‍Sindre: Visma was formed in ’96 when three ERP systems were actually merged. Our former CEO, he then joined Visma back then in ’97. The rest of course, is history. Back then, we were listed on the Oslo Stock Exchange, and then just around 2000, just before the dot-com bubble burst, Visma was able to sell their shipping division—there was a marine division—to a telco company and they sold it for like 100 million euros.

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Which at that time was absurd multiples. But nevertheless, what happened was that he actually—Stian Mohn, the CEO back then—he actually got a lot of criticism in the media because he didn’t take shares, only took cash. But then of course, dot-com bubble bursted a couple of months later, and this, I mean, back then it was a very small company. It was a small ERP business, but then Visma actually had 100 million euros of cash and all valuations dropped significantly—90+ percent—and then the M&A restarted.
So that’s how sort of the modern Visma started. They then started to—together with the CFO—started to do M&A quite a bit, buying competitors and adjacent products around ERP. Then Hg Capital delisted us from the stock exchange in 2006, and I joined 2009 as a management trainee, as part of the graduate program.
My history starts there. From there, very early on, we deliberately took a decision to move towards cloud. That was pretty bold back in 2010.

Kison: That’s very early.

Sindre: Yeah, it was very early.

Kison: It wasn’t until even ’13, but then enterprise took much longer to adopt.

Sindre: Indeed. So if you look at it from that historical lens, it was a pretty bold move. Going from on-prem to cloud is also painful, but when you come on the other side, then it’s a much nicer place to be.
Now we are 90+ percent recurring cloud, and it’s real cloud—not hosting, not ASP—it’s multi-tenant SaaS.

Kison: How many deals has the company done since inception?

Sindre: Somewhere along the lines, you sort of lose track, I guess. But sort of my accounting is 350+, probably 400.

Kison: And then you personally, how many deals have you been involved with since you started?

Sindre: Probably over 300.

Kison: Wow.

Sindre: So a lot of this activity has been in this recent decade.

Kison: Yeah. Even though they were quite acquisitive also pre-my time, but then you have to recall it was the CEO and CFO who did the deals themselves. It was more a left-hand activity. But now when I joined, we set up—we were actually a two-man band running around in the Nordics buying small software businesses for a decade. And my boss left for Hg and I took over five, six years ago and for a short period there I was a one-man band. But then I started to hire and now build the current M&A team.

Kison: What’s your personal background that qualifies you to be heading up all the M&A activity?

Sindre: That’s a great question. I came straight out of university—so company man. I started as a management trainee. Actually, three out of the top management team is coming from that graduate training program. So that’s pretty unique. And then very quickly it turned into M&A. I’ve been doing M&A almost for two decades now.

Kison: Is this one of the top Ivy League schools that prints out people like you or is it more of just give somebody the ambition, chance, and see what they can do?

Sindre: Visma is a pretty unique place giving people chances. And then when you swim at 10 meters, then they throw you at 50 meters and throw you out to the 100 meters and so on.

Kison: See how far you can make it.

Sindre: Yeah.

Kison: So you came right out pretty early. What was the experience like in the formation of the M&A team? ’Cause you said prior to you joining it was mainly the CFO and another person in the company that was driving the activity, but then they set up an M&A function.

Sindre: Yeah, this is down memory lane. I was actually quite bold back then. This 2009, straight out of university, I wrote the CEO an email sort of asking—because we were actually planning an IPO back then, 2010—and then KKR preempted that. But I actually wrote him an email sort of, “Hey, I’ve just started in Visma. You need help with the IPO.”
Pretty bold, maybe even unheard of. But yeah, I did that. And he replied. The plan was actually to hire a Head of IR and M&A. And then when you have one big investor in KKR, then you don’t need IR anymore, but you need M&A. So the IR function just shut off. And then we had this M&A team—me and my former boss.

Kison: So this really originated from you sending a cold email to the CEO. He doesn’t know you. You just reached out and said, “Hey, the company’s going IPO. Can I help out with it?”

Sindre: That’s pretty much it.

Kison: The KKR story is actually really interesting ’cause I read about it. They came in—I didn’t know it was tied to the IPO. I know they bought a majority stake of the company.

Sindre: Mm-hmm.

Kison: Capital is still involved?

Sindre: Yeah.

Kison: And then later on I guess you ended up taking the majority back.

Sindre: Exactly.

Kison: So KKR should regret, but yes, that’s the story.

Sindre: That’s the story.

Kison: How long were they owners for?

Sindre: It’s a typical PE cycle. So it’s that three- to four-year cycle.

Kison: Enough to show good IRR, then move on to the next thing.

Sindre: Oh, exactly.

Kison: So the cold email that led to, hey, let’s talk a little bit about this. We’re changing directions, but we still need M&A and then, yeah, I want to start doing some M&A.

Sindre: Exactly.

Kison: Then my first job for the CEO back then, 2009, that was actually to hire my own boss.
We were pretty efficient—two-man band running around, mainly in the Nordics, a little bit in the Benelux, a little bit in Central Eastern Europe. But we were able to do 10–15 deals per year. So for a two-man band, that was not bad.

Kison: I want to hear—you’ve done hundreds of deals—what are the top three big patterns, themes, must-haves that you’ve learned over time?

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Sindre: To set the stage a bit—the type of businesses that we acquire—that’s typically well-run companies that have a proven product, happy customers, happy employees, very solid management. That’s the run-of-the-mill M&A that we do. So, to have that background, we essentially buy good companies. We don’t buy turnaround companies or turnaround situations.

High level, I would say an important aspect is actually to stick to what you know. For us, it’s always to have that North Star—to have that alignment with the equity story. I do believe that’s super important. So to always keep that in mind: will this enhance the equity story? How does this fit the equity story of Visma? I do believe that’s very important.

So that’s maybe one element. And speaking about alignment, I would actually argue having that internal alignment is as important, if not even more important. So with the internal stakeholders—we always say that M&A, we cannot be a champion for a deal. We would have done a lot more. We always need to have that operational champion. So already pre-LOI, you sort of need to have that internal alignment in that context of, okay, is this a 100% acquisition? Is it an earn-out? Is it a one-year earn-out? Is it a three-year earn-out? Is it a five-year earn-out? What type of metrics do we measure? Is it an EBITDA game? Is it ARR?

Sort of all these type of discussions that you need to align internally—I do believe that is very critical. Maybe the last thing—this is more maybe relevant for Visma as a firm—but we like to buy proven companies with customers. We’re not the VC player. VCs, they have a different agenda—one out of ten hits the jackpot and then we're all happy. But we’re not a VC player. We like to buy proven companies with proven customer bases and proven products.

Kison: Ideally safe bets.

Sindre: Ideally safe bets. Every now and then we do a bit more hairy bets, but that’s not the run-of-the-mill.

Kison: So stick to what you know, align with the story of the business—the business story. Having an internal operational championship that’s really going to deliver on the results.

Sindre: Yeah.

Kison: And then buying proven companies—ones that aren’t just big risk bets—but you’re building a model that gets your returns.

Sindre: Good summary.

Kison: I’m curious about the culture of doing acquisitions. You have Europe and then you later got into Latin America. Are people just receptive because it sounds like there are so many deals you’ve done that you call people and they’re like, “Yeah, sure, we’ll talk to you. We’ll take an offer.” It sounds so easy. Just walking around the office, seeing all the buzz around here, I’m like, this is pretty interesting. They make M&A look easy.
I’ve looked at your website. You’ve done deals in so many different countries. Let’s take that alone—how many different countries have you done deals in?

Sindre: It must be 30+.

Kison: Okay. Is there an element around that—is it culturally different between countries as you approach targets?

Sindre: Absolutely. No, I think it’s very, very different. Even only in Scandinavia—Norway, Sweden, Denmark, and Nordics, Finland—I mean, it’s very, very different. People might from the US perceive that, “Ah, Nordics, same same.” Very different. So even here it’s very different.
The more south in Europe you get, the more emotional it gets as well. And then you throw in Latin America in the mix and it becomes very different.

I always have a saying: “M&A is local.” That’s just super important to know. And 3D is always way better than 2D. So you need to meet people locally, speak their local language, see them in the eyes, and really be that local partner.
I do have tremendous faith in that. That’s also why the M&A team right now—we are almost 20 people, full M&A professionals—but they are based all over: Nordics, Benelux, we have Germany, France, Spain, Italy, Central Eastern Europe, UK.

Back to M&A being local—it’s so important.

Kison: And that’s what they’re doing—they’re adopting culturally, locally, and catering to that M&A conversation based around that.

Sindre: Yeah. Language is one thing—to be honest, it’s almost the easy part. But it’s about the way you’re negotiating in a country—it’s very different. Brazil—I’ve just learned that after the LOI, that’s when you really start to negotiate.

Kison: After the LOI?

Sindre: After the LOI.

Kison: After you think you have agreed on everything—that’s when the negotiation starts.

Sindre: So it’s just very different country to country. So to have that local domain knowledge, to have that local knowledge around the whole cultural aspect—I do believe it’s super important to be local.

Kison: That’s so interesting that you’ve had such a diverse experience around it. What other things do you see? I’m curious, like what countries are the easiest to work with? What are the hardest ones to work with?

Sindre: All countries—they have their particularities and their specialties.

Kison: And then it goes—I’m from the US and it’s like, you’re going to have some really good sellers and some really bad sellers within our country. And I take it every country is similar too. You’re going to have some good apples and bad apples.

Sindre: Absolutely. And you have that in Norway, and you have that in Spain, and you have that in Argentina. That’s just the way of it.

Sindre: There are some fun cultural differences to accommodate. Take trust as an example. Here in the Nordics—Norway—we actually do trust each other. There’s a lot of trust, even already on the first date, essentially. And it's not uncommon that you even start talking… I mean, we're commercial people and opportunistic—we can even talk about pricing on the first date, first meeting. That’s not uncommon. It doesn’t happen always, but it’s not uncommon.

But the further south you go—and Latin America as well—trust, that’s super important. Particularly, everyone knows about Visma in Norway. Nordics, not that well known in Latin America yet. So to have that first—that’s not built over Zoom or video, that’s one thing. And the other thing of course is—it takes time. So to talk about the family, and talk about business, and get to know each other—these things are very important.

Kison: Okay, so your advice to me—where I’m working on my first international deal—let’s just say it’s in Germany. I should go meet the people. What else can you tell me? What else should I be doing? First deal, and it's international by nature—in Germany.

Sindre: Yeah. You should look forward to the fact that when you are signing the deal and they are reading it up word by word at the notary—the whole thing from A to Z—it usually takes between 10 and 15 hours. That’s the highlight.

Kison: Do I have to sit there through that?

Sindre: You have to sit there.

Kison: Really?

Sindre: I hear they do drink champagne while reading.

Kison: Okay.

Sindre: But yeah, it’s very, very German. But yeah—meeting each other face-to-face, I do think that is important. Whether it’s in Germany, whether it’s in France or Norway—to be honest, that is important as part of the M&A game.

Kison: Any other nuance things as you think about culture? I bring them like a nice cool M&A Science pin like I brought you—maybe they get as impressed as I were.

Sindre: Talking more from the Visma perspective—yes, there are all these cultural differences. But I would also say software entrepreneurs and tech entrepreneurs—they are tech entrepreneurs. That’s a universal thing. It’s almost a universal language to meet tech entrepreneurs and to speak to other tech entrepreneurs. They do tend to bond across borders.

Kison: Agreed.

Sindre: So I wouldn’t underestimate that point either, to be honest.

Kison: The industry culture.

Sindre: Yeah.

Kison: Let’s talk about execution. One of the big things I’ve been—I don’t want to use the word ranting—but advocating is around buyer-led M&A. And it’s just what I’ve noticed—companies, and the way they evolve their M&A function—really starts from seller-led, and then as they do more deals, it becomes very buyer-led, all in the pursuit of better M&A outcomes.

You’ve obviously seen tons of deals. What’s your view on a buyer-led approach to M&A?

Sindre: I guess you’re right. When you start doing M&A, by default it’s a bit opportunistic in the beginning. Then it becomes quite seller-led in the context of what’s for sale and those types of things. But for us, we like to drive the M&A agenda.

We have a pretty clear agenda in terms of what type of targets we are looking for, what type of geographies, what type of products, what type of growth rates, sales KPIs, cash flow, margins, etc., etc. We have that.

And I do believe it’s critical to own that ourselves instead of just being completely opportunistic and running after whatever pops by our desk. I get probably 10 inbound emails every single day—people from brokers, small broker houses all over the world—shooting an email on a random verticalized ERP or whatever it is in... yeah, all over the world.

Kison: So you can’t jump off to all of them.

Sindre: No.

Kison: Where does that sit in terms of—you get a bunch of inbound versus proactively pursuing opportunities? You sort of prioritize one over the other? How does that play out?

Sindre: When you’ve been doing this for almost two decades, you sort of have a very good gut feel in terms of—is this good or not? Is this worth our time or not? I have a pretty good gut feel on that.

Kison: So you do a really quick assessment of like, “All right, are we going to click down on this or not?” Otherwise, when you’re proactive, you know your scope pretty well.

Sindre: Exactly. I probably spend 10 seconds deciding whether or not this is something to pursue.

Kison: Of course. Us reaching out to targets—that’s name of the game. Those are also the best seeds.

Sindre: What about actual execution?

Kison: But yeah, we reach out to the targets. That makes a lot of sense. ’Cause you probably even know the business pretty well ahead of time.

Sindre: Yes and no. Even in the Nordics, right? I’ve been doing M&A here for two decades. In Norway—you would argue—I probably know the B2B software market there pretty well. But even here, 5.5 million people, 500–600 thousand businesses—every now and then it pops up. Random new companies that I’ve never heard of, that’s €10 million ARR, growing super fast.

I don’t think it’s possible to get a complete oversight. with Visma is that yes, we have around 20 M&A professionals only working with M&A, A to Z, but I would actually argue our M&A department is 15 or 16,000 employees. That’s the frontline. And they are the ones that—I do believe this is a pretty unique culture—but the whole culture of Visma is about growth.

And these guys, they know: Who are they losing to? Who are they winning against? Who are they having the most API calls from? What would make a perfect add-on to an accounting system? All these types of things—they know that more than us in the M&A department sitting and Googling or using AI.

So I do actually believe leads coming from management—the best leads.

Kison: How do you run around, have conversations, see what ideas they have? Or are they more built on the process where they're bringing stuff to you, and they start negotiating, throwing out—sending out LOIs—and then tell you about it?

Sindre: Oh no, there should not go out any LOI without my signature on it. That is important. So I’m aware of all LOIs.

Kison: How do you build a funnel out of this? I agree, I see how this could make a lot of sense—the people that are in the market and see all these opportunities.

Sindre: Yeah. Also, the fact is—it’s very clear guidelines across the Visma organization—that line management, they don’t negotiate pricing. They can talk to companies, they can talk to competitors, they can talk to adjacent companies, etc., but they don’t do M&A. They are a friendly, warm intro.

Kison: They know enough to know that, “Hey, if you come across an opportunity, we have a process for that.”

Sindre: Yes.

Kison: And then they tag us into it. How do you address that? Is that something you just hop on a company-wide call periodically and put out there? Or what’s your approach to getting that system set up?

Sindre: To be honest, I think it’s fairly easy. People know when they should not start talking about M&A.

Some MDs, for instance, in Visma—they are more proactive than others, like anything in the world, right? Some like it, some don’t. But at the end of the day, they also know that pricing, structuring—these simple things—then there is actually a world-class M&A department that we should pull into this.

Kison: So the leadership team is really what’s aligned, and they have a good sense of that. 'Cause they just know the workings of deals they’ve seen done before and just how the company culturally thinks about M&A.

Sindre: Exactly. And the reality is once we actually start talking about M&A, we are always actually involved.

Kison: That’s just the way it is. What about actual execution of deals? When we think about being buyer-led, is there things you do there to drive that process? The sell-side process—you got a banker there and they’re trying to get the deal done as fast as possible.

Like I said, if your goal and your success track record’s more about “have the best outcomes,” what are the things that you do to ensure that?

Sindre: We have our standard procedures. I think that’s also a good thing because even though we use a lot of operational people in the due diligence streams that we're doing, we have an in-house team on FDD, on legal, on tech, etc., right?

So we can do a whole full-blown M&A process in-house. Quite a few of them are very familiar with the M&A process. But there will always be people that are not.

But we really try to have a streamlined process—A to Z. This is how we do things. It's a Slack channel. This is how we work with that. This is how we communicate with each other. And to really be transparent in that group—that is important.

We have our playbook—the M&A playbook—in Visma. It is constantly developing. We have people from competitors, we have people from PE, we have people from investment banks, we have people from other buy-and-build platforms. We all take that and always tweak it to have best practices all across.

Kison: There’s a lot of different variables and nuances that you can continuously tweak in the pursuit of better outcomes on the deal.

Sindre: Absolutely. As you said, bankers—they tend to try to do a deal as fast as possible to get to a closing.

We’ve done a deal in a week—from reaching an agreement Friday afternoon and then Friday next week, we’ve actually done the deal. To last year—we did a deal here in Norway, case management system called Acos. Probably met them first time in 2011. It's 13 years. So there are long dialogues as well.

Back to trust and relationship building and these types of things.

Kison: Yeah, that’s a good point. If you’re proactive about it, you have to build the trust first, and then those timelines—it’s all for what’s best for the deal.

Sindre: Exactly.

Kison: Unless it’s a bank process and it’s all about getting the deal done as fast as possible, there’s no right answer on that.

It’s—I’ve noticed that deal by deal, does it make sense to actually slow the deal down and really think through how the company’s going to integrate? Have you found that out?

Sindre: That’s why both of us like M&A. Each deal lives its own life. But I would say absolutely. If there are things—if there are regulatory things coming in, if there is performance that you are questioning, whatever it is—then use the time if you’re able to.

Kison: Makes a lot of sense in terms of how the execution—you drive it from the buy side, get the best results, keep optimizing over time.

Kison: Going back—when you talked about sourcing, because I know you mentioned the best is getting folks in your company to proactively identify opportunities—do you see any of that change across geographies? Is it sort of consistent across the whole company, or is it, “Hey, certain geographies, you actually have to take a different approach to source deals”?

Sindre: Are there differences? Yes. Are they based on a specific geography more than the specific individuals? Probably no.

Kison: Okay.

Sindre: I think it’s more individual-driven. If you have a local managing director in France being super pushy on doing M&A and you let him be that, and we try to help him and be there, really get things done—but maybe it’s more on an individual basis.

Kison: I was just curious about that, if like, “Hey, is there anything that changes there?” Negotiation was a good example of how that could vary culturally as well.

Valuation—you’ve got an interesting view because you’ve done a lot of deals in different countries. Do you see differences in how software businesses are valued?

Sindre: Short answer is yes. Long answer—I’m not sure if we have time for it.
Jokes aside, it’s very different. If you turn the clock, say 15 years back—back in the Nordics, when we were doing deals here—we were quite often the only girl at the dance.
We were also setting pricing ourselves, and we were able to do nice EBITDA multiples.
Or, back then, they were nice compared to what they are today. You could even do single-digit.

Kison: I would say mid—let’s say a single digit, we cut in half and you go below the midline or above.

Sindre: Yeah.
And it’s also case by case. That’s the reality.

Kison: We could reminisce about the good old days in the podcast. There’s nothing wrong with that.
It’s just everybody’s going to clench their teeth a little bit about—

Sindre: You should have bought more back then, that’s the—because you have to also remember, there were a lot of question marks back then around tech, around cloud savviness.
Cloud wasn’t actually that mature.

Kison: That’s true. People didn’t know. They didn’t know it’s the direction things were going to go.

Sindre: No.
And it was also a bit of a—you knew something would happen around tech, but there was always this sort of, I would call it almost an inherent discount.
That, “Okay, what’s going to happen?”
There was just a bit of a question mark in the market around that.

But if we have a multi-decade view on tech in general—we’ve already been through a painful transition, and that’s how it is now on the other end. 90+ percent recurring, then that’s of course a way nicer place to be.

Kison: What about today when it comes to valuation? Teach me this stuff because I don’t want to screw up and I don’t want to overpay.
And at the same time, I don’t want to insult somebody.
I don’t want to offend you either and give like secret sauce.
So if there’s anything you don’t want to answer, let me know.

But yeah, I’ll tell you what I’ve learned so far.
One, the growth factor matters.
And I feel like there’s almost a category.
If you are under 10% year over year, you’re bottom side.
And then maybe 10 to 40% is another category.
And then the 40 to 100%.
And then—I don’t know, if you’re above 100%, you’re probably not talking to me.

I feel like there’s little buckets there that do put you in a category, and then you can throw a multiplier on that.
I’m still a little confused about the software. I think it’s unique too—obviously—we keep that as a theme because I never heard of this thing when I first got into the industry of multiplier—revenue multiplier.
Now it’s like a de facto. Everybody only wants to talk about revenue multiplier.

Sindre: Oh yeah.

Kison: But there are still instances when you talk about EBITDA multiplier. I’m still confused—when would you talk about one or the other?

Sindre: It boils a little bit down to M&A in general.
M&A is not rocket science.
I do believe—we have the 300–400+ deals.
So we have a library of deals and pricing that we sort of demarcate. “Is this market, or is it not?”
Last year we bought a 10 million ARR business growing 100%.
Do you think you’re able to buy a company like that for—
I mean, they’re burning money. So you don’t say—you don’t say the word EBITDA.

Kison: So EBITDA is not even there.

Sindre: But do you think you’re able to buy that for mid single-digit ARR multiples? You’re not.
So I do believe that we have a very good perception of what market is.
It does vary as well during country by country.
Some countries are more expensive than others—just the way it is.
We see that across Europe.
We see it in LatAm.

Overall, the market is fairly educated.
They do know quite a bit around what can I expect here.
As you said—if you’re a single-digit grower, that’s one bucket.
I wouldn’t put a bucket on 10 to 40% growth.
I’d probably put it 10 to 20%—that’s one bucket.
And then 20 to 40% as the next bucket.

Kison: What’s the other bucket? 40+?

Sindre: Yeah. 40+.

Kison: That’s probably—40+ gets me as about as the same as the 100.

Sindre: No, 100 is quite a bit more. 100 is always better than 40, but yes.

Kison: Probably—that’s probably where it is.

Sindre: That’s probably where it is.

Kison: We roleplay out—let’s say my business, 10 million ARR. Don’t take this—this is all like for education purposes here. But let’s say it’s 1 million net income. Yeah. We’re consistently doing 40% year-over-year. At least this last year we did.

Sindre: Good business.

Kison: Yeah. Plus, this year is 40%. This year we’re gonna get it in 50–60. Put a full management team in—oh, so things—I got a good story for you, right? Last year we closed out right around 45% year-over-year. And then this next year, holding management team—like, people always have the chart that goes up and to the right, but I have a high level of confidence we’ll hit 50–60%, and that’s what I’m really pushing for.

What would you value a business like that?

Sindre: That’s a good question.

Kison: SaaS. Enterprise. B2B. 40K a year ACV.

Sindre: Yeah. There are probably a couple of other metrics I would push for, but high level—also, TAM-wise—

Kison: You’re very M&A-focused, right?

Sindre: Very M&A.

Kison: Let’s be upfront. Let’s talk that through. We talk about TAM and I said, look, the current path we’re going, we sell to corp dev, we’ll sell to private equity. We’re probably gonna start tapering around—let’s say 40 million ARR.

Sindre: Yeah.

Kison: Like that’s a given. So it’s definitely a smaller thing. We’d have to find adjacencies. We’d probably want to recap the business, bring some capital in, and do some acquisitions around those adjacencies.

Sindre: Yeah. Close to 10x.

Kison: Close to 10x. That’s not bad. Okay.

Now, if I was—let’s say in the 0 to 10% category, you’re shaking your head. You don’t want to—even want to talk to me then.

Sindre: It’s not necessarily a Visma play, right?

Kison: Okay. I’m getting an X, I’m getting a zero. So you don’t want to talk to me.

Sindre: A 0 to 10—

Kison: I’m gonna have to go to—

Sindre: Well, if it’s 9.5%, it’s much better than 1.5%, to put it that way.

Kison: Okay. Who’s gonna be my buyer? 0 to 10?

Sindre: There’s probably gonna be some. You always have some, right? And I think there is—if you look at this—there are so many of these sort of permanent capital vehicles out there only focusing on B2B SaaS software companies—or not even SaaS, it can be on-prem. So many copycats of Constellation.

Kison: Even argue ourselves.

Sindre: Even though we’re—okay, so—

Kison: I’ll get a quote from Constellation.

Sindre: You’ll get a quote from them, I’m pretty sure.

Kison: I’m 10–20%. 10–20%, where am I at? Five?

Sindre: Maybe.

Kison: Yeah, maybe five. Fair enough.

20 to 40%, in between—am I at 7.5?

Sindre: It does depend where you end up there.

Kison: Six? Seven?

Sindre: Six to seven.

Kison: I get a nice bump up when I get to 40.

Sindre: It’s all relative. It does depend. If you hit the right buyer that is able to value you with a strategic premium on top—at the end of the day, pricing is what someone is willing to pay.

Kison: That’s a fair acknowledgement. How much the buyer is willing to pay at the end of the day, which is unique to every single potential buyer.

Sindre: Exactly.

Kison: We’ll acknowledge that.

The EBITDA thing—I didn’t quite get the answer on it, because you had a good point of like, “Hey, these are like negative-zero EBITDA businesses,” and then there you got a higher growth rate, you still got a strong value.

What are the circumstances when I actually would want to use EBITDA over gross revenue?

Sindre: Typically when the growth rate is flattening out and when you sort of realize—because at the end of the day, why are people applying ARR multiples or sales multiples? It’s because we have an underlying belief that any given software business should be able to earn 30–40 up to 50% margin. If you don’t have that belief, then you shouldn’t do that investment.

So over time, you need to have that belief that any software business should be able to scale.
And that’s the calculation you’re doing on back-of-the-envelope when coming to an ARR multiple.

Kison: Really, it’s like that 0–10% bucket, but I got some confidence I can increase that margin and that’s sort of going to be my value add. So I would pay an EBITDA on that.

Sindre: Yeah, essentially.

Kison: That’s what every other industry does. All the traditional businesses, basically.
Software’s unique that there are so many businesses that are in a growth category.

Sindre: Yeah, exactly. And it is, right. Software is—our former CEO, he said it—software is eating the world.
In many ways, that’s also a fact. And many investors have seen that.
The tourists—VC tourists from 2020, 2021, even maybe 2022—they’re gone.
I mean, there’s just so much capital into software, B2B.

Kison: How do you see that panning out? Because those valuations were insane. I had a friend of mine show me a 20x term sheet and I was like, take it. Today. I’ll take it.
If you don’t—
In those companies that raised at that valuation—is there a thing that you track them and saying, “Hey, if this company—there’s still opportunities there,” where yeah, it could be a down round or could be just—they’re going to write it off their portfolio and you buy for a song and a dance.
Is there anything around that?

Sindre: We’ve seen it all. We’ve seen companies that are still really push on that—“Yeah, I sold in ‘21 at X million ARR, worth even more.”
We see that. Maybe not rational, but still—we see it.
And then we also see companies that are doing a 50+% bullet sale, discount, or discount from the 2021 pricing—even more.
We see it all. And then every now and then we even can buy them from bankruptcy.

[00:33:00]

Kison: Do you have like a playbook or approach when you buy a business in a brand new market they haven't been to yet?

Sindre: We do.

Kison: Can I buy a copy of it?

Sindre: Uh, okay. I'll take the overview of it for now.

Sindre: Yeah, yeah, yeah. No, but I—whenever we enter a new market, last year we entered Italy, we entered Croatia—two new countries. Italy, fairly big. Croatia, fairly small. But still, it’s two very different markets. But we entered those two markets, and this year we will enter new markets as well. I'm pretty confident on that. And I do believe sort of one of the first things you need to do when you are looking into new markets is to understand the market dynamics. Who are the players? Who are the competitors? Doing that really thorough market commercial due diligence—I do think that is vital. Understanding who's winning, who's losing, etc., etc. With that, it also comes pricing. You need to understand how is pricing, what has the recent transactions been in this country, these types of things that come with that market understanding that you really need to be on top of.

And then after doing so many deals, you have a good perception of what is a good deal and what’s not a good deal—whether it's in Italy, whether it's in Norway, whether it's in Argentina—you have a good feeling on is this worthwhile or not.

Kison: You're pretty like extra cautious in terms of doubling down on your diligence effort—commercially knowing the landscape and other players, who’s winning, who's out there. And I feel like just because it is a new market, are you working with other resources, third parties that maybe you wouldn't in a market you’re already in?

Sindre: I mean, we can work with all the big commercial DD providers.

Kison: Would you be more inclined to do that? Like, hey, 'cause you bought a company Norway—I can imagine you’re not running to hire a Big Four to do it. Versus...

Sindre: We don’t need consultants to tell us about the accounting software market in Norway.

Kison: No, that’s absolutely right. Italy—who would you hire in Italy? Just to, you know, make sure that things don't go wrong.

Sindre: Yeah, that could be one of the top firms. Could be Bain, BCG. You can see one of those. Or you could go Big Four as well.

Kison: Higher uncertainty, then that's sort of where you would take a chance on a big-name consulting firm to help alleviate that risk.

Sindre: It’s valuable to get that input and they know... but then going blind—

Kison: I agree.

Sindre: You can do customer surveys, you can do expert interview calls—all these types of things. It does help you to get a proper understanding of the market. I do believe that’s important instead of just jumping into it.

Kison: How do you get like the right localized expertise? You call your guy at Bain and say, “Hey, I'm looking at this deal in Italy.” Like, alright, I'll get you my colleague over there and connect you or...?

Sindre: Yes.

Kison: I like short of it.

Sindre: We also work with local brokers. If we don’t have a local M&A person in that market—which we typically don’t have when we actually don’t have business there from before—then yes, typically we also work with local buy-side M&A advisors. They of course have a lot of knowledge around that market as well.

Kison: That would make sense. Get a banker there that would know the nuances of negotiation if... yeah, a bunch of things. You gotta negotiate after LOI.

Sindre: So one thing is the market knowledge of course, but then as you say—the whole cultural aspect, language, negotiation culture, etc., etc.—it's important to be local.

Kison: Again, M&A is local. I’m trying to wrap my own head around this. I’m going back to my deal in Germany. I'm like, I feel like this is exponentially more risky for me to do as an American company—doing enough of these podcasts probably is the reason why I'm paranoid. There’s all these like Pandora's box of problems I'm gonna run into after doing this deal, especially like the execution and integration. How do I get comfortable doing that and how do I convince myself it’s still a good deal despite—maybe I should just pay more attention in my backyard and look for things?

Sindre: I don’t necessarily think teaming up with a local banker doesn’t necessarily hurt in that context. You should also ask yourself: how does this fit my equity story? Again, having that alignment. Does this actually make sense for us or not?

Kison: Wanna go big? Wanna go global?

Sindre: Oh yeah. And then what’s your plan with the company? Tech—Is it rip and replace? Will you continue with the tech stack? All these questions. At the end of the day, if you plan to just migrate the customers, then you should look at it as a customer acquisition cost. If your plan is to continue the business, then you can measure it on cash flow. So all these things that you should take into account.

Kison: I like the idea of getting a local banker. Bankers can be good. They may try to not—not be good, and depending on what side you're on or what side they're on. If I were to pick up a buy-side banker in this new market for their expertise—I don't want to pay fees on the buy side. 'Cause I feel like that’s stupid. Not to knock any buy-side bankers out there. I get it on the sell side because you're creating an auction and there’s like a case around the value created. But on the buy side, can I find like an ex-Corp Dev person and say, “Hey, I’ll put you on like an hourly engagement” or something like that? I’m just curious if—

Sindre: Absolutely. You can do that as well.

Kison: Do that as well.

Sindre: But the buy-side banker—

Kison: Instead of a buy-side banker.

Sindre: Yes. The buy-side banker’s gonna want fees.

Kison: He will have fees—typically on a percent of deal size.

Sindre: Yeah.

Kison: I like how you’re being very honest with me. I really appreciate that. What’s the typical percentage range?

Sindre: Oh, it can vary, but it—also for us—a buy-side banker, that’s as much a door opener as anything else. And to have that cultural aspect and to know the market. Because once we have an LOI, then the Visma M&A train takes over and then we run the deal in our own way.

Kison: So getting up to an LOI—that’s where we see that they can actually be helpful.

Sindre: Still a lot of fees, but—

Kison: You negotiate the fees?

Sindre: We can. Absolutely. Nothing is signed before it's signed.

Kison: So we negotiate the fees. Would that be a thing? Is find an ex-Corp Dev person—I feel like they would be as good if not better.

Sindre: Oh yeah. And absolutely. And there are these platforms where you can find M&A talent.

Kison: If I were to start a business now, that's like an interesting opportunity to have. I always think tech-enabled right away because I come from tech. But...

Sindre: Oh yeah.

Kison: If you can bring in folks that had that deal expertise, that don't have that mindset of the salesperson of “I need a commission on every single thing.” I don’t know. There’s something there.

Sindre: Absolutely.

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