Valsoft Corporation - 2019 Innovatio Award winner

Valsoft created templates to help speed up the flow of acquisitions

Valsoft Corporation - 2019 Innovatio Award winner

(Left to right) Pamela Romero, paralegal, David Felicissimo, general counsel and partner, Aude Florin, legal counsel

Valsoft Corporation is a Canadian company that is rapidly gaining a major international presence mainly due to its aggressive acquisition strategy — a strategy that has been enabled thanks to a small but forward-thinking in-house legal department.

The company, which began as a Web publisher and YouTube video producer, evolved into an organization that purchases and operates vertical market software businesses. Now, it has offices in 17 countries around the world, 400 employees globally (with 50 in the Montreal headquarters) and is responsible for a range of software products that manage car rentals, golf courses, hotels and marinas. It also has education software.

In 2018, the company completed eight acquisitions — so, essentially, one every 45 days. This year, four deals have already been completed and the company projects 12 will be done by the end of December. Over the past three years, Valsoft has acquired more than $50 million in assets. All of this was accomplished by a legal team of three people: general counsel and partner in the company David Felicissimo, legal counsel Aude Florin and paralegal Pamela Romero.

According to Felicissimo, the team has been able to accomplish so much because its members have figured out the lesson that all in-house counsel working at acquisitive firms should know, which is to say yes and to describe how the yes will be turned into a reality.

“The company needs to close deals; that is how everybody’s going to get paid. That is how the company’s going to grow. If we’re just going to be in a position where we find reasons why we can't close deals, this is not going to last — this whole dream will not last,” he says.

One way he has made saying yes easier was to create a handful of templates that could serve as the foundation for typical letters of intent, saving the legal team from drafting each document from scratch. The templates also give the M&A team very clear directions about what data and information they need to obtain from the companies they are looking to acquire.

“With the templates, 60 to 70 per cent of the body doesn’t really change, but we identify what we really have: an asset deal, a share deal, a deal in the U.K., a deal in Canada, a deal in the U.S.,” he says, explaining that when he talks to the M&A team he tells them that the forms “‘don’t have to filled in perfectly. It’s data collection; once you have that, you’ll send it back to us and we will approve it.’

“That has had an impact on our productivity because they’d just send an email saying ‘We’re buying a business in Australia. The purchase price is AUS$10 million and the earn-out will be a 10-per-cent increase in ARR’ and just give us very basic information. Then we’d have to go back and ask ‘Is it an asset deal or is it a share deal?’ ‘Oh, that’s a good question.’ We’d have to go back and forth with five or six emails. With the templates, it's been great for them, because they've able to send out LOIs — they're kind of incentivized to close deals — and, on our end, we are able to track really well what comes in and what goes out.”

Felicissimo also implemented the type of ticketing system that is more commonly used by IT help desks in order to manage legal requests from the business units.

After spending so much time “putting out fires” — especially in the international offices, rather than “thinking about the long term” — he “took a step back and said, ‘OK, how do we fix this?’ Requests are coming in by email or people walking into our offices or people just making urgent requests. There needs to be a formal pipeline where requests are made and we prioritize them internally.

“So we had our IT team come up with a solution where people could literally put in a ticket where a legal request was made.”

According to Felicissimo, the system wasn’t exactly popular when it was first launched.

“It was met with some hesitation and some jokes, obviously, because they have to fill out a form. But it’s extremely easy. And I think, in the long term, it's beneficial for all of us: Fill out a form with your request. [List] what’s the priority, what’s the due date, what stage you’re at and a summary of the actual matter, and we would get a notification by email on our phone on our app. Then I could assign it to somebody on my team or even assign it externally.”

There is one factor, however, that is vastly more important than technological solutions when it comes to closing a large number of deals, and that’s making sure there is somebody involved from the legal department right from the start.

“Personally, I make it a point for my team to sit in on meetings, to sit in on business meetings, to sit in on development meetings, to sit in on M&A meetings or sales meetings. Sometimes, I wonder what I’m doing there — I don't even understand the actual language or the terms,” he says, adding that he’s not afraid to speak up and ask for definitions and clarifications about some of the specific technology or business issues being discussed.

Just being in the room, being exposed to the progress of the deal (even pre-LOI) and being aware of the financial metrics gives Felicissimo a strong sense of whether the deal will be successful.

“Looking at the deal flow, the relationship with the seller, I can tell early on whether the deal is going to close so we're able to prioritize [our legal efforts],” he says.

“We’re extremely involved with the M&A team, more than just on the legal front. We understand what their pipeline looks like, what they’re looking at for the next month or two and what they expect will close. We also have to, early on, spot any issues. We have a large deal flow. There are many deals and everybody has ambitious goals. We need to spot early on whether we are going to follow through with the deal or not, if a deal is going to close or not, because there are a lot of acquisitions we need to prioritize, and we’re getting better at that.”

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