Overview
Founded in 2001, Digarc is the leading online catalog and course management software provider to higher education institutions. Its Acalog™ product enables colleges and universities to transform their printed catalogs into cloud-hosted, searchable, interactive student engagement tools. Its Curriculog™ workflow platform allows academic departments to more efficiently manage their course curriculum design, change, and approval processes. Today, Digarc serves over 450 higher education institutions with 30,000 active faculty and administrative users underpinning millions of student interactions per year.
Bigelow Assignment
Over several months, Bigelow worked with Digarc’s two owners to understand their personal motivations and company goals and to advise them on executable strategic alternatives. Selecting an investor in the short-term was juxtaposed with reinvesting in a multi-year growth plan and the associated execution risks. After significant reflection, the owners asked Bigelow to find a partner immediately to help act on the growth plan to ensure Digarc’s continued success, while allowing the owners to transition their personal roles.
Challenges
The industry reached a tipping point: hard-won early adoption had occurred and the remaining, larger unserved segment was rapidly recognizing the need for sophisticated online catalog and curriculum solutions; adoption of outsourced solutions was set to skyrocket. As the market leader, Digarc was being asked to accelerate its growth, requiring more business infrastructure, sales management, and organizational development.
The owners had “boot-strapped” the business with no outside investment. They focused exclusively on software development and serving their customers, enabling Digarc to achieve off-the-charts customer retention and net promoter scores. However, neither owner was excited about building the business infrastructure needed to support the next level of success.
“Bigelow empowered Ken and me to choose a new path for our company and ourselves. Bigelow’s understanding of the many, varied nuances of owner-managers enabled them to guide us through the transition process. Ultimately, Bigelow’s creativity allowed us to reimagine our roles and their diligence let us unlock our company’s future potential. We will be forever grateful.” Chet Jordan, Chief Executive Officer Digital Architecture, Inc.
“Bigelow did extraordinary work on this transaction. They were 100% true to their word and a delight to work with. It is rare to find a set of advisors with their quality of work, integrity, and professionalism. It would have been a much harder road to travel had it not been paved by the Bigelow team.” David Kennedy, Partner Serent Capital, LLC
Outcome
Bigelow and the owners constructed a world-class advisory team by adding new company accountants, personal tax advisors, M&A attorneys, an outsourced CFO, third-party market consultants, and wealth managers. Bigelow’s “pull-forward” engagement architecture, designed to maximize opportunity and minimize due diligence risk, was fully utilized. Over a six-month preparation period, these new advisors created a quality of earnings report, comprehensive tax analysis, and third-party market study.
Armed with improved financial reporting, market intelligence, a management growth plan, and projection model, Bigelow engaged in robust dialogue with a select universe of compelled investors.
The management team met with multiple strategic acquirers and financial investors, providing a wide range of partnership options. The owners chose to partner with Serent Capital, a highly-regarded San Francisco-based private equity firm with extensive experience in software and education. Serent’s attractive operating model involves providing substantial operational and strategic expertise to their portfolio companies as they grow and scale. The two principals retained an ownership stake and left their day-to-day management roles to become board members. Happily during due diligence, a new CEO was identified, recruited, vetted, and hired, enabling a seamless leadership transition the day the transaction was announced.