Last week Michal Truban announced that he is selling the company he started with Pavel Stano in a dorm-room 18 years ago. For some it is an end of an era and for others it’s a new beginning. I think he explained his reasons well. In our blog post we tried to explain the company’s reasons for going into this new setup.

A transaction like this is always tricky to manage. You want to make sure the Sellers are getting a good deal, the team sticks around and the Buyers believe that they are paying a good price for the company. If you think about it – these things go against each other in most cases. If the seller gets a great price – the buyer might not take it. And even if they do – it’s then up to the management team to deliver on such a high valuation. So how do you make it all work?

Sellers

For the Sellers in many cases the price is a defining factor. They want to make sure to not just get a fair price but to exceed what even optimistic business plans would give them in return. In the hosting business base valuations are typically around x6 EBITDA but a market leader with healthy financial results (growth rates, profitability, market footprint) can command a much higher multiple – which WebSupport did.

Often times Sellers look at similar deals happening in the region with similar players to look for comparable valuations. However while the market prices are very important – there are other factors. In WebSupports case the fact that Michal is going into politics played a factor. Other factors included that the company would have the potential to lead in many aspects of the acquiring group – hence cementing the legacy of the founders.

The deal came also with the option to reinvest some of the proceeds, allowing the founders to continue participating in the WebSupport story. And so when you look at it from this perspective I’d say the Sellers got a very good deal.

Team

Any transaction of the company you work at creates uncertainty. In the past few years WebSupport found its footing and built a healthy performance culture that was comfortable for most people. The uncertainty obviously affects. So how can any deal be good for the team?

There are a couple of things. Getting comfortable can be positive, it also can mean your team needs to be challenged more. We have already started spending time with web-hosting companies in other countries to learn how they do things. This deal allows us to do a lot more of that and to get challenged by experienced people from around the world. Our board includes people from Google, GoDaddy, Ebay and the private equity world. It also allows us to contribute on a much larger scale and fulfil some of the ambitions we have in our strategy faster. Going more international and becoming bigger gives us scale we would have had to build in the next 3-5 years.

Looking at the valuation and the business plan going into it – its ambitious. But we built that plan and it hasn’t changed. And so – with the goals being fair and the advantages of experience, scale and a deep wallet for acquisitions – I think the Team is getting a good deal too.

Buyers

For the Buyers the difficult part is to assess what they are actually getting. Loopia/Axcel have been awesome in asking the right questions and focusing on important things. Looking at numbers is easy – understanding what they mean and how they will develop over time is hard. A management team can provide a business plan, but is it believable? First of all the Buyers are getting an amazing brand with healthy technology and a fantastic team. Over the course of the past 3 years we grew double-digit every year and have been able to deliver on the goals we set ourselves.

We have faced immense challenges on the tech side. We learned painful lessons while integrating acquisitions. These are all valuable things for a hosting group. And so the trust the Buyers are putting into the company by paying a double-digit million figure is not based thin air. It’s based on a track record that we have shown both in financial performance and in the ability to execute key initiatives. We are a cool team too. Add that up and the Buyers are getting a good deal.

Not done yet

The deal is signed and the closing and completion steps are taking place as I write this post. This process has been going on since August 2018 and I am tired as hell. But I am looking forward to getting started on this new journey. If you are ever in my position – take heart. The process is tedious, stressful and long. You are basically in the middle of it from day one trying to manage expectations while keeping an eye on the whole process. But at the end it’s one of the most fulfilling experiences you can have in business. I am grateful I was able to be a part of it. I want to thank Michal, Ivan, Stano for the opportunity of a life time.