Inorganic Podcast

Summary

In this episode of the Inorganic Podcast, host Christian Hassled discusses the acquisition of Command AI by Amplitude Software. The conversation delves into the deal's details, including the financial aspects, the rationale behind the acquisition, and the implications for both companies. Christian highlights the challenges faced by early-stage startups in the current economic climate and the strategic decisions that founders must make to exit now or continue burning cash not knowing if the fundraising market will the there for them when they need it. The episode concludes with key learnings from the transaction, emphasizing the importance of founders making the tough decision to sell even when they have a credible product and plenty of runway to keep going.

Takeaways

• Amplitude acquired Command AI for $45M, $20M net of cash
• Amplitude is a public company with a market cap of $1 billion, this is their 5th acquisition in 5 years
• Command AI was an early-stage startup backed by Insight Ventures, among others. The company reports it was flush with cash and agreed to be sold
• The deal reflects a smart strategic move in a tough market for SaaS companies.
• Command AI's technology aligns well with Amplitude's product offerings.
• This deal is interesting because it helps understand how public companies value venture-backed startups in the current economy.
• This deal also examples AI tech consolidation and the relative values for such companies.

Chapter Markers

00:00 Introduction

01:7 Background on Command AI

02:49 Introduction to Amplitude Software

04:51 Deal Details and Controversy Around Price

06:00 Analyzing the Deal Structure and Rationale

09:35 Learnings from the Deal

11:37 Conclusion

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

Episode References

https://www.linkedin.com/in/spenserskates/

https://amplitude.com/blog/amplitude-acquires-command-ai

https://news.ycombinator.com/item?id=41849907

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Summary

In this episode of the Inorganic Podcast, Christian and Erik delve into the complexities of take private transactions, using Smartsheet's recent acquisition as a case study. They discuss the economic challenges facing public companies, the lifecycle of a business transitioning from public to private, and the strategic considerations for boards contemplating such moves. The conversation highlights the importance of fairness opinions and the intricate dynamics of investor strategies in these transactions. In this conversation, Erik and Christian delve into the complexities of take-private transactions, focusing on the negotiation dynamics, the role of advisors, regulatory considerations, the impact on employees, and the financial structuring that influences investor returns. They use the Smartsheet deal as a case study to illustrate these concepts, providing insights into the motivations behind such transactions and the implications for all parties involved.

Takeaways

• Public companies face unique challenges that may lead them to consider going private.
• The lifecycle of a business includes transitioning from public to private ownership.
• Smartsheet's acquisition is a significant case study in the current market.
• Initiating acquisition conversations requires careful preparation and strategy. The Smartsheet deal features a go-shop provision allowing for additional bids.
• Advisors play a crucial role in take-private transactions, including bankers and consultants.
• Regulatory dynamics can complicate interactions between buyers and sellers.
• Employees in public companies face different equity compensation structures when taken private.
• Investor returns are influenced by the capital structure and debt servicing costs.
• The liquidity of equity compensation differs significantly between public and private companies.

Chapters

00:00 Introduction

04:04 Understanding Take Private Transactions

08:28 Analyzing the Smartsheet Case Study

15:53 Transaction Dynamics and Investor Strategies

20:44 How Fairness Opinion Works

23:28 Initiating Acquisition Conversations

29:18 Advisors in Take-Private Transactions

31:48 Do's and Dont's for Potential Acquirers

37:33 Impact of Take-Private Transactions on Employees

45:41 Erik Morton's Hypothetical Simple Exit Waterfall

51:38 Conclusion

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

Connect with E20 guest, Erik Morton on LinkedIn

https://www.linkedin.com/in/erikimorton/

Episode References

https://investors.smartsheet.com/news/news-details/2024/Smartsheet-to-be-Acquired-by-Blackstone-and-Vista-Equity-Partners-for-8.4-Billion/default.aspx

https://www.wsj.com/articles/smartsheet-to-be-taken-private-by-pe-firms-in-8-4-billion-deal-7296758c

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Summary

In this episode of the In/organic Podcast, host Christian Hassold and guest Keith Anderson delve into the evolving landscape of data measurement, focusing on WPP's potential divestment of Kantar. They discuss the implications of this move, the importance of independent measurement in advertising, and the future of Kantar in the market. The conversation also touches on the challenges agencies face in adapting to a rapidly changing media environment and the need for collaboration and innovation within the industry.

Takeaways

• WPP is exploring the sale of its stake in Kantar to streamlines its business and bring more cash onto their balance sheet
• Kantar is known for its consumer panel businesses and global footprint, WPP currently owns 40%, Bain Capital owns 60%.
• Independent measurement is crucial for advertisers but the capabilities on a standalone basis are becoming commodified
• The agency business is facing significant challenges, global agencies must elevate their offerings to remain competitive in a world where clients are seeking to consolidate spend with a single global partner

Chapters

00:00 Introduction

05:23 Understanding WPP and Kantar's Relationship

09:22 WPP's Strategic Reasons for Acquiring Kantar

12:46 Independent Measurement in Performance Marketing

16:47 Bain's Potential Divestment of Kantar

20:45 Analyzing WPP's Tech Strategy & CTO vs CPO

23:54 Kantar's Potential Acquirers

28:12 Agency Evolution and Collaboration in a Changing Market

35:04 Conclusion

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

Connect with E19 guest, Keith Anderson on LinkedIn

https://www.linkedin.com/in/keithanderson101/

Episode References

WPP FGS Divestment Announcement: https://www.wpp.com/en/news/2024/08/wpp-to-sell-its-majority-stake-in-fgs-global

Reuters divestment press: https://www.reuters.com/business/wpp-is-considering-sale-stake-bains-kantar-source-2024-01-10/

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Summary

In this episode of the In/Organic Podcast, host Christian Hassold explains the “why” behind MasterCard's $2.6 billion acquisition of Recorded Future. Christian’s breakdown of the acquisition story explains Recorded Future’s role in cybersecurity, national security, and how the CIA venture arm, In-Q-Tel landed on their cap table. The discussion includes context on the origins of Recorded Future, its unusually limited capital requirements, and how Recorded Future has likely out performed many other companies that achieved near billion-dollar valuations over the past five years.

Takeaways

• MasterCard acquired Recorded Future for $2.65 billion.
• Recorded Future is a significant player in cybersecurity.
• The CIA's investment highlights the strategic importance of Recorded Future.
• Cybercrime poses a $9 trillion threat globally.
• Recorded Future provides intelligence for both businesses and governments.
• Recorded Future's growth rate was impressive at 25% CAGR.
• The deal represents a 7.8x revenue multiple, indicating strong market confidence.

Chapters

00:00 Introduction

02:43 Overview of Mastercard's Acquisition of Recorded Future

03:20 Analyzing Mastercard's Acquisition Strategy

03:56 Use Case: Credit Card & Fraud Transactions

07:31 Use Case: Protecting & Defending Assets

10:02 What Is Recorded Future?

12:33 In-Q-Tel and CIA's Involvement

18:22 What’s Next for Recorded Future?

18:58 Conclusion

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

Episode References

https://www.mastercard.com/news/press/2024/september/mastercard-invests-in-continued-defense-of-global-digital-economy-with-acquisition-of-recorded-future/

https://b2b.mastercard.com/news-and-insights/blog/ecommerce-fraud-trends-and-statistics-merchants-need-to-know-in-2024/

https://www.theinformation.com/briefings/insight-sells-cyber-firm-to-mastercard-for-2-65-billion

https://www.statista.com/forecasts/1280009/cost-cybercrime-worldwide

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Summary

In this episode of the In/Organic Podcast, host Christian Hassold provides a teardown on the massive $206 million acquisition of Bentonville-based SupplyPike by SPS Commerce (NASDAQ: SPSC). In this episode, Christian provides a deep dive into the deal's details, its structure, and an informed hypothesis on the deal multiple. Christian also explores the backgrounds and business models of both SPS Commerce and Supply Pike, highlighting their roles in facilitating commerce between brands and retailers. Further, he analyzes the strategic rationale behind the acquisition and the implications for investors, founders, and employees. The episode concludes with key takeaways, including the importance of focused leadership and the benefits of inorganic growth for public companies.

Takeaways

• The acquisition of SupplyPike by SPS Commerce for $206 million is a notable deal based on the estimated multiple of >10x ARR. 
• It was also SPS Commerce's largest acquisition by deal size and multiple in its history of acquisitions.
• SupplyPike was a Bentonville, Arkansas-based SaaS company that helped brands recover inaccurate chargebacks and other deductions from retailers like Amazon, Walmart, and Target
• SPS Commerce is a commerce transaction infrastructure company that helps suppliers (brands) retailers and distributors better transact commerce
• The acquisition of SupplyPike by SPS Commerce was logical because of the high fitment of the two companies' business model
• The acquisition expands SPS Commerce's total market opportunity by at least $750M and demonstrates the benefits of inorganic growth for public companies.

Chapters

00:00 Welcome from Nantucket Island

01:02 Summary of the deal, players and deal structure

03:39 What is a competitive banker-run process

04:50 What is SPS Commerce business

06:38 SPS Commerce M&A history and this deals significance

04:54 What is SPS Commerce business

09:18 What is SupplyPike business and background

13:52 Analysis of the deal impact for Investors, the founder and employees

18:11 Learnings from the deal overall

20:45 Wrap up 

Episode References

SPS Commerce Press Release

SPS Commerce Investor Conference Call

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

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Summary

In this episode, Christian Hassold, host of In/Organic Podcast provides a mid-year market update for the M&A market in the SaaS industry. He discusses the macro conditions and factors influencing M&A activity, such as interest rates and FTC oversight. He also reviews his prediction on the increase in startups buying startups and analyzes four specific deals completed in the past six months. Overall, M&A activity is slightly up, but valuations are down, and deals are stalled due to disagreements on purchase prices. However, deals are getting done, likely at lower valuations

Takeaways

• M&A activity in the SaaS industry is slightly up, but valuations are down.

• Misalignment on purchase prices are causing deals to get stalled.

• Some deals are still getting done, both by PE's and corporate-sponsors, but at lower valuations

• SaaS Startups are not being acquired at the levels predicted, we examined 4 deals that have gotten done in Q3 to get a sense of the market

Chapters

00:00: Welcome

00:33: Taylor Swifts EU Invasion

02:53: Macro Conditions and Factors Influencing SaaS M&A

07:07: PE-backed and Corporate-backed Deals

10:01: Stalled Deals in SaaS and Market Dynamics 

14:05: Revisiting 2024 Startup M&A Predictions

17:53: Review of 4 Recently Announced Deals

Episode References

All In Podcast EP188

Pitchbook: The State of Enterprise SaaS M&A (Q324)

Carta: Q1 and Historical Startup Shutdowns

Carta: Startup Acquisition Metrics

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

Hosted on Acast. See acast.com/privacy for more information.

Episode Summary

There are plenty of problems to solve in the ecommerce space. As the market gets larger it also gets more complex with new problems to solve arriving almost daily. Throughout my career in ecommerce, I have come across a “mafia” of founders - that is people who see and experience the problems firsthand, build a software solution to solve it, get the business to the right scale for an exit; rinse, and repeat. We are oversimplifying some of the complexities, but it can never be understated how much focus and commitment is required to build and exit a software business in any market AND do it more than once.

In this episode of In/organic, I was joined by Chad Rubin, founder of commerce ecosystem notables including Prospershow, Skubana, Sellers Choice, and more recently Profasee. Every business Chad has built was started to solve a problem he experienced as an online retailer and whereby he brought the solution to market to help thousands of online sellers thrive. In this episode, I explore with Chad the formula for success as a repeat founder and his experiences and learnings along the way of building and exiting thoughtfully.

Takeaways

• Chad's approach to building businesses involves identifying real pains in commerce, experiencing those pains directly, and building companies around them.
• The decision to sell a business involves considering market trends, acquisition behavior, and economic impact, as well as ensuring a successful outcome for stakeholders and employees.
• The sale process requires careful consideration of the vision and execution of the acquiring party, as well as the deal structure and post-sale arrangements.
• Chad's journey highlights the importance of perseverance, non-consensus thinking, and proving oneself right in the face of skepticism from investors and VCs. Life after a successful exit may not bring the expected life-changing outcomes.
• Balancing work and personal life is essential for long-term success and fulfillment.
• Market opportunities in e-commerce are evolving, with a focus on multichannel and niche markets.
• The entrepreneurship journey involves continuous learning and adaptation, focusing on personal growth and well-being.

Chapters

00:00 Introduction

02:59 Chad Rubin's background

04:16 Building a business

06:53 Strategic thinking about outcomes

09:00 Learnings from selling a business

12:43 The decision to sell

17:42 Running the sale process

22:56 Insights for founders selling a business

25:42 Experiences as a serial founder and exiter

30:41 Optimizing for platforms of varying maturity levels

34:39 Maximizing the outcome

35:47 The pattern of building and selling

38:47 Advice for aspiring serial founders

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

Connect with Chad Rubin on LinkedIn

https://www.linkedin.com/in/itschadrubin/

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In this episode of the In/organic Podcast, our host, Christian Hassold discusses the concept of ecosystem mapping and its importance in corporate and inorganic strategy. He emphasizes the shift from market mapping to ecosystem mapping and provides insights on building a comprehensive ecosystem or market map. Christian also shares his approach to gathering information, categorizing companies, and creating market maps. In this conversation, Christian discusses the process of market mapping and rank stacking in the context of M&A strategy. He provides examples of market maps, explains the relationship between market maps and company strategy, and outlines the criteria for rank-stacking M&A targets. He emphasizes the importance of ecosystem mapping and the need for independent thought in the M&A process.

Key Takeaways

- Ecosystem mapping is an approach that considers the entire ecosystem surrounding a company, not just its competitors.

- The shift from market mapping to ecosystem mapping is essential for identifying inorganic growth opportunities and understanding the broader value creation within an ecosystem.

- Building a comprehensive ecosystem map involves gathering information from various sources, categorizing companies, and determining whether the companies are direct competition, indirect competition, or a partner.

- A sub-component of ecosystem mapping is identifying potential M&A targets and rank-stacking them in terms of revenue and potential fitment with an acquirer. Rank stacking drives clarity in terms of which M&A targets a company should prioritize from a list of targets.

Chapters

00:00 Introduction

02:30 Problem statement and preconditions

05:45 The ecosystem map

08:26 Building an ecosystem map

06:01 Sources of information

14:29 Categorizing companies and estimating revenues

16:40 Examples of ecosystem maps

22:19 Rank stacking process

24:46 Criteria for rank stacking M&A targets

33:39 Complimentary episode on M&A Science

34:41 Summary

36:31 Takeaways

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featured

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M&A in scaling SaaS companies is on a gradual incline. It's become a great way for SaaS companies to expand their reach into TAM, grow their share of wallet, or expand into new geographies. There is also a large pool of companies available to acquire. The challenge is the M&A function in scaling SaaS companies is often put at risk by hiring an inexperienced leader, not having any clear owner, or not setting the function up for success.

In this episode, Christian Hassold, host of the In/Organic Podcast provides a detailed understanding of the M&A opportunity for SaaS companies, the common obstacles for setting up the function, what to expect from a corporate development leader, and the role a leadership team can play in M&A success. This episode is a must-listen for founders, CEO's, and CFO's who are considering establishing a corporate development function in a scaling SaaS company.

Download the content from the episode

Episode Highlights

0:00 Intro

1:58 Reasons for Inorganic Scaling in SaaS

5:12 M&A: Large Corporations vs. Scaling SaaS

7:42 Why M&A in Scaling SaaS is Harder to Build

9:31 Common M&A Obstacles in Growth-Stage SaaS

14:46 Role of SaaS Corp Dev Leaders

19:35 Example RACI for Scaling SaaS Corp Dev

24:43 Common M&A Hiring Mistakes

27:04 Takeaways

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://linkedin.com/in/hassold

Visit In/Inorganic: https://inorganicpodcast.co

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This episode was recorded at Deloitte University in Westlake, Texas during the Deloitte M&A Executive Forum on March 7 & 8, 2024. I was joined by my friend and colleague Kim Baird, Principal at M&A Maximizer, a boutique integration consulting firm based in California. 

In this episode, Kim and I took a break from the rich sessions we enjoyed at the Executive Forum to share our key learnings and insights from a series of panel sessions that included dealmakers and leaders from Deloitte's M&A practice, Bank of America, DLA Piper,  and Generac Power Systems. Our discussion covers the key takeaways from the forum on the future of deal-making in 2024, the macro and micro-economic factors that will influence deal-making in the SaaS ecosystem.

Big thank you to Dan Helfrich, Chair and CEO of Deloitte Consulting for inviting us to the Deloitte Campus and for a great discussion on M&A!

Episode Highlights

00:00 Introduction 

00:29 Setting Up

01:59 Deloitte's CEO: Market Optimism for 2024 

03:14 Deloitte's Chief Economist: Economic Outlook 

04:28 Potential Instability of Relations with China

05:51 Cross-Border Investment Patterns

8:10 Macroeconomics' Impact on SaaS Valuations

10:15 Generative AI in M&A 

11:19 Utilizing Copilot

13:04 Mining Customer Data 

15:11 Session on Gen AI: Takeaway

15:48 Closing 

Connect with Christian & In/organic Podcast

Christian's LinkedIn: https://www.linkedin.com/in/hassold/

In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcast

In/organic on the web: 

https://www.inorganicpodcast.co/

Connect with Kimberly Baird on LinkedIn

https://www.linkedin.com/in/kimberlybaird1/

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