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Transcript of Four Deals in One Year Transaction Advisors.mp3

So our next session is going to be more fireside chat, styled it in a more perfect world, we would both have a pint of beer with us. But since this morning, we're just going to chat with some water. Very pleased to introduce Peter Granit, who's the chief executive officer of Cision, which is actually one of the largest technology companies in Chicago. And he in the last year has done four deals, all of a very different nature. And he has some scars and some war stories that he can share from that experience. So we're going to spend just about 30 minutes together asking him some some stories. And I think you'll enjoy hearing the last year that Peter's lived. So thank you for for being here. Quick introduction. Obviously, I've introduced decisions being one of the largest technology companies in Chicago. Quick interest. What is decision do.

Thanks. Well, so we have a platform in the media intelligence space, mainly selling into marketing and public relations professionals, tracking how brands are mentioned. So if you think about, say, cap IQ, if you're Impey or LinkedIn, maybe if you're an H.R. recruiter, we have a software suite of tools for public relations and marketing professionals, proprietary databases, news and ingesting lots of social content that does benchmarking and reputation tracking. So when was a business founded? So there's a long history in this business and it was a roll up back in the 90s. But this business goes all the way back to 1890 when it was first started actually in London, and it was the oldest press clipping company in the world. And so we used to all this press club that you used to see in your lobby used to come out of many of these businesses. It wasn't called Sishen at the time, but there were over 30 acquisitions, putting together lots of different press clipping companies.

And when did you join?

So I joined the business in two thousand four, came out of a startup in Boston that we had built up where we Pincus had backed this database business in two thousand and we sold it decision.

And I joined in the beginning of two thousand for first job.

What did you do?

Their first job at a first job? Yeah, it's a first job decision. I came in and ran the sales and marketing team after being the number two in the startup, moved my family out to Chicago after spending a lot of time on the East Coast and started in sales and marketing and expanded the role there.

So you came here, went to grad school, different school? Yep. Kellogg, yeah. When did you finished college? In 06.

2006. OK, so you start 2009, you're in Chicago, you've you're basically running the US business and they say, we want you to pick up and move to London, pack up your family and be the CEO of the European business. So European business is, what, eight countries, about almost a thousand PhDs was about eight hundred million euros in turnover. Eighty eighty eight. Eighty million euros in turnover. And what's the what's the mandate?

So if you remember back, I think many of you remember two thousand nine January or even Q4 of twenty eight.

This was not a technology company at the time. It was a business services company. We were a clothing company. And so we had a lot of employees in production. And at the same time, the newspaper industry was getting hit in the beginning, heading into the recession decision at the time was publicly traded up until last year in Sweden. In Stockholm, we were listed on Amex or Nasdaq, OMX and small cap company hit pretty hard, a lot of debt. And so the mandate was to go over and just clean up the business. We put a new digital strategy in place and leveraging my product team back here in Chicago, we built a suite of software tools, workflow, tools around the job function of a PR marketing professional. And I went over and we started divesting the old legacy businesses, the traditional print and production businesses.

PETER GRANAT:
So in the period of 2009-2011, I divested seven businesses or parts of them, and we took the headcount down from a thousand to about three hundred and return the business back to profitability. It was unprofitable when I went, it was losing about ten million on one hundred million in revenue.

QUESTION::
How long were you in London?

PETER GRANAT:
Two years. So I came back in early 2011.

QUESTION::
Ok, so you get back to Chicago, 2011. You're President and chief operating officer of the U.S. Business. Within a year you're elevated to CEO, the U.S. Business. You're generating positive cash flow. Margins are over 15 percent. The shareholders are they happy, reasonably happy with you?

PETER GRANAT:
Yeah, but we're still trying to drive a growth strategy and being thinly traded in Sweden and we had seventy five percent of our revenue at the time, was actually coming out of the U.S. And actually almost 90 percent of the profits were coming out of the U.S. But we were still listed in Sweden and very thinly traded. So I came back and actually finished off that transformation of the business.

And we divested the U.S. Print clipping business, which was the last we sold it to the last remaining print company business in New Jersey that's still in existence today and exited that business totally and focused on the software suite of tools in 2011.

QUESTION::
So you've cleaned up Europe, you've cleaned up the U.S. Business. You probably could have kept going and enjoyed that. But it obviously wasn't, it wasn't the vision that you had. So let's talk about what comes next. How did you first meet GTCR?

PETER GRANAT:
Just the Chicago community, got introduced through a friend in Chicago.

QUESTION::
And why GTCR? What did you like about their platform?

PETER GRANAT:
So we were having lots of inbounds from a number of PE different firms in London and the U.S. And looking at the business, what I liked about GTCR was really the tech team and the deep domain around very aggressive consolidation strategies within niche or vertical software plays. Long history of that with the team here in Chicago, my board, so I in 2011 was promoted to run the North American business. And then shortly after that I was promoted to run the entire company. So I was running Cision AB as a publicly traded company in Sweden from Chicago and flying back and forth to Stockholm about once a month with two young kids. And we live here in the city, wasn't great. So I also like to have, I would like to have my board here in Chicago, which instead of Sweden. So that was another plus.

QUESTION::
So it's February 2014. Now, you announced plans to take Cision private. I think I know the answer to my next question, but I'm going to ask it anyway. Is it tough to take a Swedish public company private?

PETER GRANAT:
I don't think I'll ever do it again.

QUESTION::
Would GTCR ever do it again?

PETER GRANAT:
Probably not. You need to have a 90 percent, there's a 90% threshold for shareholder approval. And it's a very long process, unlike the US. So we started that process in February of 2014 and they made an announcement to acquire the shares at a nice premium at the time we were trading. A lot happened this year. We were trading in the 30s, I think, and there was a fairly nice premium was like 30 percent on the share price at the time for the first offer that they made to take it private.

QUESTION::
And who is advising you in terms of Investment Banking Council on the take private deal?

PETER GRANAT:
So GTCR used Deutsche Bank out of London for the transaction. We used Latham. PWC did see a lot of the work as well. And then Jefferies did the debt.

QUESTION::
They arrange the debt.

PETER GRANAT:
Yeah.

QUESTION::
So you've got this deal announced that you're going to take the business private. You've arranged financing. Everything's lined up pretty well. Tell us when you first learned that one of your closest competitors was going to compete with you for a bid and was taking a position on the business.

PETER GRANAT:
So we're in a fairly niche space, but we have a very large and aggressive competitor that was started in Norway and was an all digital business move, their headquarters to San Francisco. And I was in Dubai at the time at a conference and got a call from my old chairman who wanted to introduce me to somebody that was going to put a bid on the business. That would happen to be my competitor. And I was still running Cision AB. And from a fiduciary standpoint, we would open up the bidding process, obviously, and take any inbound. It was a public company. And so then literally that night I talked to him and then the letter came over and they had acquired in the open market 12%. So kind of a blocking stake. Some could call it greenmail at the time, but so they were sitting on that position with an intent to buy the company. And so we went into a due diligence process with our competitor as well in the middle of all this.

QUESTION::
Was that was the emergence of their bid as a surprise to Deutsche Bank and to you and to GTCR. Or was that anticipated?

PETER GRANAT:
Yeah. So they were backed by a Swedish private equity firm. And it was a surprise. They they had said they were working on it for some time and were caught off guard by GTCR coming in and making the offer.

QUESTION::
So now you're battling for this take private transaction. Did you think you'd prevail as the process went or did you think that, you know, that the competitor was going to take the business?

PETER GRANAT:
I didn't know in the middle of a process. And, you know, Stockholm is a very small community and most of the shareholders incision was thinly traded. It just the way things operate there is very different than the U.S. and maybe in some cases the same. But it was a very small community because this was a Norwegian company and a Swedish backed private equity firm. I think they had access to more relationships, information to know how this might play out. So I wasn't sure at the time what was going to happen.

QUESTION::
Well, you won in the end. So decisions now privately held and within moments you turn your attention to focus. So one of your a Nasdaq traded company out of Maryland, your biggest competitor in the U.S. Market right now, was Vocus actually larger than Cision?

PETER GRANAT:
And so Vocus was a little less than two hundred million of revenue, went public in 2005 on very little revenue, like $30 million in revenue, ramped up as one of the first SaaS companies to go public and kind of peaked right before the recession and did an acquisition of a business called iContact in the email marketing space. It kind of fell back a little bit on their share price. And that's where I think GTCR caught interest in this as a consolidation play. So in parallel, they launched a bid to take private Vocus that was traded on Nasdaq in April, that closed in June of 2014. Cision AB was not delisted until August. So it created a little bit of a complication because the management team from Vocus, the executive team, the CEO and founder, was not going to stay in the business.

So over the weekend Cision — GTCR was sitting on majority control of Cision AB, but they didn't have the 90 percent threshold clearance and that took all the way until August to get that relief when Meltwater finally sold their shares. But I resigned as CEO of Cision AB over the weekend and became CEO Vocus since that closed faster and we dropped in management into Vocus down in Washington, D.C. in June 14, where there is the time about 600 employees in that business.

QUESTION::
So picking up a Nasdaq traded company dramatically easier, I'm sure, than one trading in Sweden. But this is a sizable deal. Tell us about the capital raise you. You raised a pretty substantial amount of public debt, right?

PETER GRANAT:
Yeah, I think over overall between those three deals, I'm not going to go into the details here, but we raised about $700 million last year.

QUESTION::
That's a lot of money.

PETER GRANAT:
There's another, there's two more transactions, obviously.

QUESTION::
Four in a year. Why not? And who arranged the financing?

PETER GRANAT:
Financing was also Jefferies on that transaction.

QUESTION::
So your debt, shop the debt and market it a bit, is that right? Did you have to do some meetings to—

PETER GRANAT:
It was, we did. And it was quite a Moody's rated. And it was quite an S&P. It was a complicated story to tell. First you had the Swedish public company and then you had Vocus as well. And in the public relations space, not many people had heard about this as an industry sector and there were a lot of pro forma synergies to make the deal work. And so that also added to the complexity of the story.

QUESTION::
And in that deal and the Vocus deal, did you use the same legal and due diligence team?

PETER GRANAT:
Yeah.

QUESTION::
So there was some understanding of the synergies and the performance, but it sounds like the investor community needed to come up to speed quite a bit. So you guys appreciate the opportunity, but it sounds like it was a tough story to sell. So you close the, you mentioned this a bit. You close the Vocus acquisition, the CEO is gone immediately. You're dropped in now running a business in Maryland. You had to leave Cision, although you've got control of it.

What was, you know, as you go through that, when you sit down and think about integrating the two businesses and you're in sort of a strange chair because you're sort of half and one and half in the other, you know, what's really easy and what's really hard in terms of the integration?

PETER GRANAT:
Each of these businesses had challenges, and so we moved very quickly over the summer to clean up a bunch of things that were not core to our strategy, Vocus had been positioning themselves in the marketing automation space as a growth strategy, and they had a new product they launch that wasn't that successful in the business. And so we were going to pivot the business back to the core of the business when they went public, which was this PR suite that competed against Cision. And so we carved off the marketing automation business into a separate entity and downsized it. It was it losing a substantial amount of money, almost $25 million dollars annually. So that was collapsed within 60 days and carved off as a separate entity and is a much smaller team today and a small business called Outmarket that's sitting off. And so those moves, plus some other changes that we need to make went very fast. Obviously, cultural issues, people issues, integration, where we made really good progress over the last six months. But those are the hard issues. I'd say most of all, the systems, I.T. systems are always the one that takes the longest. And, you know, as we look at the kind of synergies on on the business that last 10 million of synergies is really tied up in systems and getting systems working together, is the ITV.

The hardest piece of the people are the space.

Oh, I would say the people people are always the biggest challenge is just getting everyone in line with the with a new vision heading in the right direction. You had two competitors that competed in the US market for over a decade. Sales forces competed, choosing which platform you want to bet on, which is one of the hardest decisions to make for a CEO. Get that wrong. It's very difficult to recover from and then aligning all the development resources around that go forward platform as well as another. And you yet to pick a name and we had to pick a name. So both names were strong. We did some outside research on them. I tried to set my own bias aside. We did end up with decision name. Mokas had some conflicts as a telco in Australia that went public. That's been about acquiring a bunch of companies called Focus right now. And there's another focus in Argentina and decision is a made up word where we did some work on it. In twenty seven, we brought 30 different brands together, playing off the word decision and it it's clear in like twenty five countries for us and we own the domain.

So we chose the name. It's B2B, so it's not as complicated as show.

So you've got two enormous companies. You're integrating the technology, integrating the people, you're integrating the brands. In the meantime, you come to learn that Visible Technologies is available. So this is a West Coast based classic technology business. VC backed Centurion Holdings Echo VC Ignition Partners, In-Q-Tel, the CIA's investment arm. You've got investor growth capital, WPP. You've got a significant amount of venture capital in this business, expectations that probably spin out of that.

How did this come about? Did they approach you?

Was this chapter this just came through a relationship in in the industry.

So one of the parts of the strategy is, is to look at the role that social plays on kind of the transformation of media. And I think we'll stop talking about social media and traditional media, all media social these days, whether you go on a newspaper site or you're looking at Facebook. And so visible was one of the early funded social media listening companies up out of Seattle, Washington, over a series of six years. They raised eighty five million dollars and I think in 2013 and going into 14 and the investors realized this was not going to be a home run for them. But there was good revenue, a core set of talent in there from a technology standpoint that was very focused on investing large amounts of data as you deal with social media and a good book of enterprise customers. And so we went out of that, went after that business as well.

So decision about traded markets setting the price focuses straight on the Nasdaq, the market setting the price. Now you've got a v.C back deal.

There's no earnings or multiples that you can base. There's no cost that you can look at from a valuation.

So you've got very, very high capital raise expectations, valuations of early rounds and then get a business that is probably worth something very, very different than their price level. How do you how do you bridge the divide? How do you get to a price that's reasonable when you're swimming in the world of BBC expectations in terms of valuation?

I think for our model, it's not that hard. This space is in this niche. It's completely overcapitalize. And everybody knows that there are so many social media startups that have been funded since 2010 11. And so what we would look for is real subscription revenue, great brands and great people, and then value it based on their growth rate and the contribution. There is synergies for us because we have existing business internally as well. And so we just value it like a like a classic multiple of earnings. So it wasn't the same expectations.

Of course, that was not probably their expectations when they started the process, but that's where we ended up to wrap up.

In terms of people in integration, it's much more of a technology business. Is it different if you're integrating technology, human capital?

It just adds to the complexity of the integration process, but it is a very focused niche of customers. So their focus was around the enterprise for large brands, companies like Microsoft and in the financial services industry and looking at consumer sentiment and using social media like you would use traditional market research data to make decisions and set strategy. And so we've been able to put that in our enterprise group and there's not as much integration work that needs to be done with that. It's also a smaller business.

So you got you're into the fall now of 2014. You've done a Swedish take private, you've taken Nasdaq private, you've picked up a technology deal before we get to the fourth deal of the year of 2014. What's happening? Decision and focus.

Are they how are they there now? A quarter in. Are they are they hitting numbers, what's happening with those two?

So both both businesses competed. We went to DOJ for clearance on it. And, you know, obviously we had both sales forces calling on each other's renewals. And so we were able to stop that right away. And so that gave us an uplift in the performance of the business. And, you know, overall, we we had outlined a plan in the SIM and we're working towards that and we're ahead of plan during the fourth quarter. The deal officially closed, I think, October, mid-October. But we were able to run vision as a standalone and focused standalone, but start to clean up some of the things that as public companies, you just as a private company, wouldn't do. And so we were able to make some progress on that as well.

So at that point, it's getting towards the end of the year, you're many weeks now into the integration. Things are swimming, so you're well, so you feel empowered to go and do another deal.

So at that point, you pays at north of three hundred million dollars for core kind of Group Ltd., a London based firm. What's is it just another deal or is it different because it's in London?

So there were the Asian business and the Vocus business didn't have a large presence in London. London is a very important market for media, the second largest in the world next to New York. And there were two businesses that we competed with, both private equity backed in London. One was called precise and the other one was called work on a group. We didn't control the timing that both came up for sale in 2014. We bid on precise and we lost. So we actually went through a process in the middle of all this obviously wasn't disclosed at the time. In August and September, Precise went first and we lost that to Cantar, which is owned by WPP. And then at the same time, months, months later, Galkina also came up for sale. And the Galkina Group, it was the number one player in the UK market, more expensive than the precise business. And we bid on that. And we won that business in we closed in November.

On that business, you go back to the public debt markets as well to raise capital for that transaction. We did, yeah. OK, and who did you work with on that transaction?

Banker The banker side was we actually use Deloitte UK, put the deal together this time.

Did the debt Credit Suisse, Credit Suisse and due diligence to just look at them and see.

All right. So you've now gone through 2014. You've done four deals, all of which were quite different, all of which were complex, most of which were competitive auction situations. You know, now you've had a chance to step back. We're two months into the new year. So with that reflection, what was the biggest surprise as you went through the process?

I would say the Swedish take private. We're also I mean, this is out in the public domain.

We're also dealing with CMA in the UK. After the deal closed, I had a call over Christmas because the deal generate we're in the PR industry. The deal generally generate a lot of press in the UK market. We were below the threshold that we thought that needed to be filed. But the CMA has launched an inquiry into the work on a transaction. So I'm in the middle of that process competition. The Competition Markets Authority, which is like DOJ and UK in the UK. It can happen reactively after the deal closes and there's a there's a period of time. So we're in that period right now. So that's another complexity we obviously didn't expect, but we're dealing with that now.

So if you were advising or having a chat with a CEO who's thinking about a private equity backed role up within their industry, what are some of the thoughts that come to mind in terms of warnings, lessons learned along along the way?

I think of.

These opportunities in industry sectors don't come along that often, so the ability to move very fast and have the right partners both on on from a team standpoint and obviously the right sponsor. And so this was a real unique opportunity in this niche. I mean, the feedback from from GCR was we didn't we didn't think so many things would become actionable so quickly. And so we're really having the right partner that wants to move on that because, you know, this really, I think, changes the landscape for us as a business. We're now about three hundred seventy five million. I moved the global headquarters here to Chicago, but we operate still in nine countries and have a very interesting opportunity ahead of us.

And I think, you know, candidly, as a spectator to this, no one else had the courage to try and pull pull this all off and pull it together. And obviously, you did what what's next? Surely you're looking at more deals in 2015. Are we going to be.

Yeah, well, the rest of the story is not written yet. So maybe maybe in a couple of years we'll see how all this plays out.

But, you know, I think we've made really good progress in 14, the platform that we put together. I think there'll be more opportunities in social and also content marketing, which are both kind of adjacent spaces for us as those startups in the US, the UK and other markets will present more opportunities to build off of for us. And, you know, we're also just very focused on integration right now with our head down.

Well, it's been an incredible year, obviously, pulling off these deals. I think we maybe have just one minute, barely. So let me see if we can invite anyone else to ask Peter a question if they'd like somebody who's lived through successfully four deals in a single year.

Questions. Yeah.

Is to not mess up the core business and the cash flow associated with it, but also make sure you got the synergies you needed to from the deal.

So I partnered up with a CFO from the outside that that this is his fifth GTK, our company and CFO. So that's really my anchor partner as CEO and CFO coming in.

Outside of that, I had to make some quick decisions on forming a single executive team. And it might not be the right team at scale, but we'll evaluate that over time. But getting things settled down, be able to communicate the strategy consistently. And then from an operational standpoint, we have an integration team that meets every Monday morning. We have active projects that we're working through that are prioritized by the executive team. And it's just a lot of blocking and tackling and constantly reshuffling. Obviously, if you're in the middle of prioritizing instead of projects and then you do another acquisition, you have to re evaluate all the projects that are going on and prioritize. So that's how we've we've move forward with on the integration side. But I think most importantly is setting the strategy, communicating consistently with the employees and then getting the executive team nailed down as quickly as possible.

Well, it's been an incredible year and I really appreciate the insights that you shared. So thanks for for coming up. And let me ask you some questions.