Preempting and Allaying Concerns About Rapid Growth in the Sale of Our EdTech Business
The Sale of Pear Deck
When our company’s revenue skyrocketed in a matter of months, we decided to run a transaction despite the conditions surrounding COVID-19.
Working with Vista Point, we were able to anticipate concerns over our 300% growth in 3 months and negotiate a successful merger with our ideal strategic buyer.
My co-founders and I started Pear Deck in 2014. Dan had a product design background, and Riley and Michal were former teachers, and together we developed the idea of Pear Deck to create instructionally effective classrooms as 1:1 devices became more popular in K-12 schools.
Knowing that teachers would eventually be in front of a room where every student had a device was a relatively new concept, and our goal was to make sure those devices served to enhance instruction instead of causing distraction.
After starting up, we were fortunate to reach profitability early in the company’s development.
In 2017, in order to professionalize our operations, we brought on a few investors in a Series A. Bringing on investors was the first inflection point in our company’s growth trajectory—we started growing faster and faster and were really well positioned. By the beginning of 2020, we were already working with over a thousand school districts and had users all over the world.
When the COVID-19 pandemic hit, we reacted quickly and developed a program that would first help schools in Asia, and then across the world, keep students engaged while learning over Zoom or other video conference.
That spring and summer of 2020 brought a lot of new users to Pear Deck. Going into the new school year, schools were unsure of how they would be conducting school—whether in-person, hybrid, or online—and for many teachers Pear Deck became an essential tool.
As a result, our revenue skyrocketed, growing 300% between July and November of 2020.
We certainly weren’t the only company growing quickly, especially in the education sector, but our growth attracted the attention of a couple interested acquirers in June 2020.
We’d had inbound interest before from a partner in August 2019, and we had wanted to see if that interest could be the catalyst for a transaction. At the time we weren’t formally engaged with Vista Point, but we contacted them to see if now was the right time to run a transaction and hire an investment bank.
After a deep dive into our data, Vista Point advised a process timeline that could take advantage of upcoming tailwinds. In effect, they advised us to wait.
That Vista Point advised us to wait in August 2019 was probably the best thing that could have happened. In June 2020, we were in a much better position when the two interested parties approached us to talk about an acquisition.
Having these two companies express interest in acquiring our company was flattering and exciting, but we also anticipated it would be a huge drain on our time.
We could tell we weren’t going to be able to manage the process well on our own, so we decided to officially bring on Vista Point.
Vista Point headed up the process by sketching out some target valuations for us and helping us shape the story. They built out a one-page teaser that they distributed across their network of both financial and strategic buyers, then later sent out confidential information packets to the right parties.
The work was collaborative between us and Vista Point, but Vista Point shouldered most of the work.
Having Vista Point as a partner in this process was critical for us because we were simultaneously managing this process as well as managing record-breaking growth on our side.
We were just trying to hold the plane together while flying at breakneck speed, and at the same time also have conversations with potential buyers. We couldn’t have managed both without Vista Point.
An important aspect of Vista Point’s support was in positioning our rapid growth to interested acquirers. From the beginning, Vista Point warned us that buyers might look at our rapid growth as anomalous and ephemeral.
Having anticipated this concern, Vista Point was able to build out the credibility of our revenue, showing buyers that the circumstances of our rapid growth were not just a one-time blip, but a catalyst unlocking future growth. As a result of Vista Point’s foresight and positioning, concerns over our rapid growth were a non-issue.
We scheduled management presentations in September with several parties, from which we received a handful of IOIs. Looking over the IOIs, we determined to take about half those parties into the next round, for whom we opened a data room, allowed the companies to do a ton of diligence through October, then set a final bid deadline.
Something unique about our transaction was that it was done under COVID conditions, meaning that we conducted 100% of the process virtually.
We ran the entire process without meeting in-person all the way through closing, which was possible because Vista Point facilitated a schedule that enabled us plenty of face time with the various parties.
When things started to get more serious, we spent time getting to know the parties over casual get-to-know you calls during off-hours and weekends. By the end of the process we felt like we had really gotten to know the parties quite well.
We had a strong sense who would be the right fit, not only financially, but in all the other ways that we cared about.
In choosing a partner, we were looking at a number of factors. First and foremost, we wanted fit in terms of culture and mission. Focused on K-12 education, we wanted Pear Deck’s home base to be a company that could help us fulfill the mission faster and better than we could on our own.
We also wanted a company that would be a good home for our customers. By the end of the process we were looking mostly at strategic buyers, so evaluating how Pear Deck would fit into the acquiring companies’ existing products was an important consideration.
And of course, enterprise value had a strong influence on our final decision.
We used these criteria to evaluate the remaining parties in the process, which was extremely exciting and competitive to the end.
Of the final round bids, all were good options for us. After an evening of last-minute negotiations, we entered a really short exclusivity period.
The process was intense and fast, but had an amazing outcome. We were able to successfully close the deal on the last day of exclusivity with GoGuardian.
I consider our outcome a dream come true, for us as founders and for our investors. Our merger with GoGuardian offers an exciting roadmap we can pursue together, plus a strong company culture and a great home for our customers and employees. We were able to tick off all the boxes on our rubric and we feel super lucky.
Being on the other side of the transaction, it’s incredible to me how much we didn’t know and the amount of good advice we received from Vista Point.
Vista Point’s contribution was completely transformative to the process and there’s a 0% chance we would have had such a good outcome if we’d tried to manage the process on our own.
If you’re a founder, don’t be afraid to involve expert bankers who not only get you in front of buyers, but also bring a process to the table and tell your story in the best possible way for the best possible outcome.