A Former Investment Banker Shares What Drove 66% More on Purchase Price

Meet the Founder of Activated Insights

{Dr. Jacquelyn Kung:} My name is Jacquelyn Kung. I’m the founder and former CEO of Activated Insights. Activated Insights is a company that serves post-acute care providers in surveying their employees and their customers to see how happy they are. Eventually, Activated Insights was acquired by Home Care Pulse. 

Why I Didn't Run the Process Myself

{Dr. Jacquelyn Kung:} I did consider running my own process. I mean, you’re looking at a former investment banker at Goldman and I know how to do slides from my days at McKinsey, so I thought I could do it myself, but that wasn’t true.  

It’s very difficult being directly in touch with a group of buyers. Not only does it derail your day-to-day work and what you’re doing, but also, there’s no buffer between you and the buyer in terms of some of these negotiations.  

The Preparation Buyers Noticed (and Paid for)

{Dr. Jacquelyn Kung:} It was a couple things that SEG did which made us look really good. The first, the CIM, confidential information Memorandum. Most founders and business owners don’t sit around and create 150 pages, 150 slides on your own business, but SEG, for some reason, could do that and did it beautifully. I couldn’t have done that myself. The second thing that SEG did was gave us the templates for what potential buyers might look for and, specifically, things that would come up in due diligence and/or assuage fears proactively. Having those templates and being able to fill them out with the systems, for instance, Salesforce, that we had, put us ahead of the game.  

What I think SEG is also very helpful with is there, as a buyer, you expect a level of sophistication in terms of what a process might look like. You couldn’t do that, I couldn’t do that level of sophistication on my own. I think it sent a level of confidence to a potential buyer that we had our stuff together, we could proactively anticipate what their questions were, and that increased the confidence level of a potential buyer.  

Creating Competitive Tension

{Dr. Jacquelyn Kung:} SEG does a couple things which helps create a competitive tension. The first is signaling to the market that a process is being run and what the timeline is for that process. When you know all the dates in advance as a buyer, you know it’s a serious process. The second is that SEG creates a funnel effect and they have each stage, stage one, stage two, then to IOI, then to LOI, each stage, and then to close. That process in itself, with all the numbers behind it, indicates it’s also a serious process.  

How SEG Saved the Deal

{Dr. Jacquelyn Kung:} The moment where I said, “Gosh, I am so grateful SEG is standing by me,” is the moment when one of our partners almost held up my transaction from closing.   

SEG was incredibly helpful in strong arming all sides to get to a transaction close. I don’t think I could have gotten the transaction closed myself. Specifically what SEG did was be that neutral third party that told them, in all seriousness, “This founder is going to walk from the deal if you don’t close it by a certain date, and she’s going to go away and you’re going to have to find another company to buy.” That immediately closed the deal the following day.  

What I Got vs What I Expected

{Dr. Jacquelyn Kung:} The ROI, I would put at probably 10X, because I knew what prices I could get because I had kind of softly felt it in the market. I then backed into how much more would I need to get before the fees are “worth it”. It actually wasn’t that much more that made the fees worth it, and then we got over that. In fact, I think working with SEG gave us 66% more on the purchase price than I would’ve gotten myself.  

SEG made my company look better than it had ever looked before, and that helped a lot. As a founder, an entrepreneur, owner of a business, you don’t shine up your business every day to look good, and so it really takes sometimes a third party to make your company look good. That’s what SEG does.  

It’s an experience and it’s a fun experience, especially if you have someone to guide you.