The Sale of PSTrax: Running a Competitive Process to Find the Right Partner

The Sale of PSTrax

Transaction Details:

• Company: PSTrax
• Vertical: GovTech, Field Services
• Founders: Scott Bergeron, Cliff Long
• Transaction Type: Investment
• Investor: Level Equity
• Location: Littleton, CO
• Financial Advisor: Vista Point Advisors

The fact that we had real choices, because of the competitive process Vista Point put together, is what I think made the deal happen.

When it happened, it was wonderful. It was the deal we wanted, structured the way we wanted.

Origin & Growth

The whole idea for PSTrax came from my daughter, who was a paramedic, back in 2009. There was a major firetruck accident in Boston at the time, and my daughter’s maintenance captain in Colorado was trying to figure out how to make sure truck checks and equipment checks were being done consistently and documented.

My daughter called me up and asked, "Can you build something to help with this?" And I said, "I don't know for sure." They asked Cliff and me to come up to Blackhawk and look at their situation, which was all paper and spreadsheets, and asked if we could help. It started as an app for truck checks, but it quickly turned into a complete assets and inventory management system.

We built them an original version, and then learned that no two agencies do things the same way. So we had to figure out how to configure it for each agency. Then we started knocking on doors and signing up our first customers. As word spread, it grew from there.

Growth was very slow at first. First responders are quick to respond to a call, but slow to adjust procedure, especially to a brand new startup. It really didn't start taking off until 2018 or 2019. Then COVID hit, and people wanted to take better care of their equipment and find better ways to do things. Our system was what they were looking for.

We kept developing the product based on feedback from first responders, and every one of them had feedback. No two agencies are alike, and a lot of agencies still run on paper checklists or spreadsheets. There are a lot of moving parts to fire trucks and the equipment in the stations, and everything takes a beating. Half the time the left hand doesn't know what the right hand is doing. Our system helps centralize and communicate the timelines and workflows of everything first responders do on a daily basis.

Deciding to Pursue a Transaction

The trigger to pursue a transaction was an interesting situation. We had been working with our minority investor, Growth Street Partners, and they brought an offer from a competitor to the table.

We had no real intention of selling a majority of the company, but the offer was pretty substantial. We knew we didn't want to sell to a competitor. We wanted to keep doing this our way. So we entertained the idea of going through a full transaction process.

We started asking: is the market right? Are we ready? Cliff and I are both in our 60s. Cliff had already retired and was looking for more liquidity. We talked it over with Growth Street and with Vista Point and decided to make the move.

Choosing to Work with VPA

The process was fairly straightforward, but none of us had ever done this before. We had no idea what to expect.

You don't know what you don't know. Just because you've built a business doesn't mean you're an expert at selling one. There was too much on the line to attempt this on our own.

Growth Street had worked with Vista Point before and suggested them. We interviewed several investment banks, and we all had to be comfortable with the choice. Some of it was gut feeling, but over time you get a sense of whether a firm is genuinely prioritizing your interests or whether you're just another deal to them. With Vista Point, it felt genuine. After talking with Jeff Bean and Mike Lyon, it was clear they were who we wanted to go with.

There were a lot of people involved who needed support in so many ways throughout the process, and Vista Point did a great job with that. There are also a lot of emotions tied into something like this. There are retirements on the line, bank accounts on the line. Vista Point did a really nice job of settling our nerves, keeping things moving, and settling the nerves on the other side too. Looking back, the deal could have gone sideways a dozen different times, but they have seen it all before and they're experts at what they do.

And the support team behind them was something else. Sarabeth, who coordinated so much of the day-to-day on our end, was extraordinary. Sometimes she would just be typing away quietly at the table, but she was coordinating all the little things that go on with something like this. The support from everybody at Vista Point was really something.

The Competitive Process & Finding the Right Partner

What Vista Point brought was expertise and the depth of that support team. They were as entrenched in the process as we were. There were many hours, before and after normal work hours, where they were just going to work on this. They flew out to Dallas with us, walked us through what the clauses meant, what the red lines meant. They wanted to make sure we were comfortable with everything coming back, but they also made their case for how they were seeing things.

The experience and perspective they brought on how to read the deal from both sides, that's really what made the difference. There were plenty of reasons this deal might not have made it all the way to the finish line, but it did. A big part of that was the reassurance from the Vista Point team who had been down that road many times before while we were completely new to this. We didn't know what it was going to look like or how many questions were going to be asked.

Vista Point built the story, created the right materials for the right prospective buyers, and got everything out to them. We did a lot of introductory calls, and Vista Point did a really nice job of figuring out who would be the best fit for a company like ours and bringing all of them to the table in a competitive process.

It was almost like a bid war. They narrowed it to the top four or five who were really serious: buyers who had strong numbers but also looked like they would be good partners. That was what we were looking for as much as anything else. The dollars and cents are going to be comparable across a lot of buyers, but who you ultimately pick is someone you are going to live with. This is very much a marriage. You have to figure out if it's someone you can work with.

We kept coming back to the buyer we ultimately chose, Level Equity, and asking: these others are really good, but are they as good as Level? Level had a clear mission to make us better and help us grow in a mentoring and sponsoring kind of relationship.

The competitive process gave us enough choices that we could decide which path to go down. It wasn't a take-it-or-leave-it situation.

There were four of us who were major decision-makers, all nearly equal in shares. Nobody was saying, "It's my way or the highway." We respected each other as partners, and we respected our financial sponsors at Growth Street and took their advice.

The fact that we had real choices, because of the competitive process Vista Point put together, is what I think made the deal happen.

The Outcome

Once we got to the final stages, we kept thinking it was going to close, and then there would be two more questions out of a thousand to answer. But at the very end, it went smoothly. It was basically just a Zoom call and we were done.

When it happened, it was wonderful. It was the deal we wanted, structured the way we wanted.

There were no real hiccups at the end, and none from Vista Point's side. Any friction was internal. We didn't all see things exactly the same way, and we had to make some compromises along the way. Getting four decision-makers with different personalities to move in the same direction is hard when this much is at stake. But it turned out very well, and we were all excited about the outcome.

I'm still passionate about the company, the growth potential, and where we're headed. A financial event like this shouldn't radically change your day-to-day life, and it hasn't changed mine. In December, I transitioned from the CEO role into Chief Brand Officer so I could focus on what I enjoy most: working directly with customers, understanding their challenges, and demonstrating the value of the PSTrax platform. At the same time, we were able to bring in Tim Callahan as CEO, a level of executive leadership that wouldn't have been possible without the financial strength the transaction provided.

A lot of pressure gets lifted when something like this comes together. Getting the right people into the right seats makes a huge difference. When you've got deeper pockets to make those decisions, you build a better organization.

We bootstrapped everything up until 2022. Every hire came out of our own wallets, with no loans or bank lines, so we were always cautious. We're still cautious, but now we're cautiously optimistic. We always want growth to ratchet up faster than it does, but there is a lot of good work and expertise coming from the Level team, and I'm really excited about where we're headed.

Founder-to-Founder Advice

The biggest thing is making sure you have your ducks in a row, your paperwork and your processes, because everything will be asked for at some point. If you can work with a major accounting firm ahead of time, do it. Imagine every detail the IRS would ever ask you, and multiply it by 10.

The people who want to spend money on you assume there's a hidden agenda somewhere, so they're going to vet every single thing you've done for the last 10 years. Be ready for that.

When you're in the middle of it, you can't really talk about it. But once you come out the other side, most people say, "You actually made it through?" The vetting process is truly a vetting process. Just prep. Have everything ready that they're going to ask for, because you'll spend an awful lot of time trying to track it down if you don't.

It's a big commitment, but it has a really good payoff at the end.