Summary

In this episode of the Inorganic Podcast, host Christian Hassold delves into a case study on the startup Crisp (gocrisp.com), which has successfully executed four acquisitions over the last 2 years. The discussion covers the company's background, the leadership dynamics, and the strategic rationale behind its inorganic investments. The episode serves as a case study to demonstrate what good M&A looks like in an early to mid stage SaaS company and what features of M&A targets companies should be thinking about at that stage. As a part of the discussion, Christian dives into some of the deal specifics and the economic benefits to Crisp based on opinion and publicly accessible information.

Takeaways

- M&A could be as effective as traditional sales, marketing, and product investments.

- What problem is Crisp solving and why is it important

- Background on Crisps substantial financing and debt rounds

- What kinds of M&A has Crisp executed and why

- How the deals Crisp has executed have likely helped fuel their growth

- What can other startups learn from Crisp's approach to M&A

- Order of the kinds of deals a company might do is a consideration in building the M&A muscle in an early to mid-stage SaaS company

- The startup ecosystem often underestimates the value of M&A

Chapter Markers

0:00 Introduction

03:19 The Case for M&A in Early Stage Startups

05:14 Crisp's Company Profile

08:28 Pre-conditions for M&A in Early Stage Startups

13:37 Breakdown of Crisp's Four Acquisitions

20:37 Crisp's Acquisition Strategy

22:01 Financial Case for Crisp’s M&A

24:28 Analyzing the Order of Crisp's Deals

26:37 Reflecting on Crisp's Strategy

28:10 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/aretraasdahl/

https://finance.yahoo.com/news/crisp-raises-50m-series-b-140500449.html?utm_source=chatgpt.com

https://www.sec.gov/edgar/search/#/ciks=0001818100&entityName=Crisp%252C%2520Inc.%2520(CIK%25200001818100)

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Episode Outline

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

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

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

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

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