Small startup teams often debate whether to sell a company for the dream valuation or try to expand it and hold out for an initial public offering (IPO).
After Vancouver-based Beanworks Solutions Inc. agreed to be acquired by French enterprise services firm Quadient S.A. ADR for $105 million, its executives will tell you that the goal is largely the same: creating a valuable business.
“We didn’t know we’d exit this way,” said Beanworks CEO Catherine Dahl. “The goal was just build a great company that has fast-growing revenue and see what happens. If you’re focused on building a great business, things like this just make their way to you, and that’s exactly what happened.”
Dahl wasn’t worried about whether it would go through an IPO or be acquired for nine figures when it started in 2012. Instead, the company focused on filling an unexploited market need, and strived to develop unique software that automated the accounts payable process.
Dahl said that the adoption of Beanworks’ technology is still in its infancy, with 70% of the market still using a manual accounts payable process. By focusing on filling a market need, Beanworks took advantage of opportunities that came along, such as multiple acquisition offers and increased demand for its digital software – especially after the pandemic started.
“When companies think about an exit plan, they’re really thinking about a multiple on revenue,” said Karim Ben-Jaafar, president and COO of Beanworks. I think that’s incorrect. What you [have] to think about is, from the acquirer’s position: what makes you the most valuable to them from Day 1 onwards. That was the vision the board had … to create a valuable business three years ago.”
While many businesses were put on their heels during the pandemic, Beanworks saw the work-from-home movement as an opportunity to boost its sales by slightly retuning its message.
Although the company’s product is ideal for the work-from-home era that the pandemic launched, Beanworks was able to take advantage of the increased demand because it spent 2015 focused on quick scalability.
The general expectation was that the pandemic would slow business transactions down, but the opposite happened, said Dahl, who suggested that the pandemic accelerated the acquisition by at least a year.
“There’s a lot of money out there right now,” she said, “and people are looking for a place to invest.”
Beanworks experienced swift growth over the past few years. It expanded its revenue 725% to $2.3 million in 2019 from $279,000 in 2015. Despite the pandemic, it grew 70% in 2020.
While Vancouver has developed a reputation for being a great place to create tech startups, it hasn’t always been the best at retaining them. The city has long been a farm league for the larger tech destinations around world as startups eventually move their head offices elsewhere once they have achieved a significant sales threshold.
However, Dahl said Beanworks intends to stay and grow in Vancouver, functioning as a subsidiary of Quadient’s Canadian arm. •