Why Adaptive Insights chose acquisition over IPO

Robert Hull x Robert Antoniades

Returning to Vancouver for its second year, TechExit.io presents the biggest exit success stories and connects attendees with the players that made them happen. As a media partner, BetaKit interviews TechExit speakers about their journey prior to the conference.

Three days before Adaptive Insights was set to go public, it made a last-minute pivot and signed an acquisition deal with Workday for $1.6 billion. The financial planning software company spent nearly three years preparing for an IPO, but founder Rob Hull said the acquisition deal made perfect sense for the vision and future potential of Adaptive Insights.

Speaking to BetaKit ahead of his appearance at TechExit.io on April 10th in Vancouver, the cloud technology innovator shared Adaptive Insights’ founding story, the company’s initial plans to IPO, and why it ultimately chose acquisition over going public.

Consultant turned entrepreneur

After graduating from Stanford and working a consulting stint on the east coast at Booz Allen Hamilton, Hull moved back to Silicon Valley to join the startup world. After becoming CFO of mid-sized startups LoopNext and then ChemTracker, the latter of which resulted in a promotion to CEO, he noticed the huge opportunity within financial planning software.

“There was no intent to just get in and get out. It was to build a great company, do right by customers, build an environment employees love, and continue to scale.”
– Rob Hull

“There were no good tools for planning and analytics at the time,” said Hull. “I felt I was either stuck in Excel, which was great in the sense that it was easy to use but was not collaborative and didn’t scale, or enterprise applications that were powerful but not very easy to use and required consultants, making them expensive and time-consuming.”

This frustration, combined with the then-new model of subscription payments and cloud delivery, led Hull to a business opportunity.

“I looked out, saw that void, and said that the structure of financial reporting – very collaborative and very dynamic – lends itself well to the SaaS model,” he continued. “And there really wasn’t any competitor in the space at the time.”

Coming of age in the post-tech bubble world of Silicon Valley, Hull planned big for his new business idea and founded Adaptive Insights in 2003.

“My mind was, we can shape a new industry, transform the way that finance works, and create a global leader in the market,” he said. “There was no intent to just get in and get out. It was to build a great company, do right by customers, build an environment employees love, and continue to scale.”

IPO looming and a Workday meeting

Fast forward just over a decade to 2015, and things are going well at Adaptive Insights. The company was growing, adding more employees, and slowly fulfilling Hull’s mission to change the world of financial planning.

“We started mid-market, but at that point, we realized we were continuing to penetrate larger organizations,” Hull explained. “We began to transform our sales and go-to-market functions to address larger markets. It was a gradual evolution to covering all aspects of the market.”

The company decided it was time to move into hyperdrive.

“The decision to create optionality about being public was probably done three years prior to the acquisition, after hiring [Tom Bogan] the CEO,” said Rob Antoniades, co-founder at VC fund Information Venture Partners, an early investor in Adaptive Insights. “This empowered Tom to build a company that could go public.”

Once the plan was set in motion, Antoniades said Adaptive Insights began hiring experts with experience leading and taking companies public. After that, there were “a lot of things to get done,” he said, regarding system upgrades, financial documentation, and bringing on in-house counsel to guide the IPO process.

Early in 2018, the company began the process of preparing for a potential IPO. Adaptive Insights selected investment bankers and legal counsel, met with prospective investors, and assessed the receptivity of public markets to a potential IPO. This process is a common practice for companies considering an IPO, but it’s also a complex process.

In early June, Adaptive Insights began its IPO roadshow. During the roadshow the company received a call from the Workday team expressing interest in a potential acquisition of Adaptive Insights.

Acquisition over IPO

The acquisition discussions happened very quickly in parallel with the investor roadshow, leaving little time for management to make a decision. Adaptive Insights was less than a week away from its IPO and the Workday offer was on the table. At this very late stage in the roadshow process, the team had a very challenging choice to make and decided to pivot from the IPO to accept the Workday offer.

The acquisition discussions happened very quickly in parallel with the investor roadshow, leaving little time for management to make a decision.

Hull said the company chose the acquisition offer for a number of reasons, primarily the vision-fit with Workday and the terms of the transaction.

“One of the things that made this work – and was apparent right away – was the cultural fit between the organizations,” said Hull. “The sincerity with which our team felt welcomed by the Workday executive team all the way through the organization as a whole.”

Hull said that the acquisition went well, especially considering how big the acquisition was in terms of dollar value ($1.6 billion) and size of both companies (Adaptive Insights’ roughly 500 people merging into Workday’s roughly 10,000 people). He credited the “tremendous alignment to vision and strategy” between the companies as the reason the acquisition has gone well.

Moving forward, Hull said the Adaptive Insights team is heading towards the same vision it was before. An acquisition (or IPO, as was initially planned) was merely a tool to get further along on their path.

“Going public was a financing event that was intended to help us continue to fuel the growth of the company,” Hull said. “The acquisition played the same role. In many ways, it gives us a stronger set of tools to go to market with: broader brand recognition with an enterprise customer base, broader global footprint, and a partner network that is deeper and richer at the systems-integrator level. The things we saw possible as a public company we see as part of Workday, and then some. Things that would have taken us years to get to, we’re going straight into today.”

Hear more from Rob at the 2nd Annual TechExit.io on April 10th in Vancouver where educating technology entrepreneurs and investors on potential acquisitions, mergers or exits makes this event a unique opportunity for industry players who want to understand the ins and outs of selling – or buying – technology companies. This event is not just for tech companies looking to exit in the near term – it is about being “exit ready” from day one. Grab a ticket and take 20% off with code BT20.

Stefan Palios

Stefan Palios

Stefan is a Toronto-based entrepreneur and writer passionate about the people behind tech. He's interviewed over 100 entrepreneurs on topics like management, scaling, diversity and inclusion, and sharing their personal stories. Follow him on Twitter @stefanpalios or send an email to stefan.palios@gmail.com.