Seismic CEO Doug Winter had never planned to acquire his main competitor. The sales-enablement software company had just hit its stride, nearly doubling its revenue last year, and Winter didn’t want a distraction.
“We were not going out looking to buy somebody, but this opportunity presented itself,” he said.
That opportunity took the form of Savo Group, a legacy competitor that had been in the business since 1999. Savo was “the big fish,” the company that first established sales-enablement software, while Winter bootstrapped Seismic out of a basement in Encinitas in 2010.
Since then, the tables had turned. Competitors began to eat into Savo’s customer base and the company turned over many of its executives.
Deciding to Buy
“For various reasons, they stopped investing in their technology and improving their product, they changed leadership teams and kind of lost their way,” Winter said.
The deal closed in May. Terms were not disclosed. At first, it caught observers off-guard. Why would Seismic, a fast-growing company, want to buy a struggling, legacy competitor?
“I was somewhat surprised,” said Mary Shea, a principal analyst with Forrester Research. “But it does make sense with the pace of growth Seismic is going through.”
The acquisition brought Seismic big customers such as Stryker Corp. and Canon Europe. In total, it brought Seismic 200 potential new customers and 75 additional employees across Savo’s offices in Chicago, Raleigh and London.
“As we started to look, we realized we have moved some of their customers over onto our platform. It became an opportunity to acquire some great customers and jump the company ahead a year in terms of the growth,” Winter said. “When the price was right, we decided to go forward.”
The deal also brought Seismic much-needed talent in a relatively new space. Winter said the combined company quickly grew to 500 employees, including 140 in the San Diego area. Last year, the company had 55 local employees.
“When you have a business that’s growing really fast in a new space, how do you find people with experience?” Winter said. “Here, we had a chance to get 70 of them all at once.”
Meeting the Milestones
Since the acquisition, Seismic is on track to hit its planned growth milestones for the end of the year, reaching $90 million in annual recurring revenue, up 109 percent year-over year.
So far, Shea said, the deal appears to have been a success. But it will still present a few challenges; Seismic will have to migrate over Savo’s customers without a hitch, and in some cases, resell them on the company.