Getting Acquired (4 of 4): Life Post-Acquisition
by Patrick Lowndes, CEO of VendorHawk (Techstars Class 92)
This is the last blog in a 4-part series called Getting Acquired. I started by demystifying how to engage corporate development teams, then talked about how to get a competitive bidding war to get the highest offers and also how to get through diligence to an announcement. This last post is my somewhat early reflection (only 3 months past the acquisition) on how life has been since we sold the company and tips for transitioning to work for your acquirer.
Picking up the story on VendorHawk, the day after we closed the deal to sell the company was the beginning of a new season for us as founders, but also for our team.
Making sure people get paid accurately and expediently is something that CEOs should personally inspect and confirm actually happens. This includes investors, employees, board members or advisors, yourselves, and any other party or service provider who was supposed to receive money as part of the transaction. There are often hiccups when processing so many wire transfers, so it’s important to follow-up with everyone and confirm the amount they each should have received.
Watching the dust settle
Back to the personal story. The immense amount of pressure required to get the deal done now subsides. My wife actually said my posture physically changed in the first week after everything happened. I was finally more relaxed, more approachable, and more available in the evenings when I was home. She knew there was still more work to be done as we made the transition, but a weight was lifted off of our shoulders.
As a founder and especially a CEO, your job is to make sure you provide vision for the company, and help operate it to create the greatest return for your investors and the best outcome for your customers. But you’re also responsible for the livelihoods of your team. I’m not just providing for my own family’s needs (my wife and three kids). My startup is providing work and sustenance for the nine other people and their families as well. When we sold the company, I was praising God for how he helped us take care of those families, serve our employees, and get to a good early outcome.
For us, we were fortunate enough to keep all 10 team members from VendorHawk and help them grow their careers as they continued to build, market, and sell our product at the new company. So with all the change came quite the celebration!
Right after the deal closed, one of the first things we did was schedule celebrations for everyone involved. It’s best to schedule them after people get paid (which should be a few days to a week at most). It makes for a more fun party when cash is in the bank.
For our team, we actually did a fun outing to do mini golf pub in the cool neighborhood we were now leaving. More importantly, we also scheduled time for all their families and kids to have lunch together and celebrate the whole occasion. We handed out some VendorHawk beer glasses and leftover schwag to commemorate the truly remarkable accomplishments we had realized as a team.
For our investors, mentors and advisors, we had planned a nice dinner overlooking downtown Seattle to give a big and appropriate “Thank-You.” We got to socialize over a pre-dinner happy hour and then enjoy a great meal, with our investors glowing from a small win under their belt. We also honored one of our best local customers as well. I presented a slide deck that walked through the history and high points of the 2.5 year years we had as a young startup.
After making mention of all the parties to thank, we made a point to celebrate how our faith in God helped our founder teamwork and ultimate success. Was there anything that helped you across the finish line? Anything that other founders and advisors should know about that helped you succeed? Give credit where it is due and spread the best practices that led you to success (like we’re doing in this post).
Finally we celebrated with our families, not only by recognizing them at the investor dinner, but also by taking much needed vacations and time to decompress.
Remember that diligence spreadsheet? You might be getting a new spreadsheet just for all the tasks and checkboxes required to integrate the two companies! It turns out there are many things to do post-acquisition, so here are few to give you an overview:
- Transitioning or cancelling software subscriptions or accounts (easy for us, we managed all of this in our own product, VendorHawk)
- Wrap up all those loose ends with any outstanding bills that show up
- Working through all the leftover accounting, tax, HR, and legal tasks
- Getting the team productive again through new-hire stuff and onboarding
- Calling or responding to key customers and partners about the deal
- Traveling to meet teammates in different offices or locations
- Building and executing on the plan to integrate technologies or products
- Getting through your own onboarding (more on that in the next section)
It sure is a nice feeling when you’re back to building your product in a new daily routine.
Your new gig
Getting used to a new job often comes with a season of intensified learning, asking lots of questions like “Where do I find how to do that?” or “How do we normally do that?” and other humbling questions that help you get ramped up.
As a startup founder, your post-acquisition gig can look very different, depending on how you struck the deal, how your technology will be incorporated, and where you are physically located. Will you stay in the same offices and operate as a division that runs by itself, or actually be absorbed into an existing product line and set of operations, and maybe a new office?
At VendorHawk, we experienced the latter, but only had to move 20 minutes across town. Being absorbed into an existing business unit or product line means there are already product, processes, and ways of building, testing, shipping, marketing, and selling a product. Reading between the lines: your ways will likely need to adjust to fit the new business’s operation model. Keep in mind that at a larger company, there are usually a lot more formal processes and bureaucracy, even for simple things like booking travel or submitting an expense report. This comes with the territory, so prepare for more hoops to jump through — it’s normal.
About two weeks after ServiceNow had acquired VendorHawk, we were humbled to learn that Forbes ranked the company as the #1 most innovative company in 2018 — above the likes of Amazon, Salesforce, Tesla, and others. The appetite for innovation and speed mixed with an attitude of “hungry and humble” were a few key characteristics that drew us to join forces with the company. This culture helped me adjust into my new role as a “Sr. Manager, Product Management” for the IT Asset Management business unit.
What happens to your baby?
The harder thing about your new gig is what happens to you original vision and product roadmap. All the blood, sweat, and tears you poured into your product gives you something like a parental instinct — this product is your baby! It can be humbling and sometimes frustrating to now include several others into the decision-making process for where to focus new features, or for which customer type and why.
At VendorHawk, we were serving a smaller customer than the massive Fortune 1000 type company ServiceNow often serves. This meant we had to adjust the way we approached building product, not just for massive scale, but also for implementation. We had to keep asking ourselves, “What features matter most to this newer buyer?” I can’t stress how important it is to talk with these customers early and as often as you can so you don’t create an echo chamber and lose your customer feedback loop. That is lean startup 101.
Gain alignment about what makes the largest impact in your new world and use your entrepreneurial passion to continue building with this in mind. Watch out your own self pride. It is so easy to think my expertise or experience should be honored — as if I am better than other individuals or the team. How unreal is that! In reality, the new team is also very gifted and talented in understanding and solving the problem at hand.
Rest & vest?
Ever heard of this before? If not, see what comes up in a google search. This article from Business Insider provides a good overview of what happens when successful founders sit back and coast at their new company — collecting stock and oversized payouts for the work they’re now doing.
Having just been through an acquisition (about 90 days ago), I can assure you that rest will be needed. For me personally, as CEO of VendorHawk, I felt like I had a pretty balanced life compared to the crazy hours some people work. I would get into the office at about 6:00 am each weekday, arrive home at 5:30 pm for dinner and work 3 more hours after putting the kids down. This was often a heavy schedule (60–70 hours/week), but my wife and I found balance in maintaining the pace, but only for a season.
Taking vacations and lifting your foot off the gas while you reorient yourself to your new world is not just healthy, it’s needed. However, sitting back and playing video games or trying to avoiding work (like the rest & vest stereotype) is just plain irresponsible.
It’s important to take a measured approach to learning quickly and becoming productive at the new company while guarding against overworking yourself. If you’re like many founders, you’ll need to regain the richness of relationships, activities and life outside of work — some of which you lost during the time you ran the startup. For me, I’ve stopped working in the evenings altogether and spent a lot more time with my wife. I started taking back more home-based duties which my wife was carrying mostly by herself, and I began helping with projects and priorities she cares about.
Re-charge and re-create
If I could propose a new way to think about it, I’d encourage founders to re-charge and re-create. Re-creating could mean anything from building your business in a whole new way of thinking to pursuing personal or family projects that were put on the shelf. Re-create (like recreation) could mean just having more fun to care for yourself again. Re-create could also mean getting more involved in community work that is meaningful to you, or even helping family and friends think about pursuing their dreams in business.
Final reflections on getting acquired
As a startup founder, reflect on the options before you with careful analysis. If you are enjoying running the business and have no imminent need to raise capital or consider an acquisition, then you probably do want to ignore these corp dev conversations to some extent. Initially, I took this approach and it worked well for me.
But when you dive into the heat of needing to make a decision, I can’t stress how important it was to be surrounded by investors, advisors, and experienced entrepreneurs weighing in on the questions, opportunities, and challenges you’re facing. I’ll leave you with two ancient proverbs from Solomon, the wisest man in the world at his time (930 BC):
“Walk with the wise and become wise,
for a companion of fools suffers harm.” — Proverbs 13:20
“Plans go wrong for lack of advice;
many advisers bring success.” — Proverbs 15:22
If you have finished reading my reflections on getting acquired, you should get a prize because I know it was long (about 15 pages in google docs). May your prize be making better decisions about your startup, treating your team and all parties well in the process, and enjoying the outcome with everyone involved.
Disclaimer: Views I share in this post are my own and do not represent the views or positions of ServiceNow, Inc. (the company who acquired VendorHawk). I am speaking about my experience alone. Also, since this is not legal or tax advice, please consult with your experts in those respective fields.
A different version of this post appeared on Patrick Lowndes blog.