So the other day on Workshop Wednesday Andy Wilson, founder CEO of Logikull, and I did a deep dive on what it’s really like selling your company to Private Equity for almost $300,000,000!
I was the first and largest investor in Logikcull as they “de-bootstrapped” in 2015, and at first it grew very quickly, double digits every month. But growth slowed around $15m ARR to close to zero. Andy had to completely reboot the team to reignite growth, pushing past $30m+ ARR by 2023 and selling to a top private equity firm.
A great outcome — and a great comeback.
Selling to Private Equity is not the same as raising VC capital or selling to Stripe or Salesforce. Private Equity has different goals, and Andy did a great deep dive on the process. We’ll do more here on SaaStr but my Top 5 Learnings below.
#1. Private Equity Gets Very Interested in SaaS Once You Cross $20m ARR, growing 30% — if you are burning almost nothing.
That’s my view and Andy confirmed. Once they approached $20m, a number of Private Equity firms began to approach them, especially once they began to acquire some big logos again. The first one that approached them in the end was also the one that acquired them. Hit $20m ARR, growing 30%-40%, with little to no burn, and PE firms will begin to find you.
#2. They Ran a Crisp, Tight Process And Got 4 Offers to Buy Them. 3 Came from the Investment Bank They Hired.
In my experience, hiring an investment bank to help you in any acquisition > $100m or so is critical. But I don’t find they often truly bring you other buys, more just stalking horses once you have one already. But Andy got 3 other firm offers through the bank he hired — along with a price more than $10m higher. So the bank more than paid for itself.
#3. You Need 3 Strong Quarters in a Row to Sell to Private Equity. And You Absolutely Have to Make Every Quarter.
The PE firms didn’t care that a few years back growth had slowed. What they cared about was 3 strong quarters of growth, combined with being cash-flow neutral. PE firms literally review every single cell in every spreadsheet, every number in your financials. You have to make them. So Andy moved to aggressively monthly and quarterly goals for the team both for top-line growth and cash. And mostly abandoned longer-term annual goals.
#4. Once The LOI / Term Sheet is Signed, You Can’t Change or Negotiate Anything
This is true in corporate M&A too, but a good reminder. Anything you want in the deal, you have to get into the LOI / term sheet. Andy and I added an extra employee bonus pool to the term sheet in the deal. That would have been impossible after.
#5. If You Want to Be On the “PE Track”, Be Deliberate About It
Logikcull grew at T3D2 at first, then growth slowed to almost zero, and then it reaccelerated. In 2021, they moved to a PE mindset. They wanted, if they sold, to sell to PE for $2X0m or more. So they moved to focus on 40% growth with $0 burn. They lost their entire sales team, except one exec. It was a total reboot. But when they committed it, it worked. They got several offers in 2021, then a pause in 2022, and the offers came back in 2023.
Also note: one big benefit of a PE acquisition is you don’t have to stay if you don’t want to.
A traditional M&A deal, you often have to stay 2-3 years or longer. Andy was able to move on and hand the baton to his successor soon after the deal closed.
And a bit more on the deal itself here:
The Power of Private Equity and a $1 Billion+ “Double Acquisiton”
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