Lessons Learned From a $100M+ Exit (By Frederic Bastien)

I couldn’t have picked a better person to discuss exits for my first newsletter than Frederic Bastien, a good friend, angel investor (including with Optionality), and managing partner at Amiral Ventures.?

Before that, he co-founded Mnubo in April 2012, an AI business providing data analytics solutions for IoT manufacturers and service providers.

The making of the transaction

Only two years after launching, Mnubo received a $20 million offer but decided to decline, as it wasn’t the right fit.

They knew they were building something big, so they chose to continue, which led them to develop an exit strategy for future opportunities.

In Frederic’s words during an interview:

“If we want to build a massive company, we have to be ready with an exit strategy because unsolicited offers are going to keep coming.”

Fast forward to 2018, they raised a $16.5 million Series B from Munich Re/HSB Ventures, White Star Capital, McRock Capital, and other investors.

Things were going well until, three months later when one of the “GAFAM” players made a significant offer. It was a great offer for the founders and employees but not as attractive for the Series B investors who had just closed the round.

However, Frederic convinced the board that the best way to build something massive was with this acquirer.?

Once the new investors agreed, and after several back-and-forth meetings and technical due diligence, they realized they needed help with the transactional and financial aspects of the M&A process.

After meeting with a few investment bankers, they decided to hire Jonathan Guido from AGC Partners. AGC was crucial in guiding them through multiple rounds of approvals, including meetings with the cloud business unit CEO and a scheduled meeting with the group CEO himself.

Unfortunately, despite months of efforts the deal fell through due to the executive sponsor’s resignation. This caused uncertainty, delayed acquisition plans, and negatively impacted team morale and the personal lives of key stakeholders.

A few months later, while negotiating a strategic partnership agreement, the CEO of Aspen Technology contacted Fred to inform him that their plans had changed—they preferred to acquire Mnubo instead.?

Having learned from the previous process, Fred brought AGC back on board, and they were able to negotiate a win-win offer from Aspen Technology, exceeding $100 million.?

The deal involved a 90% upfront payment, 10% escrow, and a two-year cliff for additional stock compensation.

How did they prepare for an exit?

1. List of acquirers

Because the first offer in 2014 was unexpected, they didn’t plan for it. After rejecting the offer, they created a Trello board with around 70 potential acquirers.

In Fred’s words:

“By 2018-2019, we had conversations about partnerships with all of them. The top 10 acquirers on our list were already our partners.”

2. Hired a banker

They needed an expert for the financial and negotiation side of things, so hiring Jonathan Guido from AGC helped them control the process and provided valuable guidance. Jonathan was instrumental in getting all parties aligned on the path to success.

Frederic’s advice for founders looking to exit:

1. Secure a formal signed LOI as soon as possible

Fred advises founders to secure a signed Letter of Intent (LOI) from the acquiring company's board early in the process to avoid wasting time and resources on uncertain deals.?

Given their experience with receiving numerous offers in the past, Fred emphasizes the importance of this step. Many large players may try to bypass this by saying, “We never issue LOIs,” but this should not be an option for you or your board.

2. Hire a banker or advisor

Involving a banker like Jonathan Guido or a trusted advisor can help control the process and provide valuable guidance.

Founders often have emotional attachments to their companies, which can impact decision-making.?

3. Build relationships with acquirers early

Relationship building was one of the key factors in the offers Mnubo received and their eventual acquisition.?

By establishing and maintaining strong relationships with potential acquirers and partners, you significantly increase your chances of receiving an offer.

As Fred put it:

“They won't acquire your company if they don’t know it exists!”?

4. Know why private equity firms or partners want to acquire your company

Some acquirers may have hidden motives for the acquisition that aren't disclosed upfront. It's crucial to understand the true reasons behind why they want to acquire your company.

Fred experienced this firsthand when he didn't fully grasp the real motivations for the acquisition until after the deal was closed.

In his words:

“We made assumptions as to why Aspen Technology wanted to acquire us. The week after the acquisition, we learned that our assumptions were just a small part of the answer. They had another driver that they were not able to disclose during the process, which was stronger than what we thought…”

5. Take care of your team post-acquisition

In most acquisitions, founders and key decision-makers typically receive post-acquisition compensation, often referred to as ‘golden handcuffs’ or an earn-out. Usually, the acquirer focuses on securing the founders and a select group of key employees.?

However, in Mnubo’s case, Fred ensured that retention packages were offered to as many employees as possible (20+).?

This strategy not only increased the likelihood of a successful integration but also made the deal more attractive to employees who were already benefiting from their stock options.?

Fred believed that this approach would not only boost overall happiness but also enhance motivation, encouraging employees to stay and earn their shares.

Want to read more exit stories like these?

I share practical M&A tactics and personal stories from remarkable entrepreneurs, advisors, and deal-makers, focusing on the mistakes made and lessons learned when buying, selling, or building a business.

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