“No Corp Dev team, no prior acquisition experience, just Series B. Can we do an acquisition in the next 6 months?”

The team went into the introductory call with a lot of reservations from their Founder on how to go about acquisitions with abundant clarity on one thing though - ‘need to acquire in the next 6 months’.

Due to the lack of an internal Corp Dev team, the client was searching for a partner that could not only assist them in locating possible targets that met their needs but also be engaged during the entire transaction phase. They had little or no desire to deal with investment bankers because they were a Series B firm. Before speaking with GrowthPal, the majority of the IBs they met with did not consider them to be a serious option.

Also, Edtech is a difficult space, since the valuation of companies also depends on the stickiness/ARPU of customers and depth of content in the right format/shape/language, etc. Both these require significant manual curation. They needed a partner who could understand their mandate requirement and could find the KPI data points that matter to an EdTech player.

EdTech as an industry is small compared to other tech industries but still possesses huge potential. Moreover,  the customer had a massive appetite for growth and out-of-the-box hunger to gain leverage over its competitor and gain maximum market share through roll-up and bolt-on acquisition.  

Finding Edtech enterprises with unique technology and specialized services under one roof, however, becomes difficult. Another intriguing difficulty presented in this situation was persuading sell-side corporations to support an acquisition by a very new company. To assist the customer locate the proper needle in the M&A haystack, the GrowthPal team had to put in a lot of strategic IB work.

“With no starting point, we had absolutely no idea about what we were getting into. With GrowthPal, we found a partner that not only acted as our Fractional Corp Dev partner but they also ensured that we were successful in our transaction and provided the much-needed end-to-end support.”

Within a month of understanding the customer's acquisition requirement, the GrowthPal team started shortlisting, screening, and qualifying potential targets for acquisition. The team created a top funnel of 500+ companies within just 2 weeks.

Getting the sell-side companies excited about this opportunity was a bit challenging even for GrowthPal’s seasoned team of analysts but they still managed to speak individually with 100+ companies to gauge intent as well as validate EdTech metrics that matter to the customer - total subscribers, active platform users, to name a few. The team collected information directly from the sell-side companies’ leadership team and quickly created a ‘Ready to Transact’ pipeline of 58 Edtech companies - a number that seemed unrealistic to the customer!

The GrowthPal team participated in each introductory call with the sell-side company and even did all the valuation exercises for the 6 companies that were most relevant. They collaborated to put together a ‘Letter of Intent’ to 3 companies and finally did due diligence for 1 company to ensure a successful transaction.

GrowthPal’s deal sourcing and transaction support services not only helped the company make a successful acquisition but also busted a lot of myths for their leadership team such as  

• Acquisitions are not for Series B companies; 
• We can’t do single digit $ Mn acquisitions and,
•  Only branded companies can make acquisitions.

“With GrowthPal as our Outsourced Corp Dev partner, we easily saved 3-4 months of effort on setting up an in-house team or working with an Investment Banker. They have easily justified their subscription & success fees and we are very pleased with the overall ROI with GrowthPal”

Working with the customer on their transaction was a very fun exercise for the GrowthPal team. We assisted them in drafting offers and Letters of Intent for the 6 offers that were rolled out. For each of these offers, the team acted as their Investment Banker for deal valuations, deal structuring, negotiations as well as stakeholder management between all the interested parties.

With this successful transaction (and similar others), the GrowthPal team is confident of being a preferred ‘Outsourced Corp Dev Partner’ of choice for all buy-side companies looking to grow inorganically with no in-house teams.