🎧Get ready for the fascinating journey of Crossinx on The Big Exit Show!
We are thrilled to feature Marcus Laube, a seasoned entrepreneur and the mastermind behind Crossinx, a pioneering company in the realm of e-invoicing. Join us as Marcus shares his remarkable journey from the early challenges faced during the 2009 financial crisis to the triumphant acquisition of Crossinx by Unified Post Group.
As the conversation unfolds, Marcus provides invaluable insights into:
- Navigating the turbulent waters of the financial crisis and its impact on business operations
- Harnessing the power of network effects to drive growth and expansion
- The pivotal role of timing and persistence in achieving a successful exit
- Balancing personal aspirations with the needs of the company and its stakeholders
As always – hosted by Peak’s very own co-founder and managing partner Johan van Mil and Anke Huiskes founder & managing partner of NP-Hard Ventures 🕺🏻🕺🏼
You can find the episode on your favorite podcast platform, linked below. And, if you are really interested in listening to the big exit of specific founders – reach out to us so we can invite them for the next episode!
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You can find the transcribed version of the episode below:
Madelon:
Starting a company is easy. Growing a company is harder. But selling your company, that’s a whole different story. In the big exit show, we lift the curtain of secrecy around selling businesses by learning from ambitious and successful founders who have been on this roller coaster. Our hosts, venture capital investors. Johan van Mil, the founder and managing partner of Peak and Anke Huiskes, the founder and managing partner of NP Heart, will help you on this exciting journey.
Johan:
What a fascinating story.
Johan:
We will talk with Marcus, the founder of Crossinx, who sold this company after 17 years in total, with bankruptcy on the way. And then restarting it. I think it’s fascinating to hear his personal resiliency to make this e-invoicing business a real business.
Anke:
Right? Yeah. And especially his obsession with this topic, because in the beginning, he had the market timing not right. And then he had to start over again. But I think if you believe in something and you’re not willing to let go. The moment that you decide now might be the right time to basically step aside and then be right on the timing of the market. It’s interesting to hear how that journey went. Indeed, yeah.
Johan:
At that time, I invested in an invoicing company, which also went pretty well.
Johan:
Not as good as this one.
Marcus:
Right.
Johan:
So there were a lot of competitors in this space. So I think when you start a company, especially these days, when it’s really easy to start a company.
Marcus:
Right.
Johan:
And also with new technologies like AI, it’s pretty easy to develop your tech. I think resiliency is becoming more and more important. And as he also describes, it’s a thin line between being resilient, but also being too stubborn and sticking too long to your ideas. Right. Without pivoting or changing your business model. So I think that was a big insight to me as well.
Anke:
Yeah. And I think one other key takeaway was once you figure out now is the time to sell it. To be so obsessed with the number, like selling your company and having an acquisition period of five weeks, to me, it’s like crazy fast. But I guess if others know this is the price, take it or leave it, then.
Johan:
And he put a number on it.
Marcus:
Right?
Johan:
He knew the number. He named his WhatsApp group with that number, and he made it happen. So it works.
Anke:
Yeah, it works. Yeah. Many great insights. So enjoy listening.
Johan:
Indeed.
Johan:
Enjoy it.
Johan:
Good afternoon. Starting a company is easy, but growing it is harder. But especially selling your company, that’s a different story. Well, in the Big Exit Show, we lift this curtain of secrecy in selling tech companies, especially by talking to founders who’ve been on this roller coaster before. I’m your host, founder and managing partner at VC fund Peak. And my co-host, Anke Huiskes, founder of MP Heart Ventures.
And today’s guest is Marcus Lauber. He’s the founder of Crossinx. They are the leading provider of e-voicing and are based in Germany, and they’re working with the biggest, largest companies and institutions like Nestle, Bayer, but also the German national government. So welcome, Marcus.
Marcus:
Thank you, Johan.
Johan:
Perhaps you can start off by telling how you started the company in e-invoicing in 2007, right? Because I think we all know what’s happening there right now. But these days you were a pretty early bird.
Early Stage Of The Company
Marcus:
Yeah, well, that’s true. But actually, probably I need to start even earlier than that because the very first company I started in the area of invoicing was back in 1999, a company called Seals, which I started at the very beginning of the Internet. So the Internet was just invented and that’s where it started. Well, two sentences about that first company, because that started at Lufthansa, which was my first job after my studies. And as I said, it was 1998, 1999. And at that time, it was just about what could we do as a company, as Lufthansa with the Internet. So it was just building a website.
Marcus:
I was the first one to be responsible for setting it up. And then afterward we wondered what could be next, could it be more than just having games on the Internet, right? At that time, that was the most common thing to do. And that’s where I thought about invoices, first of all, because I worked in the area and the department of Lufthansa dealing with credit cards. So it was all about invoices, about payments, et cetera. And then I developed a business plan to have electronic invoices instead of paper, which was the common way to send invoices at that time. But there was not even a law allowing for electronic invoices. So we were in an early stage. Now, starting in 2025 in Germany, it will be mandatory to send electronic invoices. So that was quite a journey until now.
Marcus:
But it all started back then.
Anke:
And was it like a spin-out of Lufthans. How did that end?
Marcus:
Well, the decision back then was, well, it’s not a core business for Lufthansa. So if you have that idea, good luck and try to find someone else to finance the case, which I did at that time. It was mainly financed by Three I, the venture capital company. You might know they had a different name back in those years, and one of the other main shareholders was Accenture. And Lufthansa itself remained a small shareholder at that time.
Johan:
And what happened with that company, Marcus? Because I think you also changed the company.
Marcus:
Right. The structure there. Yeah, exactly. I mean, as I said, we were early days and the specific challenge we had was bad timing back then. In 1999, the Internet bubble just burst. So it was more challenging in 2000 to get any additional financing. And that’s why we, after two and a half years, went into bankruptcy, because there was no additional financing. Three I didn’t continue to finance and nobody else did.
Marcus:
So we had to close down the company in 2001.
Johan:
And how did you do that, Marcus? Because that’s happening now also a lot.
Marcus:
Right.
Johan:
Where current investors are not willing to bridge any further. Right. And also are not willing to invest further. How did you deal with that? Because Three I especially also their predecessors are pretty big funds and you also had Accenture on board.
Marcus:
Right.
Johan:
So money was not the problem. How did you deal, especially at that time, with that.
Marcus:
Yeah, well, money was not the problem for those investors probably, but they were not ready to invest it in that company. Well, the only way we could deal with it was that I bought the company out of bankruptcy myself, so I was allowed to take it back. We restarted from scratch just the next day and with just four people. And actually, the first financing we realized for that new company was based on tables and chairs because the old company was blown up to 40, 45 people pretty much at that time. And when I bought the company out of bankruptcy, I got all the chairs and tables with it. And as we were just four people to continue the business, I sold the remaining chairs and tables, and that allowed for another three, or four months of financing. And during that time, I ran into a company from the Nordics, Finland and Sweden being in that kind of business as well.
Marcus:
And they were interested and finally acquired the company after four months. And that’s where I continued to work for another five years then. And I do hope that the multiple.
Johan:
Was higher than only, let’s say, the sold chairs and desks.
Marcus:
Right.
Johan:
So you had another multiple there also for selling the company.
Marcus:
It was. But still, it was kind of out of bankruptcy. So obviously there were not really high multiples and then there were very limited sales at that time anyway.
Johan:
Okay, what was the reason for you to buy back the company, let’s say, out of bankruptcy, et cetera, and sell it after five months? What was your personal motivation for that?
Marcus:
Well, I was completely convinced that this was the way to go, that one day there would be no more paper invoices. That was pretty obvious to me back then, even though I completely underestimated how long it would take to get there now. I mean, it’s 25 years later, and we arrived, but I expected that to happen just after maybe three or five years. So I hardly look at my business plan back then with completely different numbers.
Anke:
But that was also the question that I wanted to ask. So after five years of being with the acquired company, you decided to start something new again, but in the same space. So during that time, have you considered starting a new company in a completely different field, or it felt like a very unfinished business? Do you mean that you saw way more potential?
Marcus:
You mean after working for five years at that company? Well, it wasn’t the plan from the beginning to start yet another company. But at that time, Titanato decided to close all their business in continental Europe. So they only focused on the Nordics again, and that’s why they intended to close down the business. And again, this was in 2007. So the decision was to start another company. Take a couple of people with me from the team I had within Titanato, and we developed the whole thing from scratch again, at least with the experience we collected during the very first years. So it was certainly easier to develop a new platform.
Marcus:
But still, we had to do it all from scratch again.
Dealing With a Developing Marketplace
Anke:
Now, what were the two or three new terms, if you can say like that, when you started the company, in terms of what you wanted to do differently this time around, of course, the market matures way more. I think they’re more ready to do invoicing.
Marcus:
Well, the market obviously advanced a couple of years, so that was better compared to some years before. Still very early days, obviously, for e-invoicing. But again, I was convinced we would get there at some point in time. What was different? We had some major customers that were convinced to continue, and they even promised us to continue with the new company. So we had one major customer, and based on that promise, actually a Dutch customer, a famous brand, which I won’t disclose now, but they promised to continue. We learned the hard way that three months after we created the new company, they didn’t keep their promises, and we had to win new customers to continue the business, find additional financing, et cetera. So it was a bumpy start for the second company.
Johan:
And for the second company, what was the reason that you didn’t buy the assets, carve out the existing business, and start with that? What was the reason for you to start all over again, if I may ask?
Marcus:
Well, that was more challenging to carve out completely from Titanato, which was a large company with more than 10,000 people at that time. So processes and discussions were much more complicated than taking it out from the bankruptcy a couple of years before. Right. So it was easier for us to start again also because technically we thought we could be more advanced with a new platform than building on top of what had been created a couple of years before. Because technology advanced, obviously, and we were building it on new technology. So that was one reason. And there were no real additional assets, there were no more tables and chairs that we could get.
Anke:
I think if you zoom in, you see it has been like 16 years building that company. And when you look at the numbers there were 350,000 SMEs and over 1,600 larger corporates that have been using the product that you won over that period of 16 years. Can you take us through a few moments within the company where it seems like it’s not a linear path, where there was a tricky point? Either because of epithets or you had to slow down a little bit to find a new customer segment?
Marcus:
Well, that could be a long story, of course. I’ll try to summarize the highlights. Obviously, everybody wants to hear about the hockey stick, right? But it was indeed more of a linear development. But again, at the very beginning, the first four, or five years of that company were also very bumpy. We were not lucky with timing. We started in 2007. So obviously what happened the year after was the financial crisis, which affected us quite a lot. At the very beginning of the first company, it was the burst of the Internet bubble.
Marcus:
Now, we started with a financial crisis, and what we realized was that during the first half year of 2009, there was no single contract we could close, no revenue at all, because all companies were pushing back and were not proactive in starting new technology, new processes. Right. So that was challenging, and we had only a couple of customers thereafter that continued. And we did it the hard way because we did e-invoicing and e-invoicing back then was driven by large buyers, large companies, like what you mentioned, Johan, earlier, Buyerstore six, et cetera. We were able to win a couple of those Vasenius, you might know, Ibonek. And the business was that we supported them in connecting their suppliers. So we had a contract with a large buyer, but then we also contracted many small suppliers to send electronic invoices to that specific buyer.
Marcus:
And from the four, or five people we had at the very beginning, I was the only nontechnical person so responsible for everything else, like sales, administration, et cetera. So doing sales with all these small suppliers, I had to call a small bakery somewhere, but also large companies, et cetera. And then they started to do business, paying €10 a month to send a few electronic invoices. But the good news was that we could also win those suppliers to become major customers for us because they started not only connecting that one specific buyer but many of their buyers. Right. Sometimes they also connected their own suppliers. So it’s really a network effect that you could create and that we were building on and developed a number of customers from that effect.
Anke:
And when you made the business plan, did you take into account that flywheel effect or that network effect?
Marcus:
That was one of the main drivers of all these business cases. But again, it often takes more time than you think it would. So that was the same thing. It started slowly. You need to reach a certain critical mass as well before it can really accelerate. Right. So typically you say at least you need, like 20% of the market to make that effect really happen. So we just got there.
Marcus:
Now it’s starting to happen. But back then it was much more complex.
Maximizing The Network Effect For Growth
Johan:
What if you stimulate that effect, that network effect?
Marcus:
Right.
Johan:
Because, as you mentioned. with very small customers, it’s hard. Did you focus on a certain vertical? Did you focus on specific client groups?
Marcus:
What did you do to maximize that? Well, that was one of the learnings. Back then, our approach was rather to concentrate on large buyers, no matter the industry. So it was a kind of a diverse portfolio of customers we achieved. But probably it would have been easier to focus on a limited number of industries first, much more than we did before, starting well with many different industries. But still, we did win a couple of large brands, and large logos, which was good, and still could take it from there, finally becoming the largest invoicing provider in Germany. But one more thing that we didn’t do was expand into different geographies which might have been an additional solution because Germany is not known as very service provider friendly. Many companies are trying to do things on their own, and there are other countries like the Netherlands, like UK, et cetera, where more than 90% of all invoices are managed by service providers. In Germany, the number even today is probably less than 30%.
Johan:
To give you an idea, it’s a debate that we often have with German companies, right. Because the country is so big to build a standalone company. And what’s the right moment then to internationalize?
Marcus:
Right.
Johan:
If it’s really needed from a market size perspective.
Marcus:
Right.
Johan:
Did you internationalize Crossinx? Because we go through the exit later. But what was, let’s say, your international position when you were acquired?
Marcus:
At the very end, we were active in Switzerland apart from Germany, mainly with our own company. And just a couple of days before we were acquired, we acquired a company in Hungary ourselves. But apart from that, the main focus remains on Germany.
Anke:
And can we start talking about how that acquisition happened? Because we read somewhere that you got in touch with the acquirer because of your espa. I hope I pronounced that right. Can you take us through how that relationship started and how it evolved?
Marcus:
The relationship with Unified Post specifically? Well, I mean, over those 16 years we had a couple of financing realms because it still needed additional financing. The existing shareholder structure, one of the learnings I had from my first company, is not to rely too much on venture capital if possible, because they are rather short-term oriented. And I knew from the beginning it’s a B2B business, it’s a marathon, it’s not a sprint. And that’s why I specifically look for long-term-oriented investors. So it was much more like, let’s say, friends and family, which well, resulted in quite several shareholders. So more than 20 different shareholders at the very end, but all are very loyal and positive when it comes to our business. But anyway, we had to do some financing in between. The first time we went break even was in 2013.
Marcus:
So we knew it was possible to break even, but we also knew it’s still a network business. So it’s a first-mover business. You need to be ahead, you need to have the largest network to reach those network effects. That’s why we decided to still invest in the company, not staying break even necessarily, but to invest additionally. And that’s why we partly looked into those possibilities and the very first contact. Not sure if I’m completely right, but that was already three or four years before the actual acquisition. Unified Post was not yet listed on the stock exchange in Belgium back then. But they just checked different possibilities.
Marcus:
I always denied it because it was not our intention to sell the business at that time. We still had the ambition to grow, to make it bigger. And then Unified Post became a public company in 2020. And that, well, obviously allowed them to pay additional amounts. Right. When it became more interesting to have a chat.
Johan:
So, taking one small step back. So you mentioned that you finance a company with friends and family, right? The 20 people on your cap table.
Marcus:
Right.
Seed Funding From Family And Friends
Johan:
Didn’t you raise any professional capital at all anymore with Crossinx?
Marcus:
In this case, not really. The only thing we did was to have that. We had a fund of a state owned bank in Germany, which was supported by other investors. So they paid the same amount as other investors did. But that’s it, nothing else. Yeah.
Johan:
And, Marcus, what did you raise in total? I read somewhere 500k, but I don’t know if that was correct. In total, for the company to fund its operations.
Marcus:
500k for Crossinx in total? No, that was much more.
Johan:
Yeah, much more. Right. Can you say something about capital? What you raised with your family and friends.
Marcus:
Was somewhere between €5-€10 million. Okay. Yeah.
Johan:
The data that we have is not always fully correct, sir.
Anke:
Does it also mean that you didn’t have a board of advisors or a board of directors? I’m curious about the decision-making process.
Marcus:
We had a board of directors, with four people on that board. Well, still friends and family, which was actually crucial, because sparring with your own employees is challenging. So it was good advice many times. Two very good friends, which can also be challenging, were part of that board because you mix private and business life. But they were part of the story from the very beginning. And along those 16 years, it always went well. Obviously some ups and downs, but we’re still very good friends. So friendship survived this roller coaster.
Anke:
Yeah.
Johan:
How do you deal with that, Marcus? Because what I recognize a lot is that people have their friends on the cap table and work with them and then have them on the board, and sometimes you run into the problem that you logically do not always agree on things. Right. How do you deal with that on a personal level? What can you perhaps share from that perspective?
Marcus:
Well, I think the most important thing was to be transparent, not trying to hide anything from the business. So we were open, discussing the different topics and challenges. We met virtually or personally almost every two weeks to discuss things and topics. So everybody was in line and was aware of what happened. And I think that’s a very strong relationship that you build based on that.
Johan:
Do you also use the root of the thump? What I hear sometimes when business, we talk about business, but when we see each other privately, then we don’t talk about business. Does it also work for you that way with your friends?
Marcus:
I think that’s easy to say, but obviously, that doesn’t really work all the time. Right. It’s unavoidable that you mix the two from time to time. Of course, if you meet with others, then we don’t talk about business, but even if you meet privately with those, you always discuss the business as well. Unavoidable, yeah.
Johan:
Of the same experience. Indeed.
Anke:
And during that period of the acquisition, because previously you said something along the lines of that you wanted to grow organically on your own terms or that you didn’t want to. So did something change in the market or the way the company was growing? Or because you thought that the acquisition price must go up because now they went public? Or was it a combination of those three? So what happened when you decided to take this route and take the meeting and explore acquisition further?
Marcus:
Yeah, well, I mean, now I’m 55. Back then I was 52. So that’s probably also the time when you think about when would you like to benefit from all you invested during your whole life? I mean, I invested almost 25 years in that business already without getting anything back financially. Then you need to think about whether you still want to continue, take the next step, or think about what would you like to get back from the business, really, what are your expectations? What is the right number to get out of it and do something different, maybe? And it still wasn’t what we tried to do, so we didn’t go to the company trying to sell it. At the very beginning, it was part of the financing realm, discussions with different people about additional financing. But actually, they started the discussion about whether it wouldn’t be possible to have an acquisition.
Marcus:
And only then we really started to think about it, to be honest. So it wasn’t really a long-term strategy, and now it’s the best timing to do it. It just happened on the way.
Talking To Venture Capitalists For Additional Funding
Anke:
Be very honest, but to better understand, when you were saying, like they started the conversation, was it that you were talking to other VCs for additional financing and they were one of the potential parties to provide financing? Or these were two different topics and they heard through the grapevine that these guys are raising a new round. This is the moment to come in and acquire. So how did that work?
Marcus:
Well, it was actually a coincidence. We talked to different financial institutions about the additional financing. But then, as I said, we started discussions with Unified Post already three years back. So it was just another call. So we talked to each other like once a year, about how are things going, et cetera. So they were not aware of that financing activity that we had at that time. Yeah.
Anke:
And if I can ask so bluntly, because you were saying, it seems that you took a step back and figured out what will be in it for me and also the money. Did you have a certain number in your mind? So when you had the conversation, you said like, okay, guys, this is it. Or how did that work?
Marcus:
Yeah, pretty. Exactly. That’s how it works. So I had a number in mind for me personally, but also in combination with the main shareholders. We even called our WhatsApp group that number. And that made it also easy for any negotiation because that was just what we expected and we didn’t change that expectation during the whole conversation.
Johan:
So, Marcus, when you were talking with your potential buyer.
Johan:
Right.
Johan:
At the same time, you also had talks with financial institutions.
Anke:
Right.
Johan:
Can you elaborate a little bit on how that was going, especially having the two trajectories at the same time?
Marcus:
Well, we started both in parallel, but at one point in time we decided to only continue the talks with Unified Post. So we were optimistic that if we would go for additional financing, we could still take that path and find additional financing. But we were concentrating on the Unified Post deal exclusively at some point in time.
Johan:
What was the reason for that, that you fully focused on that?
Marcus:
Well, it was just exhausting to have those detailed discussions. And that was also something Unified Post asked us to do at some point because they also invested quite heavily in due diligence, et cetera. So just for you to imagine they were like 30 to 40 lawyers, business people, et cetera, from Unified Post involved the whole time for five weeks. And, well, for us it was just 2 or 3 people. Right. So it was really exhausting to have those discussions. But we concluded the whole process within five weeks, which I think is also exceptional.
Johan:
Yeah, indeed. Normally that takes more time. What’s then the moment to elaborate a little bit on this, when you started to talk exclusively? You have different options on the table and at a certain point, you have to place your bets.
Marcus:
Right.
How Do You Establish The Right Exit Price?
Johan:
And then you should know also what’s happening there. What was the moment that you realized that Unified Post was the go-to path?
Marcus:
Yeah. Well, there was an indicative amount that they were ready to pay without any due diligence. But that amount appeared positive to us. And there was also one other company actually that was ready to pay the same amount. But the reason why we chose Unified Post was that we felt it would be a very good match with the businesses that we had between Unified Post and Crossinx, because Unified Post had more small customers. Crossinx focused on mid-size and large companies. Unified Post was very active in the area of payments, whereas we focused on invoicing. So that seemed to be a very good match.
Marcus:
And that’s why we decided finally to process exclusively with UPG.
Anke:
I’m trying to place myself in your shoes, creating that WhatsApp group hypothetically, like the 100 million WhatsApp group deal. And then going through these conversations.
Anke:
Visualize the moment when the deal came together and who was there? Yeah. How was that moment celebrated, basically?
Marcus:
When we finalized?
Anke:
Yeah. Signed the agreement when there was no way back and things were signed and sealed, basically.
Marcus:
Yeah. Well, that was a strange situation because that’s when you realize, to some extent, you fully only realize months later, but that you, to a certain extent, realize you need to let go of a company that you have built for 13 years, which is quite a long time. Back then we had more than 200 people, employees in different countries, not to mention Moldova. This was not a business we had in Moldova, but we had a lot of nearshoring validation people in Moldova. So it was a huge family. And you need to decide whether that’s not only for yourself but for everybody else, a good decision to make. You need to understand, where are they going, and what will their place be in the new setup. Because obviously for them, it’s not about the amount, it’s about what will be the new structure, what will be the new possibilities for them, with all the insecurity that they have during that time as well. Right. I always try to be very transparent with everybody in the company about business issues, et cetera.
Marcus:
But for those four weeks, we had to limit that information to just two or three people, not to create uncertainty because obviously if it goes wrong, you still need to do business. And that was challenging. But at the very end, we were like, let’s say four main shareholders in the company, and three of them were present for signing. Two of them were very good friends of mine as well. So we had a little celebration after signing in the hotel. But yeah, it was kind of unreal. The feeling was a bit unreal during that time. But still, it’s also a release to some extent.
Anke:
Yeah, because in the end, it was what you wanted, right? When you take us through, you made the decision, like, now it’s time to let go.
Marcus:
You realize you had to sacrifice so many things during 25 years, whether it’s having fun and pleasure, but also family. It was certainly a challenge for my family as well. So finally saying, okay, now I can pay back to some extent as well.
Johan:
Because you mentioned you realized two months later also, right? Because we learned with other founders, it can be a real celebrating moment, right? But we also had other people in the same podcast here who literally cried and went back to the family and took time to rest. How did you personally deal with that?
Marcus:
Well, we didn’t celebrate too much, to be honest. I didn’t even pause the business. We continued the business just the day after. Well, we only went to Majorca for three days with the families and the main shareholders. That was our little celebration. But over a weekend, more or less. And then on Monday, the business continued again because we said, now it’s the real work and to do integration, migration, et cetera, with the new setup. And the real emotion just happened a couple of weeks ago because now I did the exit after exit, leaving Unified Post and really leaving the Crossinx family, which was much more emotional compared to three years ago.
Johan:
And I think also for them because you’re still listed on the website, right?
Anke:
But also for you, from a founder CEO to then Chief Sales Officer, which is not the CEO and the decision maker, to now being a team of one again. And it might be a little bit of a personal question, but because people often identify themselves so much to what they do work-wise, was it for you that first phase to become like the Chief Sales Officer reporting to somebody else? I’m curious how that was for you when you’re not being the one to call the shots and now having to do it by yourself basically with your new consultancy firm.
Marcus:
Well, it’s a different thing and a different way to work if you’re no longer the CEO. Nevertheless, I was part of the management team, being responsible for the main decisions, and it was a good fit with those colleagues as well. I mean, there was still a story to tell, a story to develop jointly. So we wanted to realize what we thought about the acquisition when we started it. And we’re still about to do Unified Post is still about to do it, still, some more integration and migration is needed. So that was a positive and good cooperation, I think it was a good fit with Unified Post for Crossinx as well. In general, on the other hand, yes, you’re not the CEO. Not all decisions are taken by yourself.
Marcus:
So that’s something you need to realize as a person. If you are independent for 25 years and now start to report to somebody else, it’s a different story. And that’s why I finally said, okay, maybe not the right story for me anymore. I need to go back to be more independent again. And that’s why I took over the company Valentis, which is a consulting company from Switzerland, but more or less working on my own again.
Johan:
Shall we go to the exit valuation with an idea, given the time?
Marcus:
Yeah.
Valuation Of Crossinx By Unified Post Group
Clemence :
Onto the valuation bits. Crossinx acquisition by Unified Post Group was announced in April 2020, 113 years after its creation. Before that, the company only raised a seed round in 2009. It was a very easy valuation estimation as the acquisition amount was made public. €100 million with 50% in cash and 50% in newly issued Unified Post shares valued at €20 per share. Then, in trying to guess the revenue multiple of that acquisition, the process was also eased by the Unified Post annual report. Indeed, as a public company, it publishes a yearly report providing detailed financial information on the Crossinx topic. The 2021 report listed that since the purchase in April 2021, the revenue from its acquisition was €4.336 million.
Clemence :
If we were to do a pro-rata on the year to add the previous four months of 2021, the total revenue estimation would be €51 million. For 2021, it would imply a multiple of 15.4 based on the 2021 revenue. However, the acquisition was most likely made on the 2020 revenue and one can assume that the revenue was then a bit lower. Hence, with an even bigger multiple, it will make sense with the end of the 2020 context, which was an all-time high as shown by a SaaS Capital Index valuation multiple trending in a fairly narrow range of 14 to 16 times the revenue. So what do you think?
Marcus:
So the first comment I would make is that the €100 million was not the final amount. You might have realized that there was an earnout agreement that was realized two years ago, which made the overall amount something like €125 million. On the other hand, with your calculations concerning the revenue that was too low. That means in return, the multiple loop that you assumed was too high. Now, it still has a very good multiple on sales. That’s what I can disclose. And again, it’s all about timing. I think three or six months later, we wouldn’t have achieved the same multiple because of the overall market situation.
Anke:
We discussed many things. Is there something that we didn’t ask you? We saw somewhere that the future and innovation focusses more on AI and blockchain. We can go into that. But is there anything that we didn’t discuss that is interesting for other founders listening to this podcast to learn?
Marcus:
Yeah, well, probably we discussed quite a lot already. On the other hand, with 16 years there would be more to discuss, but maybe two things that I thought were relevant to achieve the multiple we just discussed. What we also did was really concentrate on different geographies, being the leader in the Dutch region more specifically, which was challenging because of the low use of service providers in the area. But on the other hand, everybody else, as an international service provider, wanted to cover the Dutch region, and that was obvious. At some point in time, someone will need to contact us to become the European leader, worldwide leader, and that was driving the multiple certainly, as well. And then you need to be persistent if you want to grow such a business. So that’s one of the things we were good at, I think. On the other hand, it’s of course, always, well, there are two sides to the coin.
Marcus:
If you’re getting too persistent, it can go wrong. So you need to find the right timing to let go. And even though there are more opportunities for invoicing in the future, you mentioned new technology, et cetera. So there’s much more that will happen. But we thought at that time, that the valuation was already very good because there were still many service providers around. In a couple of years, there will be only a few ones that will remain, just like in telecommunication, for example. Right. Today we have 700 to 1,000 service providers in Europe, so there will be heavy consolidation, and that’s why prices are also high.
Marcus:
To acquire service providers.
Anke:
You have the timing right, I think long enough persistence to get to a point, and I think the realization that now is probably the right time to let go. And then a number.
Marcus:
We were wrong with timing so many times.
Anke:
It was a pretty crucial time. Good. No more questions from my end. I don’t know. Johan, do you have a final question? No.
Johan:
Thanks, Mark. I think it’s a great story. I’m impressed, especially about the resilience that you took right, in starting a company, buying it back, selling it, then starting a new company, getting new shareholders, and then building that for 13 years to an exit. And then staying there for a few years, and then now starting again a new company, right? So I like that resilience a lot. I think it’s really needed, especially these days, right, to start. So it’s indeed a thin line between timing and also being focused and being on the ball and believing in it. So I really like the story. Thanks for sharing that.
Marcus:
Thank you Anke, thank you, Johan.
Johan:
Thank you very much.
Madelon:
Thank you so much for listening to this episode of the Big Exit Show. We hope you enjoyed today. If so, please subscribe to our show on Spotify or your favorite podcast platform. If you have feedback or suggestions for guests that you want to see on the show, please send us a message to podcast at Peak Capital. Thanks again for listening and hope you join us for the next episode. Bye.