M&A book Galpin and Herndon.
M&A book

M&A Strategy at Oxford:

Last month I attended the first module of the Oxford Post Graduate Diploma in Strategy and Innovation. I attended online because of Covid, but hopefully I can go and lurk the hallowed halls of the university for the next module. The main lecturer on the first module is Tim Galpin, who happens to be one of the world’s leading experts on M&A, he literally wrote the book on it.  Over the last 2 years I’ve worked on least half a dozen due diligence projects, two post-merger integrations, and I’ve advised two vendors on their sale to larger vendors.  It is fascinating to reflect on my M&A experience through the lens of the theoretical frameworks that Tim outlined on the course. I plan to do more research into M&A and strategy theory over the next year or so. Module one of the course exceeded my expectations, even if it was through the cracked looking glass of Zoom.  

M&A in HRTECH:

But the prompt for writing this post wasn’t just the course, it was a successful deal closure last week. iCIMS acquired EASYRECRUE.

I met the EASYRECRUE  CEO and Founder, Mickaël Cabrol, through Simon Bouchez, the former CEO of Multiposting. Multiposting was acquired by SAP SuccessFactors, and I worked closely with Simon for a time  (BTW Simon’s new start-up will be a rocketship).  In June I went to Paris and spent some time with Mickaël and his leadership team on product and GTM strategy, I reviewed the product, and we discussed the long term strategy for the business.  As with any successful businesses, there are times when you need to make some fundamental decisions about the best way to grow the business. Mickaël was grappling with either going for a significant series B, or a strategic investor move. He decided to appoint an investment banker, GP Bullhound, and seek a strategic investor.  Earlier I had provided advisory services to the founders of Clustree, Bénédicte and Guillaume. I helped Clustree to be acquired by Cornerstone. Mickaël agreed that I would provide similar advice for EASYRECRUE.  EASYRECRUE’s product line and strong European market presence (450 customers) meant that there was a good potential fit with several vendors. Together with the bankers, we drew up a tight short list, and refined the pitch. As part of this process we identified iCIMS as an ideal fit. The bankers and I then both approached iCIMS. I won’t disclose the details of the negotiation process. 

Fit for iCIMS:

The fit with iCIMS is good on multiple levels. The product scope augments iCIMS, with minimal overlap, and while iCIMS has some presence in Europe, it needs to significantly scale there to be more competitive for global enterprise business. iCIMS itself is majority owned by a leading PE firm, Vista, so iCIMS has both the strategic intent and the means to grow inorganically. iCIMS had done an acquisition of Irish vendor opening.io earlier in the year. An excellent chemistry developed between Steve Lucas, the iCIMS CEO, and Mickaël, and the iCIMS user conference created an useful milestone to target for deal closure.  The process moved relatively quickly, and the deal closed successfully before the user conference.  GP Bullhound did a nice post about the deal. Going forward Mickaël will run the EMEA business for iCIMS.  Read more coverage here and here

Steve Lucas has already made a significant impact at iCIMS in the six months or so he has been there, and I expect them to be much more aggressive in the global large enterprise space than they were in the past. Reflecting back on Tim’s research and lectures, the hard work starts after the deal, but Lucas has an enviable track record in M&A. He knows both sides of the table, having been acquired by SAP while at Business Objects, and successfully selling Marketo to Adobe. He has the trust of Vista, so iCIMS has a war-chest of both money and time. I won’t bet against this acquisition being a long term success. 

The broader market:

 Generally, we will see more acquisitions in HRTECH in Europe, for instance, at roughly the same time, SmartRecruiters acquired Jobpal* and this week Vonq acquired IGB. The capital to fund acquisitions is readily available to the right buyers, and larger vendors seek to acquire additional functionality and market presence. I expect to see more US vendors acquiring Europe based start-ups and scale-ups. There is also increased Growth Equity and PE interest in HRTECH,  see for instance Providence’s majority stake in Sympa.** and HG Capital’s and Warburg Pincus investments in Visma.*** I would like to see European vendors being more assertive too.

For vendors, selling a majority stake or taking on a new investor is a challenging decision and process. It has been really satisfying to help Mickaël and EASYRECRUE on this deal.  Congratulations to both companies.

Advisory support from Otter Advisory:

Sell side: If you are a HRTECH vendor trying to figure out your strategy, we’ve developed a service offering to help you work through the bootstrap, fund or exit dilemma. We will also actively advise a limited number of vendor clients on their funding or exit process, working with their preferred investment banker. 

Buy side: For large vendor clients and PE/Growth/VC clients, we offer specific services for thesis validation, sourcing, product due diligence, and post M&A integration advisory.


Additional reading:

https://www.otteradvisory.com/2020/01/have-you-got-skills-cornerstone-acquires-clustree-some-thoughts/

https://www.thesaascfo.com/prepare-for-preliminary-saas-due-diligence/

https://medium.com/acadian-insights/our-first-exit-smartrecruiters-acquires-jobpal-5a6180f48c1c

Tims’ new book.

Disclosures:
*Acadian Ventures was an investor in Jobpal. I am an LP in Acadian Ventures
** Providence Equity is a client
*** I have advised HG Capital and Warburg Pincus, but not on this specific deal.