Before founding BodeTree, my co-founder and I spent the bulk of our careers in finance. The world of mergers and acquisitions was all-too-familiar, but we always viewed it through the lens of large corporations.
Because of our experience “on the other side of the table,” so to speak, we never really stopped to consider what an acquisition would look like for our organization.
In reality, acquisitions come in all shapes and sizes and can help businesses reach their strategic goals more rapidly than simply attempting to develop initiatives in-house.
We learned this first hand after recently completing our first corporate acquisition.
After breaking into the franchise industry last year via our flagship financial management system, we fell in love with the space. The franchise market is full of passionate entrepreneurs who are dedicated to helping people achieve their dreams via business ownership.
Our guide to this unique world was Kristofer Nieb, founder and president of VelocityFD, one of the most well-respected franchise development companies in the nation.
As we learned the intricacies of this highly insular industry, my team and I could watch Velocity at work up-close. We saw how they forged deep, lasting relationships with franchisors and helped them to grow the number of franchisees in their system.
I quickly realized that if we were to combine forces, BodeTree could become a major force in the world of franchising. If we could find a way to bring to bear all of our financial, technological, and intellectual resources, we could shepherd franchisors throughout their entire lifecycle in a way that no one else could.
I felt that it was time to bring a fresh, modern approach to the incestuous world of franchising, and Kristofer Nieb’s VelocityFD was the perfect vehicle to do so.
After months of negotiating, we were able to reach terms and finalized the acquisition earlier this year. The process was enlightening for all parties.
Now that we have the luxury of hindsight, four key lessons emerged from the process.
Set a clear strategy at the onset.
In my experience, companies typically get acquired for one of three reasons.
- The buyer views them as a potential threat;
- They offer the buyer a quick path to incremental growth; or
- They allow the buyer to drive innovation in a new industry or market segment.
As a buyer, it’s important to understand why you’re looking to acquire a potential company. First, this strategic clarity informs the nature of the negotiation, validation, and structure of the deal.
Second, and perhaps more importantly, it enables you to create a clear narrative around the deal. This narrative is vitally important when it comes to generating buy-in among your team, board, clients, and the target company itself.
For me, the Velocity acquisition was always about innovation and market expansion. Franchising is such a huge industry, but in many ways, it’s one of the last vestiges of a bygone era. Processes are often inefficient and, by extension, expensive for the consumer.
BodeTree possessed the skills, resources, and technology to make the space more efficient for everyone involved, but there was one thing we lacked: relationships.
Franchising is about relationships, plain and simple. If you haven’t been part of the industry for many years, it’s nearly impossible to break in. You need a guide, and for us, that had to be Kris Nieb and the VelocityFD team.
Kris brought over 20 years of experience to the table and helped us navigate the subtleties of the industry. We didn’t view him as a competitor or as a way to make a quick buck.
Instead, we knew that by partnering we could bring about significant positive change in the industry. It was that narrative that helped us to sell the deal both internally and externally.
