Mergers and acquisitions have always been a delicate dance between buyer and seller, but in a world coping with a pandemic, that dance is even harder.
Typically an initial courtship takes place in person, and once trust grows between both parties, a complex process of due diligence and negotiation takes over until the deal is complete.
Recently we acquired Rimeto, a 24-person startup based in San Francisco that reimagines the enterprise directory. Due to Covid-19 lockdowns announced before a single in-person meeting could take place, the entire process happened—securely and confidentially—online through Slack Connect with the help of a few key app integrations.
According to Brad Armstrong, VP of business and corporate development, Slack Connect ticked all the right boxes as the tool to orchestrate a virtual M&A deal. “[M&A] is more of a conversation at the start, and then it evolves into deal mode, which is essentially an incredibly complex, multi-party project. There are all these things that need to happen, all these people that need to talk to each other, all these boxes that need to be checked. Slack Connect is the perfect tool for accomplishing that.”
Sussing out an opportunity through Slack Connect
What was supposed to be an in-person meeting in March 2020 quickly became a series of Zoom calls instead. Those early meetings between Rimeto and Slack aimed to gauge interest (lucky for us, there was some!).
From there, we invited Rimeto’s founders to a secure, private Slack channel to continue discussing the acquisition opportunity.
“Those early stages are all about vision, trust and relationship building,” says Ted Zagat, co-founder of Rimeto. “It’s not easy when the principals haven’t met in person, but we were able to navigate everything through Zoom and Slack Connect.”
Conducting due diligence in Slack channels
Once a deal is underway, there’s a laundry list of items to get through: conversations between lawyers and key stakeholders across the company, ledgers to be balanced, and an exhaustive amount of pre-deal research.
We used Slack Connect to share channels with partners across multiple organizations. This gave all parties involved in the process of due diligence the ability to chat and exchange files securely.
“It didn’t require long phone calls to brief everyone or lots of email forwards to bring new folks into an ongoing discussion.”
Over the course of three months, we created about 30 channels to collaborate on every aspect of the deal. To keep our workspace organized and easy to navigate, we created a logical naming scheme.
Our naming convention used the following format:
- cd = corporate development
- rockspring = our internal code name for the acquisition, for confidentiality reasons
- connect = used if the channel is shared with members outside of Slack, otherwise omit for internal-only channels
- subject matter = add a keyword for what the channel is about (financials, engineering, etc.)
Once channels were organized for all aspects of the deal, they became a central place to share documents and have conversations. For example, accounting teams from both companies would exchange spreadsheets and ledgers in #cd-rockspring-connect-finance, while Rimeto’s developers would explain their software design and data storage needs in #cd-rockspring-connect-eng. This helped move the due diligence process along quickly.
Whenever we needed to add people to the project, we’d simply invite them to diligence channels where they could scroll up to see previously shared documents and decisions made, with all the context around them. This made it easy to bring new members up to speed without the hassle of phone calls or emails.
“This is a vastly superior way of doing things, since it didn’t require long phone calls to brief everyone or lots of email forwards to bring new folks into an ongoing discussion,” Armstrong says.
Negotiating in Slack Connect with all interested parties
The final stage of the acquisition–contract negotiations–took place in a channel between three organizations: Slack, Rimeto and our outside counsel. At this point, the dialogue was less conversational and more transactional, but it still benefited from being centralized in a single channel instead of long email chains in siloed inboxes.
When necessary, we used Zoom calls to clear up confusion in real time. Slack even came in handy during Zoom calls. Zagat recalls using Slack to chat privately with his teammates while Zoom-based negotiations between the parties took place.
“We were able to communicate and align quickly about the conversation taking place in real time over Zoom,” Zagat says. “In effect, Slack acted as a supplementary back channel—something we couldn’t even have done before.”
One of the most remarkable aspects of the Rimeto acquisition is that to this day, the founders of Rimeto have yet to meet the Slack executives involved in person.
Complex M&A deals made simpler
Acquisitions are challenging in any environment, but even more so in a world of remote work. Thanks to Slack Connect, we didn’t miss out on an amazing opportunity just because work went virtual. We were able to conduct the entire acquisition through dozens of secure channels and thousands of exchanged messages and documents, all in a relatively short period of time.