The Secrets of Scaling to Acquisition

The software M&A (mergers and acquisitions) market saw its best year yet in 2020, and it’s on track to see another record year in 2021. VC-backed startups are buying other startups at the fastest pace in over a decade and North American startup investment totaled 155 billion this year so far. Tech is on fire and it looks like it’s only going to burn hotter in the coming years. But how does a company achieve a 10 million – or even a 10 billion dollar valuation?

This week I talk to Thomas Smale of the M&A consulting firm FE International about what it takes to scale companies at any stage of growth and get them acquired. Thomas founded the company as a side hustle when he was in university and has grown it to over 100 employees. It’s pretty safe to say he knows something about building companies.

About the episode

Thomas has sold hundreds of businesses in his 10 years in M&A and understands what it takes to hit your target valuation – but you have to know where you’re headed if you want to draw a roadmap to get there. We discuss company benchmarks and how he helps companies decide on which areas of the business to focus on and when’s best to bring in outside help. It’s no surprise to founders out there, but hiring is a huge piece of the scaling puzzle.

Conversely, focusing only on what you’re best at can often be the biggest distraction, and the biggest pitfall to growth. Maybe you’ve released 10 new features in the last month, but who’s buying if you don’t have a sales team building your pipeline?

Most founders tend to focus on what they’re good at and what they’re comfortable with. We work with a lot of technical founders and if you look at their average work day they’ll spend 95% of their time on something product related, and 5% on marketing and everything else. If you’re building a technical business you have to be somewhere in the middle, and if you’re not going to split your time up reasonably between product and marketing, you have to hire someone to take it on.

Thomas Smale, FE International

In this episode, we discuss Thomas’s journey in entrepreneurship and how he helps companies on their way to acquisition. Some highlights include:

• What founders can do to prepare for an acquisition
• Goal setting and making the right hires
• Common distractions to scaling startups
• How the team at FE International helps businesses find areas of focus
• How to grow an M&A company and market trends

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