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<\/figure>\n\n\n\nPaladin co-founders Ole Morten Amundsen (left), James Creech (center), and Thomas Kramer (right) proudly wearing Paladin cufflinks at James\u2019s wedding in October 2022.<\/em><\/p>\n\n\n\n But first, a bit of background\u2026<\/p>\n\n\n[et_pb_section global_module=”44763″][\/et_pb_section]\n\n\n In 2016, I started an influencer marketing software company called Paladin with two co-founders. Our COO Thomas and I had previously worked together at an adtech startup, and our CTO Ole and I met working at an early creator network.<\/p>\n\n\n\n All three of us had experienced the pain points of running influencer campaigns firsthand. Back in those days, it went a little something like this\u2026 Get a brief from the client, search for the right influencers on Instagram\/YouTube\/Vine, track their information in a spreadsheet, ask the influencers for screenshots of their social media analytics, and put everything together in a powerpoint presentation you\u2019d email over to the client.<\/p>\n\n\n\n The whole process was tedious, time consuming, and expensive.<\/p>\n\n\n\n So we started building some tools to make our lives easier. And eventually we realized we weren\u2019t the only ones banging our head against that wall. Every other brand and agency that wanted to work with influencers was struggling with the same challenges.<\/p>\n\n\n\n That\u2019s what inspired us to take the entrepreneurial leap \u2013 conviction that we were solving an important problem and a healthy dose of youthful naivete.<\/p>\n\n\n\n So after several months of R&D and early customer development, we officially launched Paladin in April 2016.<\/p>\n\n\n\n The original Paladin logo from our April 2016 launch.<\/em><\/p>\n\n\n\n We scraped together what little money we had to help get the company off the ground. Thomas invested his wedding funds, I contributed the down payment I was saving for a house, and Ole returned his brand new Tesla to the dealership so he could put the money toward the business. The three of us were all in.<\/p>\n\n\n\n We had barely enough to scrape by and were burning money every month. So we listened to what customers wanted and sold like crazy until we got to break even.<\/p>\n\n\n\n The next six years were a blur. We focused on continually improving our technology platform, growing the team, and scaling customer acquisition and revenue growth.<\/p>\n\n\n\n Much of it was your classic two steps forward, one step back entrepreneurial journey. There were exhilarating wins, frustrating losses, and everything in between.<\/p>\n\n\n\n After a few years, things really started to come together. We had the right team in place, knew what problems we were solving, and just kept executing.<\/p>\n\n\n\n From time to time, we\u2019d receive inbound interest from potential acquirers, but these inquiries became more frequent and serious in 2021. The company was healthy, profitable, and growing year over year.<\/p>\n\n\n\n We hadn\u2019t necessarily planned to sell the business at that time, but a few factors convinced us to at least explore the option.<\/p>\n\n\n\n For one, influencer marketing software was becoming increasingly crowded and competitive. We were up against larger, well-funded competitors and had to be deliberate about our strategic planning and differentiation. We knew that to be a leader in this market we\u2019d need to raise a lot of money to accelerate our growth or find a strategic partner who shared our vision.<\/p>\n\n\n\n The other contributing factors were personal motivations. Both Ole and Thomas wanted to spend more time with their young families, and all three of us had other projects we wanted to pursue when we had more bandwidth.<\/p>\n\n\n\n So for a variety of reasons, it made sense to test the waters with potential buyers. <\/p>\n\n\n[et_pb_section global_module=”44763″][\/et_pb_section]\n\n\n We spent a couple months getting organized \u2013 putting our materials together (CIM, financials, and data room), hiring a banker, and mapping out potential partners.<\/p>\n\n\n\n After that, we spent about 4 months in exploratory conversations with interested buyers, trying to find the right strategic fit and future home for what we\u2019d built. We then narrowed the field, evaluated the various offers, and proceeded into due diligence with Brandwatch, which ultimately acquired Paladin in early 2022.<\/p>\n\n\n\n Here are the 7 things I learned navigating the M&A process…<\/p>\n\n\n\n There were a few things I stressed when selling Paladin.<\/p>\n\n\n\n The buyer had to love our product. They needed to be excited about what we\u2019d built and the problems we were solving.<\/p>\n\n\n\n The buyer also needed to value our team. We weren\u2019t interested in an acquisition if it meant reducing headcount.<\/p>\n\n\n\n And finally, it had to be a great culture fit. If we were going to join another company, they had to share our vision and our values.<\/p>\n\n\n\n As a founder, you should also think about what’s important to you personally. Are you willing to stay on, or do you want to work on new projects?<\/p>\n\n\n\n It\u2019s easy for M&A conversations to drag out, so be sure to qualify each buyer’s interest upfront.<\/p>\n\n\n\n Avoid talking to companies that don\u2019t have the funds or competitors on a fishing expedition. They\u2019ll just spin your wheels.<\/p>\n\n\n\n I learned this one the hard way. We had a couple of competitors I thought would be a natural fit for us (e.g. they had a larger domestic footprint whereas we had a stronger international presence, or they had a great influencer discovery product but our campaign management and reporting features were more robust). But at the end of the day, we presented more strategic value to companies looking to add influencer marketing capabilities to their offering.<\/p>\n\n\n\n The takeaway: set clear expectations about your process and timeline. Focus on buyers that have strategic fit and a clear mandate to pursue a deal.<\/p>\n\n\n\n There\u2019s a natural tendency to avoid or downplay your company\u2019s weaknesses. Instead, you should tell buyers all the reasons they shouldn’t acquire your startup.<\/p>\n\n\n\n Why? They’re going to find out eventually, so it’s better to be transparent upfront. It’ll save you time and headaches later.<\/p>\n\n\n\n This also helps you qualify the buyer’s interest. Do they have the conviction to work through the tough stuff, or will they get cold feet at the first sign of trouble?<\/p>\n\n\n\n I remember being nervous about a meaningful part of our revenue that came from third-party referral fees. I was worried that the buyer would discount this revenue for valuation purposes, but it ended up not even being a concern during due diligence. <\/p>\n\n\n\n For most founders, selling your company is a first-time experience, so it helps to bring in experts.<\/p>\n\n\n\n Start with a banker or advisor who knows your industry and is stage appropriate. A great banker will source potential buyers, negotiate key terms, and be the \u201cbad guy\u201d when needed.<\/p>\n\n\n\n Hiring an advisor also frees you up to continue operating the business and hit your targets. There’s nothing worse than poor company performance during a sales process, so make sure you can stay focused on delivering good results.<\/p>\n\n\n\n Not only that, but research shows<\/a> that hiring an external advisor results in ~25% higher valuation premiums than trying to manage everything yourself.<\/p>\n\n\n\nOur Startup Origin Story<\/h2>\n\n\n\n
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Scaling the Business<\/h2>\n\n\n\n
Navigating the M&A Process<\/h2>\n\n\n\n
1. Be clear about what you want.<\/h3>\n\n\n\n
2. Don\u2019t waste time with window shoppers.<\/h3>\n\n\n\n
3. Tell people why not to buy your business.<\/h3>\n\n\n\n
4. Surround yourself with trusted advisors.<\/h3>\n\n\n\n