David Ulevitch and Jason Lemkin discuss how big acquisitions happen and some tips for how manage it properly.

1. Getting Acquired by the Big Guys
Jason Lemkin - SaaStr
David Ulevitch, VP Security Business Group - Cisco
December 17, 2015

2. Q. How does getting acquired help you to
focus on what really moves the needle?
• It allows you to sit down with decision-makers from
large organizations you wouldn’t normally have
access to as a small, independent company.
• Gives you the resources and the clout to focus on
meeting with people and doing things that really
grow the company.
• Frees up time to allow me to focus on making sure
integration is successful and we’re getting revenue
growth.
“I'm a believer that revenue
growth solves all problems
no matter what stage
you're in.”

3. Q. Have you dealt with customer anxiety that you’re
still a startup even 10 years into your business?
• Before being acquired, yes. They have anxiety
about the company, not the product.
• When you haven’t gone public, customers
are very curious what your plans are.
• If you’re trying to do business with a major
company, they can be worried you might
get acquired by a company they don’t want
to do business with.
• All of that adds friction to the selling cycle
and created ambiguity. Questions will come
up in conversations with prospects.
“If they're worried that you might
get acquired by a company that they
don't want to do business with,
that could be a problem.”

4. Q. What’s going on with the state of unicorns and
whether to go public or sell?
• Ever since we went to the Goldman Sachs
conference, we had the opportunity
to raise probably a billion or better valuation,
but for me the question is, "OK, tell me what's
next. What is the endgame?”
• When you sell your company, you get
immediate liquidity, and all of your
employees get immediate liquidity. When
you go public, you get almost no liquidity.
• The things I want to accomplish became so
much easier to achieve with an exit to Cisco
than it would be by going public.
“We had the opportunity to raise
probably a billion or better valuation,
but for me the question is,
‘OK, tell me what's next.
What is the endgame?’”

5. an investor, how active are they? What's the impact of a corp
• I think it's up to the portfolio company,
themselves. We did have a board observer, and I
think even with a board observer, it's still up to
the company to decide how much interaction
they want to have with a strategic investor.
• They had all that visibility, and they saw the
growth of our revenue numbers and it made the
acquisition conversations much easier.
“We ended up partnering with lots of
other security companies, and not with
Cisco, which turned out to be smart. They
were able to see the success of our other
partnerships with other security vendors.”

6. ing inbounds from corporate development, what's your advic
• You have to have someone on your team
that takes them, depending on the size
of your company.
• All these different people, we spent the time
with them, to get to know these people,
even if it was just to send them an update
once a year saying, "Hey, we're doing this
stuff. You think it fits? If not, I'll talk to you
next year.”
• The reason we did that was so there's some
familiarity.
“There's other companies like
CheckPoint, we did a partnership,
meet in the channel, product integration.”

7. Q. Now that you’ve sold, looking back,
what would you do differently?
• There were certainly some things that I was
totally focused on, that I thought were really
important, but turned out not to be really
important.
• We did focus a ton of energy on the
compensation, and people and retention
packages, and that turned out to be really
important.
• Here's one thing that we would do differently.
It turned out that Cisco and us had the same
counsel, and not just the same law firm, but
actually our lawyer turned out to be
somebody who had done a bunch of Cisco
M&A, and we never even really knew that.
“I definitely feel like this is the right
decision we made. No second-guessing,
no questioning it.”

8. Q. How do companies prevent acquisition deals
falling apart unexpectedly?
• When I've learned the details of deals that fell
apart, it's usually because the company being
acquired didn't have their house in order.
• You can never misstate your numbers, but you
can posture things in certain ways, and you can
talk about things that you think will happen, but
when it comes to corporate development and due
diligence, just the facts, especially when it comes
to sending over models and spreadsheets.
• You need to make sure that there is full support
from the acquirer, that the board has signed off,
that they're able to write the check size, but then
I think that the company being acquired, you've
got to have your house in order.
“It was because things had been
picked in early parts of the
conversation that then turned
out to not be a totally accurate
reflection of reality.”

9. Q. What are the best hacks for reducing post-verbal
order close times for big deals?
• Those things happen less and less as you move
up-market, but I think that especially in the SaaS
business, if you can get the customer using
your product prior to buying it, it starts to get
harder and harder to do that.
• We've learned early on that if we're only talking to
one person inside the company, that's generally
a bad sign. That means that they might be off
on their own.
• There's often gatekeepers, but once you get past
the gatekeeper, they might open up to other people.
“The networking people, the security
people, their boss will sit in on a
call, or they'll introduce you to
procurement. If you're not
getting introduced to
procurement, there's
something wrong.”

10. single founder, how did you handle sales & technology at the
• I had a very strong executive team, and it wasn't
always the same executive team, but it was always
very strong.
• My CMO was like a COO, he actually owned
everything from product, to marketing, to customer
success support. The only thing that he didn't have
was sales, so he had basically the whole customer
life cycle they came up to him.
• That allowed me to expand the service. Once we hit
about a hundred people, we had a great executive
team, and I was on the road.
“It took me a while, but I had
a great leadership team, and
they helped me focus on
being the leader.”

11. Q. How do you organize upsell on the post-sales relationship
• If customers feel like you're treating them right in all
the renewals, and you've treated them right on their
service, then those referrals more than make up for
the lack of extracting those last few pennies out of
them.
• We don't let our sales reps upsell existing customers.
They don't get to mine that vein, they have to go
out and hunt new fields. As executive, I know that
my renewals team can go and do that, but the
sales team and the VP of Sales can't go do that.
“The best lead you get is
from a customer referral.”

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