Nowadays, becoming part of a larger company via acquisition is a dream-come-true to most founders. For many, this has to do with moment when the founders finally get the opportunity to “cash out” on the idea for their startups and thus continue to grow their business.
But this kind of story does not always end up being a fairy tale, with winners left and right. Sometimes, when entering this process, businesses get sucked into a labyrinth with, no exit in sight.
IT Logs spoke to Gligor Dachevski, founder and majority owner of the software company Doxteam Services, also known as Dox Team, about the complexity, intrigues and many uncertainties that plague the mergers and acquisitions processes.
Since its inception in 2015, Dox Team has had one strategic partner – Alite International, based in Malmö. For the sake of efficient functioning and better customer service, Dox Team and Alite International start thinking about a merger, sometime around 2018 and 2019.
At the beginning of 2020, Doxteam Services (the service division of DoxTeam) merges with the Swedish company Alit International, which, up until that point in time, is also their client/strategic partner. For the Macedonian company, this represents an opportunity for closer cooperation, serving new clients and working on new projects.
While the expectations were that all this would lead to additional growth of Doxteam through their now equal partners, the first serious challenges were soon to follow suit.
What was agreed upon for the company’s buyout was not honored in full, and much of the promised funds did not reach Dox Team bank account.
For Gligor and the Dox Team, this was not an obstacle, but rather an opportunity to continue with the ongoing work that the company had with their clients. However, this was still a somewhat unforeseen problem and, as such, it had to be solved, especially if the companies could continue as planned.
The period that followed saw negotiations for additional investments by the Swedish company and, at one point, Gligor decided on all or nothing, trying to expedite the crippling process, which by then had already been going on for two years.
“That was the first big bluff. I told them that if they don’t pay what we’re owed, we will stop with the whole operation. To be frank, at that moment I was ready and able to put a stop to everything and brave the storm, if need be. Took me two years to muster up the courage, and I managed to convince them to pay the debt and to readjust some of the old installments so that the payment comes on a monthly basis, ” says Gligor.
New people and new moments
Soon after, major changes in the management in the Swedish company brought visible progress, but the payments were still lacking behind. For Gligor, it seems, all the problems at that time are still not stark enough to bring him to the edge and make him terminate the contract – so his company continues focusing on the only thing that could truly make a world of difference – remaining profitable.
“We were trying to find a satisfactory solution that will help us get what was rightfully ours, but it was all to no avail. Sadly, we were bound by the conditions set in the contract and termination was not an option. Although it was difficult for us at that time, we maintained our professionalism and we focused on profitability. We did that, until we became fed up and realized that we could not continue without full payment is concluded. We started thinking of legal options to somehow terminate the contract,” recalls Gligor.
At that time, another company showed interest in Doxteam Services. And as Gligor says, the company too, was in the lookout for new partners.
“Not having much options, we negotiated with another company, looking for partners with whom we could continue our mission. This, in turn, made Alit a bit suspicions and wary of our intentions. Beforehand, we had a rough estimation of how much the company is worth. The offer that we got was lower than expected, but it was still something we could work with. In those moments, though, you can’t help but think that, if you don’t accept this offer, then the next one will be ten times less,” Gligor muses.
His main goal at that moment was to enable enough workload for his team. So, Doxteam Services found themselves in a specific position – while they were waiting for an offer from another company, they continued honoring their part of the agreement with their owners, who, at that time, are still late with payments.
“We were in an interesting position, we told them (the Swedish company) that we will not work for them, but that we will continue making profit. And while these was the bad, we also had a lot of good things happening to us. During those times we achieved an impressive growth – maybe not from a financial point as much as with people – we got seniors in exchange for mid or junior positions,” he says.
(Almost) ideal partners
No agreement was reached with the other company and the drama with the Swedish company was unfolding until two years ago, when it became clear that there would be no positive outcome.
“That’s when we started professionally looking for an adequate merger. We came across a German company. They had offices and companies in Belgrade and Thessaloniki, we managed to get along with the director of the company and found that we had mutual and compatible interests” says Gligor.
As he explains it, even at the first meeting it was evident that they could buy Doxteam Services. However, their executive director was not present at the meeting, only the representatives from Greece and Serbia.
For Gligor, there was also the notion of how it might have looked to have a company from Macedonia be brought into the fold and, potentially, threaten the positions of the Greek and Serbian branches.
”The Germans’ assessments involved whether some of our clients could be part of the acquisition when the purchase was finalized. Everything was going great, and I was sure that we would be able to strike a deal – but the representatives from Greece and Serbia were at the meeting, and somehow they felt threatened by the fact that a company from Macedonia would play crucial role in the future. This could have very well threatened their positions. So, there was no sale,” says Gligor.
The next “suitors” come from the Netherlands, through a company that already had a presence in Macedonia. As Gligor points out, of all the options that were on the table, this one was perhaps the most serious, especially when it came to finances and business setup.
“But I and the team did not feel any “chemistry” with them whatsoever; we felt like we couldn’t function the way we wanted. If I had no choice and if I had to do it, maybe I would have done it, but at that moment I didn’t feel any need or pressure to do so,” Gligor adds.
The twist and the undeniable synergy with Synergy
While Gligor is pushing for the right solution, help comes from his long-time collaborator – the now director of the company Synergy based in Sweden, Vasil Gocevski.
First, Vasil provided contacts from Scandinavian countries, i.e. companies that would be interested in buying Doxteam Services.
“He connected us with a big Finnish company. We talked to their CEO, and he explained to us that they were looking to buy a company ‘south of Poland’. To make matters better, they liked our mission and what we were striving for,” explains Gligor.
Before long, the proposal was on the table – both companies also shared a client, so the merger would provide an even better market positioning for Doxteam Services.
And yet, there was another twist to the story.
”At that moment, Vasil saw that what we are doing is excellent and that our numbers are good. In turn, we saw that this would suit Synergy, who could partially buy us out ,” says Gligor.
And the deal goes through – albeit with a smaller amount, but for Gligor it was important that he finally found partners he could talk to and share the same views on company’s future.
At that moment, money mattered little. What was most important to us was that the company would be able to grow, properly develop, and work with partners for the betterment of everyone,” he emphasized, adding that the final result was not to reach a full acquisition, but Synergy to get 70 percent, making the deal an acquihire.
All of this came at a time when the entire IT industry in Macedonia (and in the world) is dealing with challenging and highly complex problems. Gligor is nevertheless happy to say that Doxteam Services, now Synergy, remains in a good position.
What is acquihire?
Acquihire is an act or instance of buying out a company primarily for the skills and expertise of its staff, rather than for the products or services it supplies.“All this turned out to be a classic case of turning a crisis into an opportunity. We remain as we were – a great company, with a steady team and continuous progression. We are currently hiring a large number of experienced developers and lead developers from almost all areas, front and backend developers, data engineers, people with knowledge of automated testing, team leaders and delivery managers,” he says.
“We have new big projects in the pipeline, fully managing the projects at our place. On the customer side of things, we generally work with product owners, and all other profiles taken care of by us. The most important lesson how me was to learn that you simply must have a connection between the production and the work, and not sell just for the sake of selling.” Gligor concludes.
