GameChangers | NAWBO


GameChangers Jodie LaVoie

A conversation with NAWBO Member and Former Chairman of ArrowStream Jody LaVoie about why focus isn’t easy, imagining your buyer before you meet them, life after the sale, and how NAWBO has been really, really good for her.

In these uncertain economic times and with the great division within our country, how have you turned uncertainty into opportunity as a business leader?

It is easy to lose focus in times of economic and political uncertainty. I think times like this make it especially important to remain focused on the company’s customers and growth strategy. As a tech company, ArrowStream took every opportunity to listen to our customers, so we could focus our development efforts on meeting their needs and stay ahead of the technology curve.

How has NAWBO helped you up your game as a business owner? What year did you join?  


I joined in 2015, soon after I took over as Chairman of ArrowStream. Given the unusual circumstances in which I had to step in for my husband and hit the ground running, I needed to quickly build a professional network. The NAWBO leadership made some personal introductions to like-minded professional women, who were an invaluable sounding board. I also attended the Thrive Conference and left inspired, with new professional resources as well as personal friends.   


How long did you work on selling ArrowStream from first concept to final contract?


ArrowStream was founded in 2000 by my late husband, Steve, and me, with funding by a group of individual investors. It was always our plan to create a liquidity event for our investors. Initially, we were building a business that could go public. But when the economic and market climate changed a few years later, we concluded that a private sale of the business would be a more viable endgame.  


What was your approach to ArrowStream's valuation?  


The board has always considered valuation and liquidity as part of its regular rhythm. Beginning in 2006, we started seeking annual input on valuation from an outside advisor. Until one actually hires an investment banker and engages in the process, those valuations are just a rough barometer. Ultimately, the market determines price and that requires a thoughtful sale process.  


What considerations went into narrowing down and ultimately selecting a buyer?


Interestingly, and I guess fortunately, the serious offers were very close in terms of dollar value. That made it easier to focus on the non-financial considerations. Steve and I spent a substantial part of our life building ArrowStream. So it was essential to find a buyer committed to investing in and taking the business to the next level.


We also were looking for a buyer who valued our amazing employees and shared our strategic vision of maximizing the efficiency of our customers’ supply chains.


And last, but certainly not least, we needed to be comfortable that our preferred bidder would have the committed capital to close, would execute quickly, confidentially and would be reasonable in negotiation of the deal terms.    


What emotions did you FEEL after the deal with Diversis Capital was done?


ArrowStream was our second family. Immediately following the sale, there was a sense of loss, especially since so much of my husband was interwoven in the business. But that feeling quickly changed to one of enormous pride as I reflected on all we accomplished in 17 years, in the commitment every single employee brought to work each day, and in knowing that Steve would be pleased with the outcome.     


Can you give us a quick thumbnail of how this deal went?


While I am not able to share specific numbers, let me highlight the process.


It took roughly one year from the day the board decided to consider a sale until the final close with Diversis. We spent about three months interviewing and selecting the investment banker and another three months working with our banker and legal counsel to prepare the necessary agreements and compile a list of potential strategic and financial buyers. We then spent two months soliciting initial and subsequent indications of interest and doing management presentations, followed by a few months of negotiations to finalize our transaction agreements and close the deal.


Throughout the process, the board met regularly with its banker and legal counsel to discuss our options and next steps.    


What do you know now that you wished you knew when you were in sell-mode?


To anyone embarking on the sale of a business, be prepared for many twists and turns during the process – from the buyer’s deep due diligence investigation about everything related to the company, to ensuring management is supportive of a transaction. As such, it is critical to create options. A well run sale process should drive interest from multiple potential buyers. This helps to maximize value for selling shareholders, increases the likelihood of close, and affords backup options, if needed.


Is it important for business owners to know their valuation – especially in uncertain economic times?  


Absolutely. The board should regularly consider liquidity, access to capital, current valuation, and when to engage outside professionals. It is important to understand the different types of valuations that an independent valuation expert can provide, which can be prepared for tax purposes (like a 409a valuation) or for the purpose of a sale.


Ultimately, it takes a willing buyer and willing seller to negotiate a true market value for a company and running an M&A process ensures the market is determining value rather than a financial model.

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