If You Can’t Beat ‘Em, Buy ‘Em Out

A gleeful businessman with a suitcase full of money.

Photo credit: Shutterstock

It’s not an uncommon occurrence: two companies duking it out in the marketplace, their battle only ending when one buys out the other. Whether it’s GoDaddy buying up European rivals to expand its reach or Billtrust taking its competition, Invoice Connection, out of the game to do away with constant low ball pricing scares, there are plenty of reasons why a company might choose to buy out a rival.

Of course, ideally, the situation is more of an amicable, strategic merger. San Francisco investment banker Thom Weisel is no stranger to this sort of development: his Montgomery Securities was sold to NationsBank in 1997, and in April of 2010, Stifel Financial purchased Thomas Weisel Group.

Montgomery Securities, a privately held investment bank that focused on lucrative IPOs of high tech companies, ultimately became a subsidiary of NationsBank called NationsBanc Montgomery Securities Inc. Weisel continued to serve as the unit’s chairman. This came after Weisel announced several months earlier that Montgomery was looking for strategic partners. So rather than a foundation of anger and distrust, this deal was made based on a desire for compromise.

“The combination of our two companies is a great fit and will allow us to reach our goal of providing one-stop shopping to our clients,” Weisel said at the time.

As for Stifel’s acquisition of Thomas Weisel Partners, the all-stock transaction, involving more than $300 million, definitely sweetened the deal. And while Stifel did basically buy Thomas Weisel Partners out, Stifel made the purchased investment bank a fairly autonomous subsidiary with Weisel himself a co-chairman of the board.

Unfortunately, not all buyouts are this smooth. Flint Lane’s Billtrust, an electronic and paper billing service aimed at plumbing, electrical, and lumber supply wholesalers, suffered from years of bitter rivalry with Invoice Connection, a rival company who consistently went after Billtrust’s clients by offering much lower prices.

Still, Lane wasn’t going to let the simmering animosity affect his business decisions. He met with Invoice Connection co-founder Earl Beutler, and on June 6, 2011, the two companies signed a letter of intent for Billtrust to buy out Invoice Connection. The deal closed in September of that year.

The world of mergers and acquisitions is, at least in theory, a realm of utmost professionalism. Companies make decisions about expanding, partnering, and buying based on the market and what’s best for each individual business. But there’s always the cutthroat underbelly, where sometimes the best solution to the problem of competition is to…well, buy it out. No matter what unpleasantness may (or may not) occur during the actual handoff, the positive outcomes are usually worth it: the subsequently formed businesses are stronger and can offer their clients more services and opportunities.

So in the end, having a rival might not be such a bad thing after all.

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Henry Kravis – Business Profile

henry-r-kravis

Img: Via kkr.com

Henry Kravis co-founded Kohlberg Kravis Roberts & Co. (KKR), along with is cousin George R Roberts and mentor Jerome Kohlberg in 1976. He is currently the Co-Chairman and CEO of the firm with Roberts. Henry Kravis started off his professional career working at Bear Stearns alongside his cousin in the late 1960s. After Bear Stearns rejected several of their ideas, Kravis, Roberts, and Kohlberg decided to strike out on their own. Flash forward to 2011 and KKR has over $62 billion in assets and were responsible for major buyouts such as RJR Nabisco, Safeway, and more.

Henry Kravis has used all of his power and money to help others as well. He, alongside wife Marie-Josee Kravis, partnered with Claremont McKenna College to create the Henry Kravis Leadership Institute. The organization sponsors the programs and training of future leaders, and the winner recieves $250,000 towards non-profit operational costs. He also frequently gives talks at Claremont McKenna and other schools about leadership, business, and more.

Kravis was also a founder and co-chairman of the New York City Investment Fund, a “private fund with a civic mission.” Created under his vision, the fund seeks to mobilize the city’s financial and business leaders to build a stronger and more diversified local economy.

Henry Kravis currently resides in New York City with his wife, Marie-Josee Kravis. He has a B.A. from Claremont McKenna College, and an M.B.A. from Columbia Business School.

Kohlberg Kravis Roberts Buys Sage Nonprofit Solutions…but what is SNS?

SageOn February 15, 2013, it was announced that Accell-KKR, of Kohlberg Kravis Roberts is buying Sage Nonprofit Solutions. Kohlberg Kravis Roberts is a technology-focused private equity firm based in New York City. Accel-KKR’s funding of Swiftpage to acquire Sage ACT! and Sage SalesLogix will help Swiftpage’s strategy in the digital marketing platform.

John Oechsle, the CEO of Swiftpage stated that, “The acquisition of Sage ACT! and Sage SalesLogix is a game changer for Swiftpage, giving us a significant presence throughout North America and Europe with award-winning products for the small and medium-sized business markets. We would not have been able to complete this complex transaction without the assistance of the team at Accel-KKR. We look forward to working with Accel-KKR to aggressively pursue the many growth opportunities available to us.”

What is Sage Nonprofit solutions? SNS provides accounting, donor, grant management software, fundraising management, human resources, payroll, and more for non-profit and government organizations. Today, it is helping over 32,000 not-profit organizations increase their efficiency with these products they offer. They are based out of Austin, Texas.

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