as you try to Make Your Number.