EP #377 - Roger Dudler & Dennis Just: Growing Through Acquisition
Redeem your EUR 75 bonus at Splint Invest with code Dali24: https://splintinvest.onelink.me/ZGYb/swppod Timestamps: 3:50 - Deciding to acquire TwicPics 16:30 - The smallpdf fuckup 20:37 - Integrating two cultures 26:20 - When to start thinking about acquisitions 32:50 - Resorting to investment banks About Roger Dudler & Dennis Just: On August 29th the Swisspreneur community got together for the third edition of its annual Zurich Scaleup Cruise, sponsored by Swisscom Ventures, SIX, UBS, MLL and Emerald Ventures. With about 130 founders and investors, there were plenty of people to connect with on the Panta Rhei ship on that late August evening, while you enjoyed a flying dinner and the view of Lake Zurich. Many of the participants were veteran Swisspreneur cruisers: it was their 3rd time attending! The highlight of the evening was the panel discussion with Roger Dudler, co-founder and CEO at Frontify, and Dennis Just, partner at 3VC and former CEO at smallpdf, on buying or building to scale. Since there are as many founder journeys as there are founders, the audience wasn’t surprised to hear that different things led Roger and Dennis to go forward with their respective acquisitions: for Frontify, acquiring TwicPics came as a natural result of their company growth, whereas for smallpdf the acquisition of PDFtools was the result of a neck-to-neck bidding war that they decided to engage in so as to stop their partner from being acquired by an American buyer who would raise PDFtool’s pricing. Smallpdf acquired PDFtools in 2022 for 30M (which is 10M less than the seller would have gotten from the American bidder, and that certainly speaks in smallpdf’s favor), half of which was paid in cash and half financed by a loan from Swiss banks — such are the benefits of being a bootstrapped, profitable company! Frontify, on the other hand, acquired Twicpics in 2023 for an undisclosed amount. With the deal closed, came the harder part: integration. Dennis quickly realized that smallpdf and PDFtools were not 100% aligned values-wise, since the acquirer’s growth ambitions were much higher than the acquired’s, so it was necessary to bring PDFtools “up to speed”. Eventually, Dennis and the smallpdf team decided to integrate the two companies regarding culture (same salaries, growth plans, etc) but not when it came to corporate structure, because PDFtool’s customer base was rather enterprise-heavy, whereas smallpdf was more B2C-focused. Their branding and go-to-market strategy thus remained separate. Frontify is going through a similar process, even setting up a specific team to manage the integration, which meets weekly with management and follows a very clear plan. When answering questions from the audience, Dennis noted that companies smaller than 50-100 employees should not think about acquiring other businesses, since you need 3-4 people fully dedicated to the matter anyway, as well as the proper processes and structures set up. And although acquisition becomes a bit of an expectation for companies at a series C round level and beyond, Roger warned founders against taking up offers from the sellers who come knocking around this stage: it is much better to build your M&A muscle proactively and wait for the right time to seek out companies yourself. Even after the panel discussion finished and the attendants ate the last of their dessert, there were people who simply could not stop networking (can you blame them?), so the party continued on land at the Metropol. It was a fantastically successful evening overall and we can’t wait for next year’s edition!