Part III: M&A Founder Lessons

Companies are bought, they are not sold. Buyers typically pursue acquisitions to:

  • Gain market share, increase revenue and customer logos.
  • Remove a competing business from the market.
  • Expand their product lines and technical capabilities.
  • Expand in-house technical and sales expertise quickly.

In December 2018, Autodesk acquired PlanGrid for $875 million for all the reasons above. I worked at Autodesk, assisting in integration for fifteen months in the newly formed Autodesk Construction Group.

Integrating a startup into another company is like jumping into freezing cold water — there is an initial shock to the entire system. As founders, it was important that we took care of our team and ensured our products continued to work well for customers.

This post is for anyone who has a signed LOI or term sheet with an acquirer and is looking for lessons learned on how to navigate the new world — what to anticipate and what to try to avoid. For folks who are talking to corp dev, read this. (For founders who want to sell their company right now: It is mentally, physically and emotionally taxing to live two competing realities — to envision two competing futures for your startup at the same time. Your job is to preserve optionality and make all options (including running your startup standalone) available if you want to entertain an M&A conversation. Do not risk slowing down in execution and growth to talk to corp dev).

Lesson #1: Vision

After an acquisition, most companies prioritize product integration as their top concern. In our case, this was true as well. However, true product integration is often a lengthy and unsatisfying first priority, as it can take years to complete if it ever happens. Unless the architecture is exactly the same, and products somehow snap together nicely, the result is often a hodgepodge of incompatible products. The costliest challenge of focusing on product integration as the number one priority is that it overlooks more critical needs. The top priority should have been establishing and aligning on a shared vision.

In 2019, we needed vision from leadership, and it would not come for several quarters. It wasn't because of a lack of desire; there are just a lot of dependencies at a large company, and it takes time to run any decision up the flagpole.

In the early days, our teams, revenue targets, incentives and sales processes were not integrated. This led to construction customers receiving multiple sales calls from different teams within the same company, resulting in ARR churn and ARR shifting between product lines.

Takeaway: Vision is the foundation of all conversations and execution. Clear communication from leadership on vision brings clarity to what we’re building together — and how. Vision gives the blueprint for marketing, comms, sales and support to have productive conversations with our customers.

Lesson #2: Team

After the acquisition, a team member expressed, "We never had the chance to mourn PlanGrid's death." Within eighteen months, approximately 40% of our team left. Some believed we had faltered in the market and were absorbed by our competitor, while others saw it as an opportunity for new leadership roles and more direct reports.

We had four separate startup orgs within Autodesk Construction wondering how everyone would fit together. When reporting structures are not clearly defined, some individuals self-select out, while others start to become more competitive. 

Anytime there is an org change and new reporting structure there will be turbulence, and we experienced this emotional turbulence at full scale. Retention packages were put in place to retain the strong performers, many of whom have had amazing careers at Autodesk. I did my best to motivate the team and set them up for success before I passed the baton.

Takeaway: If your handcuffs are multi-year, be selfish about how you distribute retention packages. Prioritize the teammates who you can’t live without in the new world. There will be a shock to the system and it is best to make decisions promptly, communicate them quickly and get back to execution.

Lesson #3: Go-to-market motion

With the newly acquired startups came a dozen new products for the new construction division to sell. The company hired a consultant to help enable and train our folks on how to message and cross-sell. Meanwhile, incentives were put in place to encourage sales reps to cross-sell all construction products for the first year.

What surprised me the most was how little cross-selling happened despite the opportunity to make more money. Top sales reps told me that what prevented them from selling other products was that it would delay deals. They’d rather stick to the script and sell products they were familiar with. 

We needed hands-on, in-house leadership to learn how to sell a newly formed platform and coach the team on how to do it. The sales team would eventually excel at representing the different product lines, but I left before I saw it happen.

Takeaway: There are certain training programs where consultant trainers are good options: public speaking, empathy, and industry standard sales methodology such as MEDDPICC. And then there are mission critical enablement and training that must be owned by the company and leadership.  

Lesson #4: Back-office systems

During the merger, we had to drop all our point solutions and startup tools to turn on all the enterprise “winners.”  We wasted hours on slow, cumbersome software and were thrown into confusing legacy workflows. The new tools we were given not only made us less productive, but also made us continually frustrated and angry. We didn’t have software to help us strategically run our business. This is what inspired us to build our new company TigerEye

Meanwhile, the team had an immune system response to our new tools. Another acquired startup refused to turn on the systems and would fight headquarters for another year. Despite the intense need to communicate, we couldn’t see each other's calendars to schedule time to talk. 

Takeaway: Back-office systems integration is boring -– it’s blocking and tackling — but to function as one  team, we must use the same tools. We made the right decision to act quickly on system integrations, but we lost valuable teammates. Great people want to use great tools to do their work.  

#5: Product Integration

It is almost impossible to start product integration without first choosing the engineering leader, defining the engineering culture and uniting the engineering team. Without leadership, any conversation on whose architecture or tech stack or login system is better will likely trigger immediate in-fighting. Assuming a single engineering leader is now in charge, the brass tacks will include what libraries to use, design-system choices, dev tool vendor selection and integration of each overlapping product functionality. 

Our construction division prioritized integrating login systems, because it’s a terrible experience to make a customer log into different product lines. 

Takeaway: Unification of the engineering team and products is gnarly and challenging. And the larger the team the harder it is. Put strong leaders in place and prioritize their retention because most great engineering teams prefer building new products than integration work.  

Final thoughts

For folks who are considering acquiring another company, there may be real strategic benefits. But it also comes with a hefty tax. Beyond the cost of the acquisition itself, the integration process can be time-consuming and challenging, and it often results in a thrashy transition period, and several products that might not fully integrate. But this turbulence can be navigated smoothly with clear vision. 

As a founder selling your company, be warned that integration is a painful process. But it might be the best path forward for the company, customers and team. In 2018, we hit a wall in terms of TAM in SMB and midmarket and needed a quantum leap up to enterprise. We had two large competitors whose products and teams were enterprise-ready and this was a vulnerability for us. I was given the choice to continue a fist-to-fist combat on two separate fronts or to join one to go fight against the other. In the end, I wanted a financial outcome for everyone who had worked hard for, and believed in, PlanGrid.

This article was previously published in TechCrunch+  last week. It’s the second post of a three-part series focused on lessons learned from my days leading PlanGrid. Part one is here. Part two is here.