“The best advice I got… is to plan for the future and have a solid exit strategy from the beginning,” said Brandon Fischer, Founder of Anacore, an Indiana-based software development firm that was recently acquired.
Earlier this year, Anacore was acquired by Prysm Inc., a Silicon-Valley-based company that produces video walls that use Anacore’s technology. The software company acquisition made headlines in Indiana and changed the game for what Anacore is able to do with their business.
We followed up with Fischer to see how the acquisition is going and learn about the acquisition process now that a few months have gone by. Enter Brandon Fischer…
Did you have an acquisition strategy when you started Anacore?
I formed Anacore almost 9 years ago, when I hired my first employee. At the time, I had no exit strategy in mind. As we became a more product-oriented company, it became clear that I needed to think differently. In order to properly develop, market, deploy, and support a product, I needed more capital than our earnings could provide. For years, I reinvested every dollar of profit back into the company – but it wasn’t enough. I wasn’t willing to put my family at risk by co-signing a big loan or taking out a 2nd mortgage on my home – I needed to bring in outside investment.
When did you develop an acquisition strategy?
I wasn’t looking to sell the company. I was preparing to raise $2M in a series-A… ideally through a single strategic investor/partner. We quickly had a few interested parties before we even hit the road. We started down the investment path with Prysm and our investment discussion quickly turned to acquisition. There is so much synergy between our companies that it just made sense.
Did you have investors or advisors who prepared you for acquisition? What was some of their best advice?
I was very fortunate to have some great advisors who helped me through the process. One of my advisors, Ron St.Clair, was incredibly generous and spent a lot of his time helping me negotiate the sale to Prysm and also navigate the painful due diligence process. The best advice I got, which I won’t be able to use until my next venture, is to plan for the future and have a solid exit strategy from the beginning.
What has been the biggest benefit of getting acquired?
We now have the global resources of Prysm to deploy and support our installations worldwide… that is not easy to do with 9 people! We also have the financial resources behind us to scale much faster. By the end of 2014, we will have added 20 new full-time jobs in our Carmel office – from sales and marketing to technical support… half of those will be software engineers.
What have been some of the challenges after acquisition?
We are going through a unique time and experiencing record growth – that is an understatement. To put it in perspective, we sold more in the first quarter of the year than we did in all of 2013. When you combine the challenges that go along with fulfilling a record number of orders – and, at the same time, getting acquired and integrating into a larger organization, it requires a lot of resilience.
We’ve seen other software acquisitions out of Indiana as well as acquisitions into Indiana. These exits almost always result in positive outcomes and Fischer gives us some insight here into the honeymoon phase. But it’s not always easy to navigate being a part of a new company.
What do you see as some of the potential hurdles for Midwest startups acquired by Silicon Valley or New York companies?