Selling a company is almost always a challenging and time-consuming process. However, for Fredrika, the CEO and cofounder of Neodev, the journey was made smoother by her experience and the relationships she built over the years – as well as a bit of luck.
In a recent conversation with Exitplanner, Fredrika shared the story of how the Neodev team found buyer Sylog, and the process of getting ready for the sale in 2022.
Finding a buyer with a bit of serendipity
When the Neodev team set out to find potential buyers, they first established a set of criteria. For example, the acquiring company should be larger and have framework agreements with customers, and they should share Neodev's unique employment model:
"The absolute most important thing was to have the same employment model as we have, since our model is quite different. You don't have a fixed salary, but you get a percentage of your earnings, and you then choose for yourself how you allocate your money within the boundaries of tax law."
"We wanted such a model because we perceived that all employees wanted it, and it has been a success factor."
The team found and approached buyer Sylog without the assistance of any brokers or intermediaries. The decision to start looking on their own was based on a previous experience with such services:
"I had worked at another company where we were acquired, and they had a bad experience with the people they had hired. So we thought, let's start by ourselves and see how it goes."
After creating a list of around 10 companies that seemed like good matches and conducting some initial research, the team narrowed the list of potential buyers down to a few companies, and one company in particular sparked an interest:
"When we had this list of potential candidates, Sylog came up as a name. And then I remembered, yes, I have worked with them. And it was so funny, because one of the same people from 25 years ago was still on the board."
Fredrika’s knowledge about and experience with Sylog was a clear advantage, and Sylog was even an early inspiration for the employment model of Neodev. It gave everyone a good feeling moving forward:
"When we met them the first time with the others in our small management group, they were also just like: this is perfect. It just felt so right. It was surprising, but sometimes you need to have a little luck."
Like something from the 90's
Although Neodev was already in good shape in terms of documentation, Fredrika emphasized the incredible amount of work that went into due diligence, a process that was handled by a third party:
"It was an enormous amount of work. They examined us thoroughly and wanted documentation for everything. We had our papers in order, and they said they were very impressed. Even so, I probably spent an additional 200 hours on top of my regular work during evenings for two months."
Filling out a data room is central to the due diligence process, but it was not without complications:
"There were different departments with lots of questions in the data room. But they hadn't synced between each other, so there was some overlap. One department said we want these five things, and another said we want these five things, and they were similar but not quite the same… It really felt like the same work was redone several times."
"And then it was very awkward when you uploaded documents. It felt like an interface from the 90s."
Fredrika’s experience demonstrates the need for a more streamlined and modern approach to filling out a data room, and it is also a good reminder that better software solutions should go hand-in-hand with better processes and communication.
An independent subsidiary
From initial search to the final sale, the entire process took only about a year and was announced in 2022. Neodev is now a subsidiary of Sylog, and the two companies cooperate around clients and have regular meetings, but Neodev operates as an independent subsidiary:
"I have been part of several other company acquisitions, so I have learned to not underestimate the importance of spending a lot of resources on the integration going well. Especially when it's a consulting business, the company’s value is the consultants, and if they stop, it's worth nothing."
"The first part of this process was to get all employees to understand why we were selling so that everyone would feel good about it. I think that was very important."
The interview was conducted in Swedish. All quotes were translated manually to try and preserve their original tone and intent.
Neodev AB is a Swedish consulting firm operating in the Öresund region. Their main expertise is software engineering with business areas: artificial intelligence, web, embedded, mobile applications and devops.