Acquisitions and M&A for founders: how to buy smart, price a deal and avoid the mistakes that turn acquisitions into disasters.
Acquisitions and M&A, with an emphasis on strategies to buy smart and avoid common disasters. It also touches on scaling companies through acquisition and strategic M&A.
What would you say were the three biggest lessons, you know, to to try to assure that the that M&A, you know, ends up being successful? Yeah, I don't outstanding point. Number one is know why you're buying some someone. Meaning, we had a very deliberate M&A strategy. We weren't looking for buy Here's a great company, let's go buy it. No, no. We bought companies, some that were great companies, some that were not great companies, but they were great for us. And they were great for what our customers wanted. We were buying products that we could integrate with our platform, that our customers needed and would buy, and we knew we could charge less money for them than anything else the customer could find somewhere else. So, we knew if we bought a company doing 7 million of of recurring revenue, we can get it to 50 million of recurring revenue because our customers would buy it
because it would be integrated with our platform and we'd sell it for a lot less money than what anyone else could buy similar functionality. Very deliberate. The second thing is don't buy a jerk. You know, like most companies that we would buy were founder founder-led. Uh there were a couple of deals that I said no to because I could not get along with the people we were buying. The people we were buying had the wrong type of like ethical standards or they didn't feel the same way about being a customer-first organization, all about the customer, delivering value for the customer. The third is don't overpay. You know, if you pay a premium multiple for someone, there's not a lot of room for error. And as you stated, M&A's hard. Most don't work because it ain't easy. And if it was easy, everybody would freaking do it. So, if you pay a top multiple for someone, you leave no wiggle room
for error. You don't. So, we didn't pay we paid fair market we paid fair prices for everyone, but we were always buying things at bargains because it gave us the wiggle room that if we messed up the investment thesis of buying that company didn't blow up. And we went 17 for 17 with acquisitions. We got really good at it because we followed those principles and we didn't have to do anything. You know, we never were in a position where we had to buy someone. No. Never let that happen. So, that's that's how we managed it.