Hiring an Investment Bank to Maximize Transaction Value
The Sale of Imagine Easy
My friend and I started a company in high school to solve a common problem students had.
Fifteen years later, we sold that company for $60M.
In 2001, I was in high school living in the west suburbs of Chicago.
It was the early days of the web and my buddy Darshan and I were geeking out a little learning to build websites. Web development wasn’t a common pastime for high school students back then.
One day that hobby came in handy. In one of our classes we were required to include a bibliography in a class paper, which for us felt too tedious to consider.
Together, Darshan and I thought, "Maybe we could solve this pain, and wouldn’t the web be a great way to do it?"
We spent two months working after school and ended up creating the first product for our newly formed company: Imagine Easy.
Our only product started gaining popularity. Unfortunately when we graduated, we went off to separate colleges. To continue building the company, we applied to internships in the same places so we could continue working on Imagine Easy in the evenings.
After college, we still were unable to work full-time on our small company, despite the fact that our first product had grown relatively popular with a few million users. The obstacle: our parents wanted us to get real corporate jobs. So that’s what we did, for a couple years.
The corporate life wasn’t for us. In 2008, after a year and a half of working in one of the largest investment banks at the time, I thought, "I’m done with this."
I was ready to make the leap and see if Darshan and I could turn our popular product into a profitable company.
We left our jobs and focused full-time on Imagine Easy.
Fast forward to 2016. Imagine Easy had grown to $20M in revenue, and we’d been working on the business for 15 years on and off.
I was 32 years old and about to have my second kid.
At this point, Darshan and I felt like we had gotten the business to a point where we thought we could sell it and meet our life goals financially. We were also interested in seeing how selling the company to a large acquirer could help us take the business to the next level.
And from a personal standpoint, we were ready for new life experiences.
Our change in personal and professional life goals signaled a good time to explore selling the business.
We decided together that we were going to sell. In doing so, we were faced with the decision of whether to run the transaction ourselves or hire an investment bank to advise us.
I’d worked at a major financial institution, so I was pretty familiar with the value of an investment bank and had a good grasp of the process of selling a business. I also knew a lot of the players in our space. So I thought maybe I could manage the process myself using my finance background.
At the same time, selling a business is a sophisticated process that requires specialized knowledge.
We considered that an investment banker would be able to provide us the expertise we needed to maximize the value of the business.
A big point in favor of hiring an investment bank was that, when you’re negotiating with buyers, it’s good to have a middle person who can be tough with buyers when necessary.
When you’re marrying two companies, you don’t want sour feelings between the parties long-term. Having a middleman helps.
We knew our business better than anyone else, and we’d pushed the company close to the finish line. We just needed the extra push, so we decided to hire an investment bank.
We interviewed a number of investment banks, among which was Vista Point Advisors.
There were a few qualities Vista Point had that made them stand out to us. In the interview process, they seemed to be more thoughtful about how each step of the investment banking and sales process would go.
Vista Point was methodical about the way they planned to present our company to buyers in order to maximize value.
We also sensed in them our own entrepreneurial hustle, which we valued in a banker.
When you’re an entrepreneur, it’s all about the hustle. Our initial meetings with Vista Point made it clear they were ready to go to bat for us.
We were also impressed that they only represented founders on the sell-side. Some of the other investment banks we interviewed worked both buy-side and sell-side. This raised concerns that those bankers would have to worry about maintaining relationships with buyers instead of representing us.
Vista Point didn’t need to worry about maintaining relationships with buyers. When they said, "We’re going to do everything possible to get you the best deal possible," we knew they meant it.
When running the transaction, it was important to us to stay proactive in putting together the investment memorandums and other documents.
We personally wanted to be heavily involved in the process. Vista Point was very supportive in that decision, and guided us while we took the leap.
During the whole process, Vista Point gave us the proper advice on how to get our ducks in order. From getting our IP agreements together to organizing our finances to creating the right positioning story, they coached us each step of the way.
One of the key contributions Vista Point made was in organizing a competitive process that resulted in a great outcome for our sale.
One of the first steps was bringing a large group of buyers to the table. We then narrowed down to a few of the most interested buyers.
It was important to Vista Point to keep the process moving quickly. When one interested strategic buyer was moving too slow, we moved along without them. We could do that because we still had other buyers on the table. As a result, we didn’t have to let the process lag because of a slow participant.
At the end of the day, we had one very interested private equity buyer and one strategic buyer to choose from.
The beauty of having multiple interested buyers is that we could use their terms and valuations as leverage to negotiate.
In our case, the private equity buyer had offered a high valuation for our business. The valuation was attractive. However, the challenge with private equity buyers is that they have a higher risk of not closing.
Our strategic buyer, on the other hand, was very likely to close as they were heavily invested in the direction we were taking our business. They also thought we would fit in extremely well in their organization. These two things made them our ideal buyer, but their valuation was lower.
Working with Vista Point, we were able to leverage the private equity buyer’s bid to get the strategic buyer to up their valuation.
The competitive process worked out very well for us because we were able to sell to the company we wanted at a valuation that made sense to us.
Selling our business was a whirlwind of a process. During the whole length of the process, Vista Point was on speed dial. They were available via call, text, or whatever other medium we needed.
They extended our team and performed like we would expect our best team members to perform.
In the end, we closed a great transaction. Our company that we had invested a lot of time and energy into landed with a buyer we felt would continue to advance our company’s values we had first instilled 15 years before.
Neal is now working on a new project: a gaming initiative called Solitaired.