Joe Bardenheier handled over $1.6b in M&A across 80 deals during his tenure at EIG (including buying Hostgator).
Joe’s path to Endurance started when he was Co-Founder, President and C.E.O. of The Gavin Group, an international apparel company that was sold to a public company in 1992. From there, he moved on to a senior position at Vanguard Sailboats where he was instrumental in the acquisition of its largest competitor. Joe then became a Senior Consultant with Ernst & Young prior to cofounding WebOnTap, which was acquired by Endurance in 2000. He has become a member of Endurance’s executive team, which has grown the firm from a start-up to one of the leading provider of cloud-based solutions designed to help small businesses establish, manage and grow their businesses.
Joe graduated from Tufts University and received his M.B.A. from Babson College. When not helping Endurance grow by leaps and bounds, Joe enjoys alpine skiing and racing sailboats.
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What is a nuance/different metric in your evaluation that you might look for in high ticket ARR businesses versus smaller ARR ones? (i.e. $30K Average client ARR value versus something like $500/mo) Or is there one?
Bigger is generally better but there are a number of things to consider, growth rate, profit, LTV/CAC etc.
Have you found a pattern in the typical metrics or cash levers you optimize post acquisition? IE do you typically raise prices? Or do you find companies under investing in retention initiatives? Or not spending enough in marketing? Or is it really contextual to the acquisition and there’s no major pattern to improve the unit economics?
It is very specific to the deal. But if you have a good platform that is doing things efficiently you should expect to be able to leverage your processes to gain economies, whether on the marketing, pricing or retention. Integration is key however.
What are prime motivations to do M&As in SaaS? (eg. adding a new business line, killing a competitor etc.)
Those can vary, you can add customers, geographies, technical capabilities, product expansion, talent, or more than one of the above – all should be considered at the outset of creating an M&A strategy.
Do you promote the use of “anti-competition” agreements with founders while doing M&A’s?
Yes, we usually try to put some sort of non-compete into the agreement. These are getting harder and harder to enforce and generally you can not go out more than 2 years but if you pay for something you have some rights to keep them from competing. Cali is pretty tough to enforce, check your state laws on these.
How proactive vs. reactive was EIG when it came to acquisitions? Were you constantly pitched by VC firms shopping their portfolio companies looking for exits?
Yes, we were constantly in the market looking for opportunities, both self generated and inbound.
Is the size of the business (ARR) the key metrics for an acquisition or would it be a combination of that with technology, future growth, etc.?
The latter, everything should be taken into account. Size matters only to a degree, then it is about growth, profit, scale and how it might perform as integrated with other companies/assets/platforms.
What percentage of the sales are affiliate sales in the EIG hosting brands? Would EIG integrate affiliates into one platform for them to be able to sell all your brands?
Affiliates do contribute a decent amount to the new subscriber sales at EIG. Many affiliates work with multiple EIG brands.
How often does someone in the product org need to be an advocate of the deal for it to go forward? Are they usually product driven, or is it more opportunistic?
Obviously if there is a product component to the deal then having their input early on is HUGE! I am a big fan of making sure that potential acquisition ideas come from the product team and go into them on a continuous and regular cycle.
What’s the typical career path to a position such as yours? Founder/Operator or valuation experience at IB/PE?
Hah, not sure there is a typical career path. But mine has been entrepreneur, founder, CEO, Sr. executive along the way. I bought and sold a couple of my own companies before EIG. When we decided that “Inorganic” growth was going to be part of our strategy, I grabbed the baton and ran with it as I had a good understanding of the strategy of the company and had done a lot of different types of deals, BD, Sales and marketing before. Had to get up to speed on some of the modeling and valuation analysis. Its all part of an overall strategy. If you have a decent understanding of how the operational areas of a company work together you can really help make acquisitions more successful.
Hey Joe, specifically for the EIG hosting assets like Bluehost, HostGator, BigRock… Did you guys partner with any companies to handle WordPress services or tweaks?
We generally do a lot of the WP things in house and have become major experts in it. But EIG is a big promoter/supporter of the WP ecosystem and the community. There is a big Biz Dev function at EIG that handles partnerships as well.
Thanks all very much, great questions, this was a lot of fun. Happy to talk further in another format if appropriate. Feel free to ask Nathan about that. Keep cranking!!!