Tag: M&A

5 M&A Insights from the Choose Energy sale

5 M&A Insights from the Choose Energy sale

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As I wrote about last week, Choose Energy was sold earlier this year. Beginning in 2015, Choose Energy had multiple casual M&A discussions. But, we did not formally engage until we knew we were ready as a company.

With a few months delay giving me a bit of clarity, I wanted to share some advice / insights that stand out to me about the process and how to prepare for our own deal:

  1. M&A is hard. Very, very hard. Finding the right buyer, at the right price at the perfect time in their strategic initiative game plan is rare. Choose was lucky in that the company had inbound interest. And even then, not easy. (Jason Lemkin at SAASTR has documented just how hard this can be for companies with ARR type revenue and how they should aim to sell at local maximums.)
  2. A clear internal deal champion at the acquirer is required. And you need that individual and their team to have a clear path to continued success after the deal.
  3. Deal fatigue is real. – for both sides. I have raised Series B & Series C capital from a combination of strategic and VCs. Those processes are time consuming. M&A is double or triple that. Have a great team in place, hire great advisors and have an experienced CFO. (We were lucky to have David Yi, a serial KPCB CFO) The amount of work is unexpected, even for someone like me that expected it. To get through it you really do need to create a bond with the acquiring team and “gang up” on the advisers. Part of their job is to be fall guy so the buyer & seller can rally around a common enemy 🙂
  4. Be prepared for regulatory requirements. For companies in the energy & industrials space that capture proprietary data and engage with federal and state level regulatory bodies, be prepared! Good process as you grow the company saves you from some major headaches down the line as lawyers dig through diligence and process documentation. Again, hire a great CFO, even part-time.
  5. Enjoy the ride. There is something very odd about the completion of a sale. You go from being independent and controlling the asset to suddenly having a disbanded board and an entirely new organization structure, reporting structure and incentive structure. Even if your acquirer provides barely any oversight post acquisition, there is still a mental change. For me, this was one of the oddest feelings… and I liked our acquiring team! Enjoy those last few months of corporate independence.

Once a deal is complete there is an entirely new set of issues to address around corporate communications for employees, customers, service providers, and regulatory agencies. I will write about that experience in the coming weeks.

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Choose Energy is acquired, hat tip to Jerry Dyess

Choose Energy is acquired, hat tip to Jerry Dyess

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Last month Choose Energy was sold to RedVentures.

I joined Choose Energy as the Director of BD in June 2012 in coordination with the Series A investment from Kleiner Perkins. I was the third employee and first non-engineer. The range of highs and lows we experienced as we grew the company from under half a million in annual revenue to over $10M in ARR were dramatic. There were many unique components to the CE growth that I am look forward to diving into over the next few months. But now that the deal is done and public and was successful from both a financial and educational perspective, there is one major thank you I need to give:

Thanks you, Jerry. Jerry Dyess is the Founder & CEO of Choose Energy. At first glance Jerry doesn’t “match” the Silicon Valley CEO fit. And frankly, early on in his tenure at Choose, he didn’t. Based in Plano, Texas with Louisiana heritage Jerry (admittedly) never felt totally comfortable in a San Francisco board room. Instead of board discussions he preferred customer conversations, employee engagement and products that drove immediate revenue and feedback. Jerry never explicitly stated this but if I had to summarize four of his main mantras, they would be:

  1. A small company grows into a big company through many small steps
  2. Revenue follows value provided. (A relationship that many SV firms tend to believe is the inverse)
  3. Hire the best people and get out of their way
  4. Stay lean. Excess cash causes problems. See point 1!

With the deal now in the rear-view mirror, what I am most proud about and thankful for is working with Jerry from the first days after the Series A to final day of the sale. Jerry is the consummate entrepreneur and I have no doubt that the ultimate success of Choose Energy was driven primarily by his product vision, his employee and customer empathy, and his market understanding. He transformed as a leader and I am proud to say I worked alongside him as his Chief Revenue Officer in our final year. In today’s transient workforce, I would like to believe that our enduring run at Choose Energy was pretty special.

And I can’t wait to see what he does next.