Elemica Inc., a cloud software company, was working in 2019 with behemoths such as BP, Shell, Exxon and Dow Chemicals to help them manage their supply chains. Retired CEO and Board Member John Blyzinskyj says then roughly a million transactions flowed through the software every day — the equivalent to some $700 billion in commerce annually in a mission-critical application. That generated a lot of interest in Elemica.
Blyzinskyj says he was getting inbound calls weekly from prospective investors who wanted to acquire the company. It had developed a big brand within a small niche within the industrial sector, and was growing rapidly and profitably. Given all the activity and inbound inquiries, it seemed like the right time to sell.
This would be the second time Blyzinskyj sold Elemica. The first sale in 2016 was on behalf of the original investors. They had brought Blyzinskyj in to help turn the company around. There was no majority shareholder. Instead, there was technically about 20 different shareholders, so nobody had a majority interest.
"The board had decided in 2016 that they wanted to sell the company," he says. "And then part of my role was to ensure that all of the shareholders were represented and their views were known and to get a good outcome, which we did do, on behalf of all of them. But because there was a diverse set of investors, it took quite a lot of management. So, each step of the sale process was a little bit delayed simply because I had to make sure that everybody was on board."
The second time around, he says, was much easier. There was one principal investor, private equity player Thoma Bravo, and they were very professional about the whole process.
"That's what they did for a living and so the decision-making process was incredibly fast," he says.
The first time around in 2016, the process took around 13 months. The second time, it was more like six months.
What Blyzinskyj says he learned from the difference between the two experiences is to prepare well in advance.
"Although the process of a sale takes anywhere from six months to a year, maximizing the benefit, the sale price and the terms and conditions on behalf of the investors, you really need to plan for that well in advance," he says.
During the second transaction, he and the investor formed the strategic, longer-term plan together, and then they kept to that plan. That's important, he says, because as a CEO, part of his responsibility was the sustainability of the company and the operating performance beyond the day of the transaction.
"You don't run to the line with an exit. You've got to run past the line and you've got to make sure that the company is sustainable for the longer term," he says. "Not just prepare for a sale but prepare the company to make sure that it's operationally efficient for the long term."
Blyzinskyj spoke at the Boston Smart Business Dealmakers Conference about what he learned from selling Elemica twice. Hit play to catch the full conversation.