The intangibles that underpin a strong strategic partnership

Neil Araujo, iManage CEO and Founder, shares his experience of leading the company through the formation of a strategic partnership to accelerate its organic growth and the continued evolution of its cloud-based, AI-enabled knowledge work platform

Laying the groundwork

Before we started our search, we established that finding an investor who would be a true thought partner for our business was our highest priority. The ideal investor would help us maximize opportunity by exposing and helping us to address our blind spots to ultimately deliver a better customer and employee experience.

We recognized one blind spot without being told — that our experience was limited to one market or industry. We therefore saw the value in choosing a partner with broad exposure to new markets and geographies and sought out a partner who could bring the network, wider perspective, and proven ability to fuel our growth.

We also understood that this was something new and we needed expert advice to get it right. We chose a banker to work through this whole process carefully, and, as it turns out, we chose wisely. They guided us through the steps of identifying prospective partners aligned with our values and vision who have the skills and experience to help us accelerate our growth while maintaining strong customer and employee satisfaction.

Assembling the ingredients for long-term value creation

In general, I believe investors are looking for the things we would expect, but I can only speak in the context of our particular situation. For instance, it’s important that a company be operating in healthy verticals. For iManage, these verticals must include prospects that can benefit significantly from cloud, AI, governance, and other services iManage provides — services that represent areas where our business can grow.

Investors also look for companies with a track record of innovation and a good balance of strong organic growth and profitability.

As mentioned before, the alignment of vision and values was critical to us in our search for an investor, and investors are looking for happy employees and customers that are being taken care of, as well. And, at the end of the day, you need all these ingredients for long-term value creation.

Focusing on the people and letting the value take care of itself

At iManage, employees build great products, and great products drive great profits. If you focus on your employees, you will have great returns. That’s what we mean when we say to focus on the people who create the value and let the value take care of itself.

So one of the things we looked for in an investor was an appreciation for the way we operate and respect for the obligations we feel towards our employees and our customers. We sought a mutual understanding that value creation doesn’t come from focusing on profits but on what drives those profits.

Bain Capital has a consulting heritage. They’ve seen all types of businesses — and they’ve seen that businesses that focus on people, culture, and customers create significantly more value than those that don’t. With the experience of working with hundreds of companies and data gathered around what makes a company successful, it was easy for them to connect the dots between those values and a great investment.

The ability for us to continue what we have been doing over the last several years — growing market share, growing revenue — but doing it through organic innovation and best-in-class technology is ultimately a win for all concerned.

Growth is good for everybody. Our customers benefit from the innovation that comes with investing more dollars in our product; the investor is happy because the value of the asset grows, as does its impact; and employees are happy because growth drives a more vibrant work environment.

Be ready to change and embrace the change that’s needed

At every stage of a company’s growth, there is a capital structure and an ownership structure best suited to propel the company to the next stage. The formula that works at one stage may not work at another, so we need to look for the change that will move the company forward.First, we need to be ready to change and then embrace the change required to propel the company to the next level.

And yes, change is always uncomfortable and requires us to work harder; but in this industry, in the tech industry, the moment we become static is when we begin to come apart. So finding the right structure and the right partner, based on where you are in your life cycle, and embracing change when needed is critical to continuing to grow.

When we divested from HP in 2015, we used the moment to prepare ourselves for the big revolution happening in the world then, which was cloud computing. We are seeing something similar now with artificial intelligence. And once again, I feel that iManage is well-positioned to help our customers capitalize on this revolution — to leverage AI as it relates to the content they manage using our platform.

With Bain Capital’s help, we can ensure that iManage takes full advantage of the opportunity in ways that benefit our customers and is also exciting for our employees and our shareholders.

My (in)expert advice for companies looking for investment

I’m not an expert, so this is my advice: pick a great investment banker. We did, and they helped us put our best foot forward. They helped us make sure our choice was the best fit for iManage. We would not have had the outcome we had without them.

Beyond that, it’s important to build a truly deep relationship with your investment partners. We first met with Bain Capital more than three years ago, and that relationship was reflected in the transaction and in our ability to plan a growth strategy together.

Finally, I’ll reiterate, focus on your employees and customers. Do right by them, and the investor element will take care of itself.

Why it’s the intangibles that make the difference

iManage has over one million professionals using its solutions at over 4000 organizations in more than 80 countries. For many of us at iManage, this is our life’s work, so ensuring that our employees and customers would be in a better place when this investment closed took precedence over everything else. Getting comfortable with that was an intangible, but we had to be certain that we were choosing an investor who would value and prioritize things the same way we do.

We had many, many conversations before making this decision. We talked with the investors themselves until we felt we knew their character and their motivations. We spoke with their references, confirming our impressions. We talked to others in the industry. But we were also transparent with the investors about what was important to us, so there would be no surprises downstream about what makes us tick, about what we most care about. And that, I fully believe, is what clinched the deal.

Portions of this blog post may have appeared in a byline article published in Business Chief.