4 Steps to Acquisition

Just six weeks ago, two and a half years into our journey as a company, my startup ShopLocket was acquired by PCH International. I couldn’t have imagined a better fit for our team or our mission and am thrilled to continue our journey under the PCH umbrella.

As much as I’d like to take full credit for having architected the lifecycle of our startup, only now can I really connect the dots leading to our acquisition and the truth is, it all started at the Start Conference last June.

We didn’t see it coming

While the road from meeting PCH at Start to being acquired was about 8 months long, we really didn’t see it coming until we were only about 7 weeks away from the deal closing. Since the acquisition many people have wanted to hear the “real” story behind how it all went down. How did we meet PCH? How long did it take? What was the process?

To answer some of these questions, in this post I want to lay out all of the touch points I had with PCH prior to our acquisition, Starting with the Start conference.

Start

Prior to the Start Event, I had only ever vaguely heard of PCH through the hardware community. I am based between Toronto and SF and had flown down to SF for the event. I had never attended a Summit event before. The list of attendees looked cool, but I didn’t really know what to expect.

shoplocket300

Starting out as a general commerce platform, we had recently pivoted towards a singular focus on pre-orders for post-crowdfunding products and hardware companies. My goal at Start was to get more connected with the hardware ecosystem.

PCH was announcing their new Highway 1 incubator at the event, one of the first incubators solely focused on Hardware companies. It peaked my interest to say the least.

I listened in on the launch announcement and played around at the PCH booth with some of their newest products out of the PCH Accelerator— littleBits, Metawatch and Lively. From that time on PCH was always in the back of my mind. But it would take quite a number of chance interactions to lead to what ultimately became our acquisition.

What happened next

About a month after Start, I ended up running into Brady Forrest who runs Highway 1 again in Montreal at Startup Festival, and would run into him again a couple months later at the Silicon Chef hackathon. I had found my way onto the Silicon Chef judging panel, which Brady was also on and Brady was kind enough to take all the judges on a tour of the new Highway 1 office and  invited us to the launch party happening a couple days later..

It was at the Highway 1 launch event that I first met PCH founder Liam Casey — who was in town for the launch from Shenzhen. At the event I showed Liam the Launch Academy that we had prepared for hardware startups. He loved the guide and seemed very interested in our approach to commerce and the hardware ecosystem in general. I happened to already have plans to fly down to Shenzhen for the first time later that night and we agreed to set up a time to meet a couple days later in Shenzhen.

shoplocket400

My trip to Shenzhen was amazing, but that’s another blog post altogether. I’ll leave it at the fact that I had the chance to meet with Liam again two days later in PCH’s Shenzhen office. The conversation went on for a couple hours, but was far from acquisition talk. We talked about Liam’s journey in starting PCH and his long term vision to be an end to end platform from concept to consumer.

The opportunity

It was in that meeting however that Liam mentioned a new event and office facility they were opening in SF. Wanting to host a conference myself I thought it might be a great place to do it. When I got back from China I reached out to the PCH team in San Francisco to chat about hosting the event in the PCH space. Over the course of November we had many calls discussing the event, but more importantly we discussed just how much our strategies and views of the world overlapped.

We had officially launched pre-orders just a few months prior, and were seeing tremendous traction and momentum in our business. I had started the process of closing a new round of funding to propel the growth even further. By the time I flew down to meet with PCH in person at the end of November it was clear that we needed to find some way for our two companies to work together. The more we talked with PCH the more I thought PCH would make an amazing strategic investor as part of that new round.

Initial talks about strategic investment quickly turned into acquisition talks as we realized just how much more we could do by pooling our resources. I had met many people within PCH and knew both our company cultures and visions aligned completely. ShopLocket as the community and commerce arm to PCH seemed to make so much sense, but there was still a lot to figure out.

The next 7 weeks leading towards the acquisition would become some of the most amazing, fruitful, and stress filled weeks of my life to date!

Shoplocket100

Getting to details

Everyone had started moving down the road of talking acquisition but first things first, we needed to figure out if we were even in the same ballpark in terms of price. Our primary objective was simply to represent the interests of our shareholders and investors and to pick a number that everyone, on both sides, could be excited about. Price in particular is a touchy subject for a lot of people — and no one ever wants to be the first to spit out a number. But it’s a conversation that has to happen, and it has to happen early on in the acquisition conversation. Nothing necessarily needs to be decided on immediately but you need to make sure that both sides are working in the same range. Luckily for us everyone was really on the same page from the start.

Secondly, we needed to figure out if we were on the same page regarding high level deal structure and terms. Selling your company is an extremely emotional decision. It’s your baby, you’ve put your life into it, it becomes a part of you. 2.5 years seemed like both a lifetime and the blink of an eye, and we still felt like we were just getting started — just finding our groove, about to make a real impact on the entire community. We didn’t want to give up the things about ShopLocket that made us want to jump out of bed every morning. We knew that unless we could keep our autonomy, our ability to continue running ShopLocket independently to fulfill our shared vision, and unless we could keep our close knit team together and keep growing both in Toronto and San Francisco — the deal would be a no go.

Luckily PCH has what I think is a very unique perspective on acquisitions. They see acquisitions as a way of injecting new DNA into the company and have a deep respect for protecting the entrepreneurial spirit of the companies they bring on. Liam’s compassion and respect for us as entrepreneurs perhaps more than anything else gave us the comfort that not only did this deal make sense on a business level, but also on a human level.

Once we had qualified that everyone was on the same page — that’s where things really got interesting!

It took us 3 weeks to get all of the high level terms into a term sheet, which arrived in my inbox on Christmas Eve. My stomach was a knot of excitement and anxiety from that point onwards. While negotiations slowed down a bit over the holidays, you can imagine it was all I could think about.

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We have a very close knit team and everyone knew that PCH was a very real opportunity since the conversations had started in early December. We had to keep telling each other not to get too excited, we still had a company to run! No matter how sure I felt that this deal would go through, our advisors and friends in the startup world kept reminding us that most deals never cross the finish line. On both sides we were keeping involvement in the conversations on a need to know basis. Every milestone we crossed got us closer, but until the deal was closed there was always some risk.

Once January hit things were back in full swing and the PCH team was on its way to come meet the whole team in person in Toronto. When Liam and the PCH team arrived in Toronto we had some great planning sessions with our about what the world could look like together. It was during these sessions that Liam mentioned that PCH had a big demo day coming up at the end of January and suggested it would be a great place to announce the acquisition. The only slight problem was that it was just 3 weeks away!

That date ended up setting the timeline for the next three three weeks. I loved the idea that we could get it done in 3 weeks, but it was undoubtedly ambitious. We got all the lawyers, accountants, board member and investors lined up and ran towards that deadline. PCH was great about not making the due diligence process to strenuous, but even in the best of cases its a stressful and emotional process. The tight deadline made for many long nights, many conference calls spanning 3 time zones, and many days locked away in a boardroom going through every sheet of paper we’ve ever signed and every aspect of the company’s inner workings. Not to mention we also needed to rebuild our website for the announcement of the acquisition at the same time!

In the end, after making 3 trips to San Francisco, 1 trip to Ireland and 1 trip to Las Vegas over the course of two months — we hit the January deadline, the deal was closed and we announced the acquisition that very same day.

It was an absolute whirlwind, but we couldn’t be happier with how it turned out. Just six weeks later the team is growing rapidly and we’re well on our way to building the end to end platform for hardware innovation we all imagined.

Katherine Hague is CEO and Co-founder of Shoplocket. Herself and her co-founder Andrew Louis started Shoplocket as a simple way to sell from any website quickly. Today it’s a platform that helps entrepreneurs bring their products to life and into the hands of their consumers. 

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