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Software M&A best practice: Navigating Uncertainty

5 key takeaways from Boardwave’s M&A workshop

collaboration with Frog Capital

The November M&A workshop was extremely popular, and focussed not only on acquiring businesses, but also being acquired. There was excellent advice from experienced software leaders and experts on what is required to make M&A deals succeed.

We were joined by a group of highly knowledgeable speakers who shared their war stories and experiences of different facets of M&A. This was followed by an interactive panel discussion & debate of the key themes, chaired by Frog Senior Partner, Mike Reid, Senior Partner at Frog Capital.

Here are the 5 key takeaways from a dynamic and highly engaging session:

1)    Growth at all costs is no longer the key focus of acquirers – gone are the days where acquirers (private equity or a strategic acquirer) are looking for growth at all costs. Investors are looking to invest in businesses with more balance, focused on combining more modest growth with more emphasis on profitability.

2)    Aligning purpose, mission and values not only helps navigate complex negotiations, but increases the cultural cohesion of teams who will be working together post deal. Getting the "deal" done is only the first step on your journey, if you are acquiring another company you will be joined at the hip for years to come, so understanding purpose, mission and values is important to ensure transparency and alignment.

3)    Communication is pivotal; balancing business as usual with a transaction requires coordination on who in executive and board teams are involved, making sure everyone is on the same page, and that focus on core strategy is maintained. Transactions can be very distracting to those in the management team who are involved, and can become a "full time job". Ensuring an efficient process gives you time back to keep running the business, so performance doesn't suffer while the management team turns its attention to M&A

4)    Employee engagement is critical for successfully integrating newly acquired businesses – experience suggests, whatever their original intentions, many Founders & owners leave after their business is acquired so for the acquirer building strong relationships with key team members is important. Understanding how to protect key members of staff perhaps one level down the organisation, who are key to its success, is vital.

5)    A systematic and evolving approach is required; whether in market mapping, negotiation, or post deal integration, there is enormous value from documenting processes and updating them with key learnings over multiple deals. Each deal might be a little different and one-size doesn't fit all. But many components will be the same, over time you can develop best-practices to ensure smooth sailing post deal.

Scale-Up Methodology: our partners Frog have a library of excellent podcasts and toolkits designed to share their collective experience, helping software companies to scale-up. You can find M&A focused content, as well as sales, product, finance and technology themes here.

Our Expert Panel

The speakers who started us off provided different perspectives across operational, market and transactional aspects of M&A::

·       Sion Lewis, CEO, Ciphr

·       Raphael Grunschlag, MD, William Blair

·       Cecile Marret, CRO, GoHenry

Integration is a key part of successful acquisition

Sion Lewis recounted some stories from his extensive M&A experience, much of which was gained from his time at IRIS Software, but also recent experiences at Ciphr. Among them, he provided a thought-provoking revelation, "I don't think I know an asset we've bought where the owner hasn't left before 18 months. It's just a thing. So you have to get used to that. And you have to assume that the owner's going to leave." Transparency is critical alongside early discussions on leadership roles and the wider integration process.

Lewis also emphasised the importance of employee engagement. He encouraged executives to take an active role in the new business, stepping into the shoes of the acquired company's workforce, even focusing on small details like addressing the state of the office kitchen. A people-centric approach to integration is paramount, nurturing talent and fostering a positive workplace has a transformative impact on employee retention.

Navigating global waters

Raphael Grunschlag, Managing Director at William Blair, shared some invaluable insights into the wider market. With roots in the San Francisco Bay area and a career spanning the Netscape IPO to present-day M&A and its complexities.

He highlighted the richness in European software talent and the interconnectedness of talent, capital, and M&A opportunities, with private equity playing a pivotal role.

Grunschlag highlighted how market perceptions have changed in the current economy and valuations are underpinned by the rule of 40. “We're now in a world where growth at any cost isn't rewarded as much. A balance of growth and a little bit of profitability goes a long way.”

Architecting success in uncertainty

Cecile Marret spoke next, offering strategic advice for navigating the uncertainties and complexities of acquisitions and the challenge of balancing transactional involvement with the demands of daily business operations. She spoke about the value of engaging the board in specific instances when there is strategic advantage.

Cecile emphasised the importance of alignment of purpose, mission and product vision, as well as understanding the personal and cultural dimensions during negotiations. Making sure everyone is on the same page when communicating between different languages, to check everyone understands things the same way is vital.

Interactive Panel Debate

Mike Reid, Senior Partner at Frog, chaired a lively, interactive panel discussion, which covered a comprehensive overview of acquisition strategies with Sion Lewis and Cecile Marret who spoke previously joined by ;

Richard Moseley, General Manager, Non-executive director & SVP, Rapid7


Matthew Elson, CEO, Evotix


Richard Moseley stressed the importance of meticulous attention to detail, likening acquisitions to buying a racehorse. Decision-making dynamics, cultural integration, and the risk of over emphasising growth at any cost were focal points.

Matthew Elson shared his recent experience of his business, Evotix, being acquired after Frog had invested in January 2020. He acknowledged the critical need for effective communication, ensuring alignment between parties involved in the deal.

Mark Beith brought forth the perspective of preparedness, cautioning against distractions that might lead to lower growth and revenue. With a focus on strategy over product gap, he recommended a systematic approach in navigating the acquisition landscape.

Cecile Marret, referred to a key aspect of share-for-share deals, stating that success requires not just synergy but also a foundation of mutual admiration and familiarity among the involved parties.She pointed out the high risk associated with divulging deal details to too many people, highlighting the need for discretion in the acquisition process.

In conclusion 

Mike Reid highlighted the importance of striking a balance between involving executives and board members, citing their distinct but complementary roles. The panel collectively emphasised the significance of documentation and continuous improvement, urging businesses to learn from each acquisition experience.

The workshop provided some lively debate and invaluable insights for businesses considering going down the route of acquisitions. The combination of personal narratives, strategic insights, and collective experience provided welcome actionable guidance in the ever-evolving landscape of M&A.

About our sponsor : Frog Capital

Frog Capital is a positive growth equity investor focused on funding and actively supporting European software scale-ups that make a positive difference in society.

Boardwave & Frog's mutual passion for making a positive difference and sharing collective experience made this latest event a memorable evening.



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