Case Study #86: Building to Be Acquired

Photo by luis gomes

When Kaelon Egan first built Accelaschool, he knew he wanted to build the company to be acquired by a bigger player in the space. This wasn’t just because he had doubts that he could scale the business himself, but because he saw this as a logical endgame in building a business. Not all first-time entrepreneurs have such vision.

Kaelon worked in a school district for ten years in the IT department and saw where data collection was going and how it could be improved. He saw this need not just from inside the district, but as a parent in which he was inundated with paper forms and permission slips that all could be dealt with digitally, instead of potentially being lost inside a backpack.

Sales Model

Kaelon used his knowledge working in the school district and as a parent to great effect in the sales process. He knew the pain that different schools felt, and he knew how Accelaschool could solve those problems. Once he was able to make the case to those people feeling the pain on the ground, those people could sell the solution internally to the higher-ups.

Outside of customer-facing sales, Kaelon was also thinking about a future acquisition and when it became clear that their software needed a different type of architecture, they chose one that would more closely adhere to a big player in the space, making them a more attractive target in the long term.

Size is Speed

Accelaschool had 15 employees when it was acquired and Kaelon saw a strength there. He admits that many software founders stay awake at night worrying that a giant in their space will just code out a competitor over a weekend. But his team was nimble and had only continued to build up knowledge that meant that the best a giant could do would be to create a me-too product that lagged behind in its path.

Time to Sell

As we often talk about on the blog, there are many reasons people choose to sell. Kaelon was remarkably self-aware in recognizing that he was not the person to take the company to the next level, and besides that, he was ready to move on to something else. While he had originally approached Powerschool as a potential partner in which both companies could help each other grow, it became pretty obvious that an acquisition rather than a partnership made more sense.

Key Lessons

As we noted already, Kaelon was a mature first-time builder and seller. Here are three points that helped him win big:

• He bootstrapped. By not being beholden to outside investors or other similar influences he was able to control the direction of the company and the time and place of his choosing when it came to sell. Not all businesses can be bootstrapped, but sometimes founders are too eager to take money without realizing hidden costs.
• He had a great Advisory Board. He notes that they were particularly helpful when it came to the sale, as he had no idea really whether the valuation made sense or what deal points he should fight for. But Advisory Boards are how you even get to a sale in the first place. They offer disinterested real-world advice that can make a real difference.
• He built to sell. Kaelon began with the end in mind and knew he wanted to be acquired and built his company accordingly.

Are you building something you’d like to be acquired by a big player in your industry? We’ve helped many business owners do just that. Give us a call today.