Salesforce acquires Slack for $27.7 billion
Square agrees to acquire Afterpay for $29 billion in an all-stock deal.
Medallia is acquired by Thoma Bravo for $6.4 billion.
These are the headlines CEOs dream of - and if you play your cards right, you could have the primary responsibility for proving your company's value to your prospective buyer. Phew, those are some lofty career goals. But it's all within reach.
We were curious how it felt to lead a partnership from the early days of discovering common use cases for solutions to signing a full acquisition agreement. The kind that leads to an "exit" event and the acceleration of the deal.
In May 2021, Demandbase acquired DemandMatrix and InsideView to develop its Data Cloud, part of Demandbase One - a full B2B go-to-market solution (more on that soon).
The acquisition can trace its beginning to a partnership. We wanted to find out what it's like to watch a budding partnership suddenly evolve into something much bigger.
"We said this deal is just the first step in a longer-term partnership," he saysAsher Mathew, Vice-President Go-To-Market, Data Cloud, Technographics,demand base(previously VP, Revenue and Operations atdemand matrix).
Below, Mathew shares what the acquisition experience has been like from early days to today.
The relationship between Demandbase and DemandMatrix unfolded in three phases:
February 2020: The discovery phase
In February 2020, Demandbase and DemandMatrix started an initial dialogue where Demandbase explored use cases for using DemandMatrixTechnological datainternally and for its customers.
In the beginning, Demandbase was a target customer and target partner account for DemandMatrix. A DemandMatrix sales representative initiated a sales pitch with the Demandbase team. This conversation allowed the Demandbase and DemandMatrix partnership teams to network and discuss combining their data to help their mutual customers. From there, the product teams and CEOs of DemandMatrix and Demandbase joined forces to improve their joint solution.
"The partnership team should pursue partnerships where their sales team has already closed deals," says Mathew. “If you and I are in a customer relationship, it would be a lot easier to train our sales teams to sell that data to our customers because we both know and understand each other. This is especially true when one company is very large and the other very small.”
Why DemandMatrix was attractive to Demandbase
Mathew says the most valuabledata stackfor B2B SaaS companies should include four core datasets – firmographic, demographic, technology, and intent data. Demandbase's product already provided an intent data solution. DemandMatrix turned to Demandbase for their technological data solution.
Technological data provides insight into a prospect's tech stack. With this data, Demandbase can identify potential partners, see what competitor tools their potential customers are using, and understand which potential customers prefer the best tools (like theirs).
"Companies hire partnership leaders and say, 'Hey, can you tell me who are the top five companies to work with?' says Matthias. “And then the partner leader goes and looks in his rolodex and asks a bunch of people. But there's a more data-driven way to do that when they use engineering data.”
Demandbase used DemandMatrix technical data internally and then integrated the data into its platform for customer consumption.
Aside from DemandMatrix's product being attractive to Demandbase, the tech industry climate leading up to the acquisition was also right:
Demandbase and DemandMatrix began partnership talks in February 2020, just as the COVID-19 pandemic hit the US. While many companies suffered revenue losses, the data industry became increasingly important as workers and consumers spent more time online.
In 2020, the first year that Mathew led sales and operations at DemandMatrix, Mathew and his team doubled the company's revenue and customer base. DemandMatrix was a bootstrap company with no VC funding; Still, his business doubled in a year.
Additionally in mid-2020ZoomInfoannounced its IPO (the first IPO in the tech industry since the start of the COVID-19 pandemic),Dun and Bradstreetannounced its IPO and the value of the data continued to rise.
"The market got extremely hot and data partners started looking at the different types of data that they could consolidate and bring into their applications," says Mathew. "And that's how the transaction began."
November 2020: The official partnership
Just nine months into the discovery phase, Demandbase and DemandMatrix entered into an official partnership. This involved using DemandMatrix's technographic data in the Demandbase platform to allow customers to learn more about their target customers' tech stacks. Clients could then use the data to score and segment their target clients and develop a strategic outreach approach that takes into account the types of tools and skills the prospect has.
Demandbase and DemandMatrix initiated the initial phase of their co-selling relationship by launching sales enablement sessions for Demandbase's sales force. The goal of the enablement sessions was to train sales reps on how to help customers leverage DemandMatrix's technographic data to learn more about their prospects' tech stacks.
The sales reps would use filters in Demandbase to select specific records that are relevant to their prospects. The enablement sessions helped their sales reps understand how to use the filters and surface engineering data for various use cases on the platform.
Meanwhile, the data market grew.Qualtricswent public in January (two years after being acquired by SAP),Matillion announced $100 million in Series DFunding in February, andDataGrail raised $30 million in Series B fundingMarch. Mathew says the acquisition happened so quickly that their co-sells barely surfaced before DemandMatrix was acquired.
“Just prior to the acquisition, we knew there was a need in the market for better technographic data and we felt so strongly that we wanted to fundraise. Then we were taken over,” says Mathew. "Having hundreds of customers adopt our data after acquisition is the same confirmation of our initial hypothesis."
Mathew attributes the growing tech climate to the speed of acquisition.
"All of this happened so quickly that the success story is currently being built up," says Mathew. After the acquisition, hundreds of users adopted DemandMatrix as a standalone solution and now as aintegrated solution.
Before takeover day, Mathew and Demandbase CEO Gabriel Rogol had to match their hats.
“If you're a small business, you have to split the work at the executive level. The CEO needs to focus on closing the acquisition deal while someone else runs the company,” says Mathew.
While Rogol worked with the Demandbase team to work out a deal that would be beneficial to both companies, Mathew focused on ensuring Demandbase was running smoothly and meeting its business goals.
May 2021: The takeover
In May 2021, just seven months after the launch of the official partnership,Demandbase acquired DemandMatrix and InsideView.
In the early months of the acquisition, Demandbase chose to operate the three companies and their solutions separately for three reasons:
- Because each solution is kept separate, customers have the choice to purchase each module separately or the entire product suite at once.
- Each solution impacts market stickiness and can attract unique customer bases without having to buy all three solutions at once.
- Each solution has built its own brand reputation that influences the market.
However, Demandbase learned that its customers wanted to deal with a single point of contact during the purchasing process, even preferring to purchase the entire solution (including Demandbase, DemandMatrix and InsideView) at once rather than in parts.
Three months after the acquisition, Demandbase integrated DemandMatrix and InsideView into its platform. The decision came from one of DemandbaseCore Values of Customer Success.
If Demandbase acquired DemandMatrix, it would launch its data cloud with DemandMatrix's technology data. By acquiring InsideView, the company would launch its Sales Intelligence Cloud. In addition, it acquiredEngagio, which populated its ABX Cloud, and Demandbase already had its Advertising Cloud. Demandbase has built its GTM suite through acquisitions.
Launch their post-acquisition co-sell requests
Demandbase and DemandMatrix are now conducting training to educate their sales force on how to use DemandMatrix's technographic data with Demandbase's intent data in the new data cloud.
To empower salespeople on both sides, Demandbase and DemandMatrix are at the forefront:
office hours for sales staff,or deep-dive Q&A, where sales reps can ask questions about specific use cases, learn how to sell the specs to customers, and get a better understanding of who typically buys specs and how.
Monthly training for sales staff,to discuss new use cases for technical data and to train the sales people on both sides.
training for the solution consultants,led by Mathew and/or the data delivery team (imagine: those who parse data for customers and uncover insights on their behalf), the new types of technical data, the attributes that interest customers, and how , discussed how the data can be packaged that benefits the customer.
They also developed their common goal plan, which meant picking specific clients to target together and taking a push to book the demo, confirm the sales calls, and work on closing the deal. To keep their shared goal plan on track, Mathew plans to host regular pipeline review calls, business analysis, and other meetings with each team's sales reps.
Have you led an affiliate program to a takeover or IPO? Let us write. Send us a message@Crossbeam on Twitter. Plus, get tactics from industry experts on growing your partner program in Volume 2 of our Partner Playbook.