The Sale of Element451: Managing the Process & Securing a Good Outcome

The Sale of Element451

Transaction Details:

• Company: Element451
• Vertical: AI, EdTech
• Founders: Ardis Kadiu
• Transaction Type: Investment
• Investor: PSG Equity
• Amount: $175 million
• Location: Raleigh, North Carolina
• Financial Advisor: Vista Point Advisors

While I had led the company through multiple growth stages, a transaction of this size required specialized expertise to maximize outcomes and minimize disruptions to our business. What Vista Point did was bring certainty around the deal process and the outcome. That's where they helped out tremendously, with that knowledge of how to manage everything throughout the whole process.

Element451’s Origin & Growth

The idea of Element451, which is a student engagement and CRM platform, was 15 years in the making. It came from my passion for making the student experience better, focusing on recruitment, enrollment, engagement, and helping schools simplify their journey.

I started on the educational institution side and we had a really hard time keeping this continuity of engagement with the students. They land on the website and then go into the application, which is a completely different system. So the experience is broken and that impacts retention and conversion.

I went on to open a marketing agency where we were trying to solve this problem of: How do we help schools do better recruiting? We started building our own internal systems to create better engagement with students. We built our own CRM to manage it, then we started building the whole platform, and spun it out from there into Element451 in 2018.

Now we've moved through the full life cycle, helping not just with recruiting new students, but with retention and how schools manage it, as well as ongoing communications afterwards. Element451 has become an integral part of that whole workflow.

Growth was slow at first because it was spun out from the original product and self-funded for the first few years. We were bootstrapping it, but it was really difficult to keep the innovation up while still building a go-to-market engine when you don't have enough capital. Like any startup, we faced challenges early on, but our conviction in the problem we were solving kept us pushing forward. But we had conviction, so we pushed forward and got our first seed round in 2019.

That felt like the stamp of approval, getting a check to help build momentum and hire a few people to drive the go-to-market engine. Once we did that, and because the product was really good, the flywheel started. We got a few more customers, they liked it, we were able to reference those customers, and it started growing.

Then the 2020 pandemic happened and we thought things were going to tank, but it actually created tailwinds for us because a lot of the schools needed to digitize and make most engagements with students virtual now. Element451 became a great platform for them. Since then, we’ve grown about 80 to 90 percent year over year.

Deciding to Pursue a Transaction

We always had a goal in terms of getting the business to a certain place and then this was going to happen. For the last three to four years, we have been meeting those goals in terms of our revenue.** It became a matter of: how do we accelerate to the next stage? **We had successfully built a strong foundation, but to fully capitalize on our momentum and expand our market leadership, we needed the right partner to accelerate growth.

The decision was pretty simple: we needed a partner to accelerate to the next level. It was between a strategic buyer and a financial sponsor. We wanted Element451 to be the brand and grow, rather than be rolled up into something else. So the financial sponsor in the next round became really important to us because we knew that Element451 is a really great platform and really customers love it. That became the driver for how we thought about finding an investor.

Choosing to Work with an Investment Bank

I started the process by myself because we had a lot of inbound inquiries, but with growing interest from investors, it became clear that running a full sale process while continuing to lead Element451’s growth required dedicated support. It was just not sustainable. I didn't want to lose my sanity. I had a business to run. And by the way, I hadn't done this before, so I had no idea how to go about the later stages of negotiation.

I brought a bunch of interested people to the table, but I needed somebody else to manage the process. We reached out to a few folks and Vista Point Advisors really stood out to me because of their style matching the way I work. I liked the more even-keeled, transparent conversations on what the outcome could be. They told me frankly about the upsides and downsides, and not just, "Oh, we're going to kill it. We're going to get you the best deal ever." So I appreciated that style.

I liked the idea of them being sell-side only and working directly with smaller entrepreneurs. They were more founder-friendly.

The Process & Creating Competition

The deal process was really intense. I did that first, mini run of engaging with the initial interested parties, and then we decided to open it up. That's where Vista Point became really crucial. With their help, we were able to tell the full story of the company’s value, which had been missed a little bit. So it was intense, but there was a lot of demand.

As we progressed, one of the things that worked really well was pushing individual parties through the diligence process in parallel as much as possible. We were pretty transparent about doing back-to-back diligence meetings with multiple parties. That turned out to be a really smart move, even though at the time, my team wanted to quit! It turned out to be a good strategy for us because we were having those open conversations, and in quick succession, and it ended up being very competitive.

We had some amazing choices in terms of who we were going to partner with. In the end, it really came down to very small things that edged out certain partners. Vista Point opened up the market quite a bit, yet it was interesting to see how many of the finalists were those who had shown prior interest in Element451. So it wasn't that somebody came out of left field, but what Vista Point did was bring in certainty around the deal process and the outcome.

They brought structure to the process and worked through the diligence on our end. And they pushed the investors' diligence process so far along on the other side that the certainty was pretty high that we were going to close on a great option, and that there wasn't anything that was going to come up. That's where they helped out tremendously, with that knowledge of how to manage everything throughout the whole process.

The process was highly competitive, and we were able to move swiftly to finalize an exceptional partnership.

The Outcome

We're very excited to partner with PSG and to take Element451 to the next level. The outcome was great, and naturally, where there's competition—and it was highly competitive—it leads to better results.

It’s not just about the formulas and the valuation, there are the needs or demands of the other parties to consider. We were able to find a good partner fit for the company, and because of the high competition, we were able to negotiate good option pools for those who had worked at Element451 since the beginning. It makes me feel good to see that it was a positive outcome for them as well—and in some cases, it was life changing.

I mostly feel like the outcome was good because Element continues as its own brand. It accelerates the mission. We're still the same company, it’s just that now we have even more firepower behind us. Our customers feel like Element451 has even more longevity in the market and even more backing to bring it to the rest of their networks. The network effect is real. That's the part that I feel the most proud about—that we continue the story.

Founder-to-Founder Advice

It's really important to know exactly what you want the outcome to be. What’s your ultimate goal? There are so many tempting offers that come to the table, and if you don't have a clear idea that you're moving toward, then it's really difficult to be clear-headed throughout the deal and you might make bad decisions. If you want an investor, know what you're optimizing for.

At least, being decisive about what we wanted worked for us, so that's my advice: know what you want.