Exit by Choice, 2023: preparing the Tremend sale, the buyer funnel and the deal team

Season 1, episode 1 of Exit by Choice, Dan Berteanu’s Romanian podcast about preparing a company for an investment or an exit, 15 October 2023, about 49 minutes. I was the guest, as co-founder of Tremend. Subject: the sale of Tremend to Publicis Sapient, announced in January 2022, how we, the founders, prepared and went through the transaction, how we put together the deal team and told our people. Topics: the search for a minority partner that became a sale, rehearsals before meeting buyers, from 80 companies to one, deciding by data, why Publicis Sapient, twelve key people at the negotiations.

In Romanian. The quotes are translated, with the original alongside.

§A minority partner, at first

“We wanted a partner who would introduce us to various other accounts, so we could keep growing even faster.” („ne doream un partener care să ne introducă în diverse alte conturi ca să putem să creștem în continuare și mai repede”) (at 12:34)

Earlier ways of growing abroad: a company bought in the US, teams in Germany, and Belgium, where it went very well (at 11:26). The conclusion of those experiments: reaching foreign markets needed a physical presence, because “vânzătorii trebuie să fie on the ground” (“salespeople have to be on the ground”, at 12:09). Hence the idea of a minority partner (at 12:47). An introduction led to a mergers and acquisitions boutique in California, two people who had not done deals in Romania before, from whom I learned a great many things (at 13:02 and 14:47). Their first message: a minority deal was not guaranteed (at 14:26). First conversation around March or April 2021; agreeing with the advisers took about a month, the whole process, to closing, nine months (at 15:17). The advisers knew that deals in which someone enters as a minority succeed far less often, since most buyers want full control, and “încet, încet ne-au schimbat așteptările” (“slowly, slowly they changed our expectations”, at 25:20).

Elsewhere. Business Magazin, 2022: growing alone would have taken significant investment and maybe two or three times longer, “so we started our engines to look for these partners” („aşa că ne-am pornit motoarele să căutăm aceşti parteneri”).

§Rehearsals before the buyers

“The presentations we were going to give had to be rehearsed and refined.” („Prezentările pe care noi urma să le susținem trebuiau repetate și rafinate.”) (at 16:02)

Once the advisers had arranged Tremend’s data in the formats buyers expect, the training began (at 15:43). A series of rehearsal sessions refined how we, the founders, presented and introduced ourselves (at 16:08). One lesson: transitions matter, “când predai cuvântul de la unul la altul” (“when you hand the word from one to another”, at 16:24), because of the difference between a fluent conversation and one in which the other side waits a few seconds (at 16:38). The most draining moment of the nine months: the workshops in Bucharest, where Tremend’s twelve met teams of about ten flown in by each bidder, after rehearsals meant to get everyone “să cântăm în cor, să fim aliniați” (“singing in a choir, aligned”, at 47:07). Intense, and also energising, because the feedback was very positive (at 47:22).

§From 80 companies to one

“Basically, where you see yourself working. Which people you see yourself working with.” („În principiu, unde te și vezi lucrând. Cu ce oameni te vezi lucrând.”) (at 17:46)

The advisers built the list of potential buyers; we added one or two names (at 17:22). The criteria: the culture we could see ourselves in, a significant M&A budget, and not being “yet another” (at 17:46 and 18:24). The advisers contacted 80 companies from all over the world. About 25 expressed interest and heard the presentations, and 12 submitted letters of intent (at 16:52 and 19:06). Five went to the next round, one withdrew, and four got access to the data room (at 21:53), with tens of people on each side checking thousands of contracts and documents (at 22:28). Three reached the final (at 19:32). The advisers set the process, the expectations and the deadlines very clearly; when one bidder’s CEO tried to set his own deadline, that structure kept it in check (at 44:44 and 45:18).

Elsewhere. ZF IT Generation, 2022: “there were several candidates, a shortlist was made, and from that list we talked with each one, at length” („au fost mai mulţi candidaţi, s-a făcut o listă scurtă iar din acea listă evident am discutat cu fiecare în parte, destul de mult”).

§Statistically, not emotionally

“You have to acknowledge the data and make decisions statistically rather than emotionally.” („trebuie să recunoști datele, să iei niște decizii mai degrabă statistic decât emoțional”) (at 26:36)

Besides the moment: I had put a lot of heart into the company (at 26:26), and statistically the context was “mult prea favorabil ca să-i dai cu piciorul” (“far too favourable to kick away”, at 26:44). The moment, from the end of 2020 to the end of 2021: post-pandemic optimism, with a need for digitalisation that seemed endless (at 23:41), the kind of moment when you do not know whether or when it will come again (at 24:13).

Elsewhere. Economica.net, 2022: “The recent transaction with Publicis came naturally, through a very good analysis of the context and the data. Passion comes first, but numbers are numbers.” („Tranzacția recentă către Publicis a venit natural, printr-o analiză foarte bună a contextului și datelor. Pasiunea este pe primul plan, însă numerele sunt numere.”)

§Not one more wheel on the truck

“To give us the potential to be relevant in the group, not just another wheel of the truck’s 100.” („să ne dea nouă potențialul de a fi relevanți în grup, nu doar o altă roată din cele 100 ale camionului”) (at 31:28)

The final round played out in one evening, with the advisers in America talking to one finalist and then to the other (at 20:49). The two were head to head (at 21:31). Three reasons for preferring Publicis Sapient: it wanted to develop a hub in Central and Eastern Europe, which widened the geography Tremend worked in (at 27:19); the cultures fit “ca o mănușă” (“like a glove”, at 28:04); and while the other bidder, an even larger global group, felt like becoming “yet another” (at 28:23), Publicis Sapient had serious delivery from India and nothing significant outside it, which made Tremend important to them (at 31:03).

Elsewhere. Economica.net, 2022, on choosing investors: “you have to choose very carefully, to fit culturally, for there to be chemistry” („trebuie să alegi cu mare atenție, să te potrivești cultural, să existe chimie”).

§Twelve key people at the table

“We went with 12 people to all the negotiations, 12 key people.” („Noi am mers cu 12 oameni la toate negocierile, 12 oameni cheie.”) (at 32:52)

Involving the key people worked in our favour, and I would recommend it to anyone (at 32:22). The reference: the Agile idea of the self-organizing team, in which the team contributes to a project’s success (at 32:41). Every company that came to Romania to meet us appreciated it, because they expected to talk only with shareholders or founders (at 33:00). The usual practice, as far as I knew, is to keep such things closed for fear the good people leave (at 33:21). A risk, but one that can be mitigated if handled with care; the impression it left was of “ceva mai solid aici decât unu-doi eroi” (“something more solid here than one or two heroes”, at 33:41). When the rest of the company heard the news, there was a moment of doubt and some voices said it would go downhill (at 35:04). The news also came with good things: access to international clients and the chance “să jucăm în Liga 1” (“to play in the first league”, at 36:05).