Your tech company is hot, happening, high-growth – but is it exit-ready?

How to control the process when that acquisition offer comes (or doesn’t)

Fi.Span CEO Lisa Shields: Being ready for that acquisition offer means being in control when it happens

In tech, as in theatre, there are good exits and bad exits. In both cases, planning ahead will prevent disastrous fumbles on your way out.

In describing how to get exit-ready, Lisa Shields, CEO of the Vancouver business-process-management software firm Fi.Span, uses the analogy of selling a house. Maybe you aren’t ready to sell yet. Still, it’s good to have everything in order.
“You might leave the bathroom unpainted. The new owner can take care of that. But you know they will want a solid roof in place,” says Shields, a speaker at the TechExit conference being held April 10 at the Vancouver Convention Centre (East).

For tech companies, Shields advises “the basics: having your minutes books in order, HR in place, contracts all sound.”
“You aren’t exit-ready unless you are administratively ready,” she says. “Think about how your business would run without you – because a buyer is certainly thinking that. Without you as founder around, are other people on your team ready to take on roles?”

Shields learned the hard way, experiencing a failed exit before enjoying a successful one. She’d grown the technology startup Hyperwallet into the leading international payments processor for business-to-consumer mass payouts. “We were your classic Vancouver 14-year-old overnight success story. We started out as a nothing burger; suddenly we were the toast of the town.”

Like any hot, happening, high-growth company, Hyperwallet attracted interest. Shields was delighted when an offer floated in from a private equity company. “It looked fantastic, was going to put cash in our jeans. We were excited.”

The catch: “It was a buyer-directed process. On our end it was ad hoc; we just weren’t ready. Think of having an offer on your house, then the inspection goes badly and the offer is withdrawn. That’s what happened to us – and it was a body blow to the psyche of our senior management.”

Like any setback, the experience wasn’t all bad, Shields relates. “It exposed to us the critical elements of the business that needed to get fixed.” By the time Act 2 rolled around and another buyer was interested, Hyperwallet was hyper-ready.

Reflecting a theme of the TechExit conference, Shields counsels businesses to be exit-aware from Day 1 and to be prepared as your business grows. “That way you control the process. At Hyperwallet, we ran an auction on our own terms, our own conditions, right down to ‘Want to make us an offer? Have it in by noon next Friday.’”

The house analogy again: the homeowner has now fixed the leaky roof but left the bathroom for a new owner to paint whatever colour they want. “When your business is exit-ready, you can maximize value to optimize outcomes for you, your shareholders and your employees.”

After the good exit: the transition

It was a private equity company that ended up buying a majority stake in Hyperwallet in 2014, an “easy and positive” process for Shields professionally. “I had a great relationship with the new CEO. Transitioning to be on the board was an honour; I got to see the next phase in growth.”

The personal transition was harder. “As a founder, you’re used to getting up and going to work every day. You’re running a high-growth company, your personal company. It’s who you are, what you do. Suddenly all that’s taken away.”

Not being the sail-around-the-world type, Shields realized that what she wanted to do was … found another business! “I like working. I like the sense of shared purpose with a group of people.”

But her “bouncing two-and-a-half-year-old startup” Fi.Span isn’t all that Shields is involved in. Noticing the subtle differences in the way young female founders and company leaders get treated compared with their male counterparts, she feels it’s important “to do what we can to right this ship.” Now she’s actively volunteering in the Vancouver STEM (science, technology, engineering and math) scene, working hard to increase female presence in industry.

To learn more from tech entrepreneurs who have travelled the exit path at least once before, register for the second annual event being held April 10 at the Vancouver Convention Centre (East).