I was lucky enough to be the first venture investor in a next-gneration ediscovery startup, Logikcull, way back in 2015.   A flash-back to them at $1m ARR or so here:

Andy Wilson CEO has been part of SaaStr events and contents since then, and a great session below on how they scale, and a great post here on how they migrated from a services business to a true SaaS business here (always hard).

There’s a lot we could talk about there on Andy and Shen’s 19+ year journey to a big exit (including their decade as a services company), but we’ll save that for a podcast and a deep dive soon.

Here let’s talk about the deal:  Logikcull and another adjucent vendor were just together acquired for a combination of $1 Billion Cash.

Because I think we can learn a lot here about Private Equity works in SaaS and acquisitions.

Logikcull was/is doing many tens of millions of ARR and has been profitable for some time (yes it can be done) with solid growth.  What happened here?  It was acquired to combine it into an e-discovery leader deep into the nine figures in ARR.

1+1 = 3 here

How does it work?  Imagine one SaaS scale-up at say $100m ARR growing say 30% — good but not quite enough to IPO.  Now combine it with another at $50m ARR growing say 40% — again, good but not enough to really because a billion dollar combine.  Now what do you have?  A leader at $150m+ growing 35%.  That’s on the path to a stronger, high quality IPO at $200m ARR in just a year or so.  When you might not have gotten there otherwise.

So together, Logkicull + iPro are worth $1 Billion Cash — even in today’s market.  Alone?  Probably less than the sum of their parts, for now.

Private Equity does a lot of these deals, and expect to see a lot more going forward.  But they really only work if you’re efficient.  Logikcull stopped raising at a $100m valuation and then got profitable around $30m ARR.  That makes companies like it a very attractive “target” to combine with another leader.

But if you’re sitting on a huge valuation, or burning a ton of cash, these days tend … not to happen.  More on that here.

A huge congrats to Andy, Sheng and the whole Logikcull team on one of the top “exits” in the space.  Boom!!


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