13th - Sep - 2018

CLX 10th Birthday Part Four: The Big Time

It’s 2015, and CLX is seven years old. The company has bootstrapped its way from zero to 100 million euros of revenue. But to fund the next chapter, CLX considered fresh investment. Björn Zethraeus explains why the board sought an IPO.

The creation of CLX was a bit like putting a band together. There were six of us, all friends and all with different but complementary skills. We played really well together, and we worked hard. We built a following but continued to see an opportunity to grow it significantly. We wanted to become truly global.

We acted in a fragmented industry with many local and regional service providers and it was increasingly obvious there would be an upcoming consolidation. We wanted to prepare ourselves financially to take on a more active M&A agenda.

We had a number of strategic options to consider. Should we continue our ongoing journey with profitable organic growth or bring in external capital and significantly strengthen our ability to consolidate. Though CLX had grown fast – we were on target for 100m euros in turnover – there was more we wanted to do. We wanted to conquer the global mobile messaging market. We knew we would need to broaden the ownership and bring additional external funding to grow even faster and do all the things we envisioned for the future.

Next we had to decide how we would do this. So in 2014, we started marketing ourselves towards primarily large US private equity firms investing in technology. There were lots of meetings, and follow up meetings. And we received quite a few term sheets. We considered the different offers we had on the table but in the end we decided that this path was not the right one for our company. We felt we wanted to continue to execute on our long-term plan and keep the fantastic culture in the company. We ran a profitable business so we had options, and could continue running the business on our own.

Still, a liquidity event would enable us to combine our own organic growth with acquisitions. One way would be to take the company public and we started preparing for a listing in April 2015. We could have listed on an overseas exchange, but decided to stay in Europe and do our IPO on Nasdaq in Stockholm. At the time I was the group CFO, so it was my responsibility to ensure we were IPO ready. Looking back, I can say that I did not comprehend how much work went into a listing. I still remember how much stress this meant for our organization, it was an insane amount of work. Somewhere in the process we decided to shorten the timeline and go for the ‘fast track’ listing process, so that we could catch the first ‘IPO window’ in the fall of 2015, which made the work load even greater.

It was not a given that our IPO would succeed, you definitely can’t control macro trends. In late Summer 2015, the financial market became quite nervous which, worst case scenario, could mean that the window for IPOs was closing. Fortunately, the market recouped and we successfully listed in early October 2015. There are so many heroes in our team who were involved in this process.

I also remember how quickly things went back to normal after day one. There was a big ceremony at the Nasdaq exchange. We drank champagne, and rang the bell and all that but by the afternoon, we were back at our desks working. The reason? We were trying to buy Mblox. It made so much sense. We wanted to grow in the US and Mblox had the profile and the customers. We knew the Mblox board wanted to sell. In the end, it all happened pretty quickly. We signed the paper in May 2016 and closed the deal in July.

Mblox was twice our size, so it was a big transaction with a lot of integration to do. It was quite similar to when we bought Symsoft in 2009 – another company that was much bigger than us.

Of course, that was just the first of a series of upcoming M&A deals. The IPO gave us a war chest to expand the company into new areas. This includes the strategic acquisition of Sinch, which strengthened our portfolio with voice, video and verification, and also got us closer to the developer community. The acquisition of Xura Secure Messaging in Germany strengthened our business in Germany and the rest of DACH region. The acquisition of Dialogue Communications in the UK, gave CLX a stronger presence across APAC, as well as the Sentinel product which monitors messaging traffic in operator networks. This year (2018) we acquired Unwire Communication who have a strong Nordic client base and we also acquired the personalized video and rich media messaging technology company Vehicle Agency.

These deals expanded the scope, the headcount and the footprint. We have put significant effort into merging the new family of businesses into one company. Every organization has its own culture, and we knew that creating one shared culture would be important to the future success of CLX. From the start, we had cultivated a strong culture that had served us pretty well.

To discover more about this, check out the post entitled ‘Nurturing Company Culture’.

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