M&A from a Founder's Perspective

In this episode, Kison interviews Armando Biondi, Co-founder and COO for AdEspresso. Biondi shares his personal experience on the AdEspresso and Hootsuite merger.

They discuss selling, communication during the integration process, and negotiating.

The Importance of Communication, Due Diligence, and Post-Closing Integration.

Co-founder and COO for AdEspresso, Armando Biondi is also an investor in more than 25 companies.

Biondi and the AdEspresso team were at a conference when Hootsuite reached out to them. First, they partnered up with them, and later it moved to an M&A discussion.

The initial interest was due to the fact that both companies cater to more or same customers.

There was a natural potential in going to the market as a joined entity instead of two separate companies.

Luckily, the company was profitable and growing and not under pressure to sell, so they did not go about other options.

“If you do have the pressure to sell because you are running out of money or the company is going nowhere, it’s an entirely different conversation.”

The Due Diligence Process

Biondi describes due diligence as a very complicated and consuming process.

“As you become more and more convinced and closer to the deadline it becomes a real effort. It’s a very expensive process.”

At first, they managed the company while they were having the conversation to see if it was possible or not, so he didn't want to distract them but at some point it has to happen.

You are trying to protect the management section as much as possible, try and do that as long as you know.

In order to prevent the different teams from getting distracted from the business, Biondi protected the management team as much as possible.

He filtered and minimized as much as he could initially until he felt that everyone needed to know.

Armando’s team faced the challenge of deciding whether or not this selling is a good decision.

“From a founder’s perspective, selling a company is probably the biggest sale you can do.”

Negotiation was a back and forth.

Communication is critical.

Sometimes he thought the deal was completely dead because of communication disconnecting between the founders and the team, investors, counterparts and, at one point, even customers.

“At first we didn’t feel that we were getting the information that we needed to go ahead. Eventually we overcame and saw there was some misalignment and moved forward. At some point, it becomes a gigantic trust exercise on both parts. You are talking about tens of millions of dollars. On the founder’s side you are giving away something you worked really hard on.”

The employees are also worried about their jobs, about the cultural side, and the investors have to be confident and trust the founder.

The cost of the process was surprising, and it was time-consuming.

Biondi and his team worked night and day, weekends included, for three months.

There was a lot of tension while negotiating, and the process got very intense during diligence.

Biondi is interested to see the transition through and continue growing.

“You have this growth opportunity, and at the same time you care about what you built and you want to preserve that.“

Armando’s advice to quartet teams who are pursuing a company like his is to try to understand what motivates the founders.

To the founders, he advises to always get trustful lawyers. Sometimes, the amount of paperwork can be too much for a COO or a CEO.

 

00.00 / 05.00 personal experience during a merger

05.00 / 10.00 diligence process

10.00 / 15.00 making decisions from a founder’s perspective and the importance of communication

15.00 / 20.00 post-closing integration

20.00 / 27.00 integration process

Check out other M&A Science Podcasts!

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By
Kison Patel

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