How Outsourcing Helped HelloSign in $230 Million Acquisition
There was a time not too long ago when getting a signed document from someone required several tedious steps. From a printer to a fax machine and later a scanner, the process wasn’t efficient. Enter, HelloSign. Joseph Walla and Neal O’Mara, cofounders of HelloSign,who now help over 80,000 customers, including Instacart, Lyft, Samsung, and Twitter to digitally sign documents faster, securely, and with legally-binding signatures. HelloSign’s drive to create simplicity for offices and individuals led to a $230 Million acquisition with Dropbox in January of this year. This is a dream for many startups, and for HelloSign, it certainly didn’t happen overnight.
Walla and O’Mara have experienced consistent growth with HelloSign since the company launched with an electronic fax platform in 2010 called HelloFax. At the time, they were solving the problem of businesses needing to eliminate the use of fax machines and wasting tons of paper. Not to mention there was a privacy issue that came with documents being out in the open with sensitive information.
“Our goal is to make business easier and to simplify work. We want to make agreements between various parties completely frictionless,” said Whitney Bouck, Chief Operating Officer at HelloSign. The convenience that HelloSign offers is a tool not only used by businesses but individuals as well. Their freemium model allows everyday people to skip the hassle of the print, sign, and scan process.
How It All Started
A mission to create a paperless office started in 2011 when HelloSign was accepted to Y Combinator. It was through this accelerator that Walla and O’Mara would eventually cross paths with Arash Ferdowsi and Drew Houston, cofounders of Dropbox. “Our founders share roots from Y Combinator,” Bouck shared. “The acquisition was an outgrowth of a long partnership.” It didn’t happen overnight as forming a relationship with acquirers often takes time.
“We can make a much better experience for our customers by working together and unifying a very fragmented process,” explained Bouck. “The acquisition made sense for HelloSign because we could accomplish our mission much faster by tapping into the Dropbox customer base and having the backing and credibility of a larger, more established company.”
Prior to January 2019 when the acquisition was announced, HelloSign had already integrated with Dropbox. The previous November, Dropbox Extensions was announced which enables users to edit a contract, request a signature, and digitally fax the document without leaving Dropbox ⎯- a win-win for users.
It Takes a Team
Any startup prior to an acquisition is focused on growth and scaling. Being able to outsource a CFO and all accounting work was the best option for HelloSign from start to finish. “As a fast-growing startup, you are going to be very choosy on where you place your resources, and the fact that we didn’t have a need for a full-time onboard head of our finances, Early Growth was the best option,” explained Bouck.
Mike Hilberman, an Early Growth CFO, took over this part of their business which allowed HelloSign to stay focused on scaling. Hilberman has been helping HelloSign for over five years during which time they have experienced more than 5x growth. EGFS provided HelloSign with complete finance, accounting, and tax services, as well as assisting with securing venture debt and working on their first audit.
During the acquisition, Hilberman was also there to assist with all the due diligence requirements with ease due to his experience. “If we had in-sourced a VP of Finance, we would have had someone practiced, but not as senior as Mike. I think if we had had someone internal, it probably would have taken more guidance from the founders and myself,” said Bouck.
It was important to Hilberman that his services could allow Bouck and her team the ability to maintain the day to day business through the multi-month acquisition process. “We were able to support by helping with the large number of diligence requests that Dropbox had, normally handled by an internal financial team, while going through the acquisition process.”
Another advantage of having an outsourced CFO and finance team for HelloSign, was the ability to avoid having redundant finance staff with their acquirer ⎯- an issue that always complicates the sale process. When a company is acquired, often you will find two teams for departments such as finance. “There was no price penalty paid for severance costs of redundant resources, which is often part of an acquisition,” Hilberman said. That means acquiring companies can minimize severance obligation to laid-off employees.
Overall for Bouck having EGFS as an outsourced provider helped with their new success. “We were able to divide and conquer as well as keep the circle smaller,” she said. “Mike’s level of expertise and advice was very helpful in the acquisition process. We were positioned well for the acquisition, and having Mike handle the needs of due diligence was a tremendous help.”
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