Casting Vision Around Growth and Market Opportunities to Expand Deal Interest and Increase Buyer Competition

The Situation

Dave Stelnik, Jason Kronstat, and Adam Buggia founded DirectAthletics after graduating from Tufts where they were collegiate runners. After growing the company for 20+ years, and being approached by several potential buyers, they knew they had developed a powerful, necessary software platform. The platform became more valuable due to their exclusive partnership with the NCAA, which provided them with unprecedented access to a massive amount of data. The founders were looking for a solid partner to help drive the business forward and offer them the opportunity to grow with the company. After meeting Ascend through another opportunity and hearing about our team’s success with a similar transaction, the DirectAthletics team decided to hire us. Given the company is in a niche market where word travels fast, the founders were hyper-focused on the confidentiality of the process and distributing information intentionally to avoid customers and competitors becoming aware of the process during deal discussions. We agreed to take on the challenge of managing the sensitivity of the process while making a market and creating competition by guiding them through the entire lifecycle of the deal:

• Organizing and preparing the company for a sale including a bottoms-up financial model, detailed cross-sell and upsell analysis for each buyer, KPI deep dive analysis, and positioning and marketing materials
• Conducting outreach efforts by developing a bespoke universe of prospective buyers and facilitating communications with each group
• Creating a competitive environment to maximize price and terms
• Soliciting and negotiating letters of intent
• Developing bespoke materials for each buyer highlighting combination synergies, take-rate expansion for payment processing, and new revenue streams and market share capture opportunities
• Managing the due diligence process
• Liaising with the buyer’s advisors to close the transaction

The Strategy

DirectAthletics is at the intersection of SportsTech, Data-as-a-Service (DaaS), and FinTech, providing management platforms with results tracking, athlete tracking, registration, and payments capabilities. To achieve the founders’ goal of expanding into new markets, Ascend cast a vision around their total addressable market by targeting four types of buyers — companies that specialize in endurance sports, companies that focus on participatory sports, companies that focus on payment processing, and companies that could utilize the technology for activities such as ticketing, fundraising, or venue management. We customized marketing materials and messaging to each buyer group to demonstrate the unique value proposition and create deal competition.

The Execution

This strategy drove a number of potential buyers to the table from all four target markets — though there was initial concern about DirectAthletics’ size as a “smaller” company, despite its impressive proprietary technology. To offset this line of thinking, we highlighted three primary points. First, DirectAthletics’ excellent margins, growth trajectory, and increased usage of their payment portal. Second, the success of the company’s technology in building strong relationships and developing a loyal customer base. Finally, we outlined our strategic vision showing each individual buyer how DirectAthletics could scale effectively into new markets and complement their business, all while managing both client and buyer expectations.

The Results

While DirectAthletics was able to secure several offers from companies within its addressable markets, FloSports was ultimately the best fit at every level. We negotiated a higher than expected purchase price, had all of our terms met, and obtained company equity and positions for the founders. Furthermore, the powerhouse combination of FloSports and DirectAthletics fortified FloSports’ position as the market leader and dominant force in the endurance market while extending its “flywheel” and driving synergies through relationships, technology, and a shared philosophy.

The Ascend Advantage

No matter the stage or size of the business, we treat all our clients with the same level of commitment and care. We believe in putting people first. That, coupled with our unique knowledge of the space, is what led the DirectAthletics team to choose Ascend. They trusted us to find the right partner to help them reach their goals, navigate the sensitivities surrounding the process, and create outside-the-box ideas for new buyer markets to foster competition. In addition, we were able to guide them through a turbulent time in the market and still deliver a positive result for both seller and buyer.