Why I Sold – Acquisition Stories with Neil Mukerji, Kobas

We caught up with Neil Mukerji, the former co-owner of Kobas. Kobas is an all-in-one hospitality management platform for restaurants, bars, and similar venues. Its cloud-based system provides a central hub for managing operations. Neil shared his experience about selling to Jonas, the acquisition process and what life at Kobas is like post-acquisition. Listen below. 

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Podcast Transcript

I’d like to start off with you telling us a little bit about Kobas’s origin story and give us a brief history of the company.

Kobas is a software as a service platform for hospitality management. Point of sale through rotas time and attendance, stock control operational best practice and much more. It was founded in 2009 by James O’Sullivan, who I’ve known as a friend since the late 90s. In the mid 2000s, I was CTO of e-mail and marketing for a SaaS company, and James worked with me there. James moved on to make it on his own and through his connections started providing operational software to a couple of cocktail bar chains, which transformed into Kobas.

In 2013, I agreed to partner with James and we’ve co-owned Kobas since then until this year’s acquisition by Jonas through Vesta. So in those 12 years, we’ve grown the client base, the service and of course our team. We’ve weathered various storms, Brexit, the pandemic, the energy crisis, cost of living, all that. Despite all that, we’ve built point of sale and hospitality management platform that people love.

Kobas has definitely been through a lot like you said with weathering all those various storms. So what about Kobas makes it unique to have weathered through all that and come out as a successful company? 

What makes us unique is we’ve always aimed to be a complete hospitality solution. So not just point of sale or stock or time and attendance, but all those things together under one roof. Giving people a single log on and a single sort of ethos of using all those things.

Over time, that has become a bit harder as modern hospitality has become a lot more technologically complex. But we remain a one stop hub for running those businesses. Anyone who’s tried to juggle multiple integrations knows that can be quite hard – getting everything to talk to each other, and as Kobas provides so many of those services on a single platform, that all work together seamlessly.

I think our other advantage is that we hired many staff directly from hospitality roles, particularly into our client facing roles and they give us like relevant expertise and that classic hospitality customer service ethos that isn’t so common at a SaaS company.

In terms of weathering those storms, some things like you know, Brexit was a slow change in the industry. So that made us focus a bit more on our rotoring tools, giving better insight into labour costs, that kind of thing just helping our clients sort of manage that. The pandemic much more definite like straight in with lockdowns, that kind of thing. So we pivoted to online ordering for home delivery collection order at table. It really sort of drove the road map in that way. Which was vital because UK hospitality opened sort of in phases where you could only order from table. And on top of that we added what we believed to have been the UK’s first multi-venue ordering system. So we have like food halls and stuff, we get a big bar and you get a bunch of independent traders around the edge serving different food types. And our platform lets a group of people like order from a bunch of different traders and their drinks all in one hit with a single payment. So that’s been really good and the energy crisis again, just better margin analysis, better stock control, reduce wastage, just helping our clients really make their money work for them.

That’s great. Kobas obviously is a great company, which is why Jonas/Vesta decided to acquire. How did you guys end up discovering Vesta?

James, our founder, met Richard Clancy, Vesta’s CEO, at a hospitality Expo in London. I think in 2016. He and James realised that they lived in a similar part of the world and they played a bit of golf, that sort of thing.

I get the impression they gave each other an interesting window into each other’s worlds. James obviously knew the hospitality space and Richard obviously knew the business space. They seem to get on quite well. And Vesta’s something we’ve known about for quite a few years, so it’s not new.

Why did you end up deciding to sell to Jonas? And how did we end up comparing to other acquirers?

James is a majority shareholder. So it was mainly his call, but I certainly had some sway in that. Personally for me, there were two main things about Jonas as an investor, which were the buy and hold forever strategy and just the way the deal was structured and explained to us.

Kobas has been an enormous endeavor for James and me: 15 years for him, 12 for me. And the support and loyalty of our team, both past and present has been hugely appreciated. While we felt it was time to sort of pass on our ownership, we had explored other options which maybe were a bit more lucrative. But what happened to Kobas and the team was really important to us. You know what happened next to them. And Vesta’s buy and hold forever strategy gave us confidence that the team and platform would probably have the best chance of future success. Other acquirers with different strategies, their motives, what would happen to our team was just a bit less promising.

The structure nature of the deal executed by people for whom that kind of thing was routine was reassuring. You know, we’d not sold a business before, and Jonas/Vesta buy a lot of businesses. So there’s a very interesting dynamic there. The the valuations obviously are a part of it. It was clearly explained to us, the technicalities around the way the payments are structured. It was all quite new to us and all clearly laid out for us, which was nice.

Business sale is always going to be a bit stressful. It’s basically inevitable. I’m not pretending this wasn’t, but it was kind of a straight forward and pragmatic as I think it possibly could have been. Whereas I just felt some of the other things were exploring. Maybe just felt like they had more jeopardy for us and our team and our customers.

You mentioned how you liked our buy and hold strategy and that ties into something else I wanted to ask in regards to our Jonas differentiators. So at Jonas, we talk a lot about our ABC’s model which like we said you touched upon. We have autonomy: our decentralized operating model. Our buy and hold forever strategy: which allows us to invest in the long term, as you discussed.  And the culture of sharing best practices: which is learning from Jonas or CSI family of software companies. Based on your experience, how have you seen these values in action?

So I did wonder how much autonomy would keep to be honest, and we have seen some changes, but those I’ve seen have made sense. The senior staff have naturally seen quite a bit of change. James moved on straight away. I’m not hanging around forever. So some things are changing, but we have been allowed to maintain all the usual day-to-day processes that mean that the rest of our team’s routine, below the senior staff has been largely undisturbed.

Like a good example is that Vesta got a standard set of employment terms. And we’ve been able to grandfather anything our existing team had, over and above that has been grandfathered into their their Vesta contracts. Our team can still use the same tools they used before. We use things like Slack, HubSpot, Teams, there’s no mandate to change any of that, which is really nice. Our internal meetings and structures are the same. And all this combines to mean our culture stays intact. And I think that’s really important just for everyone, for our team, our clients.

The buy and hold forever just leads to a longer term view, which is always my preference. No one’s sort of desperate to implement change rapidly for any reason. We’ve got metrics and measurements now that we’ve not worked towards before, that’s new to us. But where we’re falling short, where we need to make improvements, there’s no ask for a knee jerk correction or anything, you know. Instead, we sit down, we talk through the way we work, consider alternatives to meet these objectives and improve things.

And this will, I guess lead into that culture of sharing best practices, right? There’s always advice available to help us with any challenges, and yeah, a general feeling that like we’ve got all this support now. So combine that with buy and hold forever. In time, success should should just be inevitable.

Yeah, exactly. And what was Kobas’s experience with Jonas post-acquisition? I know you guys are still relatively new, but how has that experience been so far?

Yeah, we’re roughly a couple of months in now, which I guess is probably the period of biggest change. For me personally there were a couple of wholesome aspects of running Kobas that I didn’t want to lose. And you know, spoiler, I haven’t.

But first, like we’ve got clients all around the UK and we’re a fully remote company. No central office, nothing like that. We are a distributed workforce. That means our team get to live where they want and how they want, and it also works better for the company.  It enables us to reach our clients more easily wherever they are. I guess that means that also, you know we’re a business, we make money, we pay our staff that money, and it’s spent in local communities. And that’s just a nicer vibe than if we’re all in London. All the money we would make of all over the UK would go to London, we’d spend it there. That’s not what happens. It gets spent in people’s local regions where they want to live and work. And as Vesta lets Kobas keep its autonomy, Kobas remains a remote first business. And I’m just pleased to see that’s still happening.

Second, I guess I’ve always been mindful of our ability to provide a positive career step for bright, ambitious, talented people with a passion for hospitality. I think lots of brilliant people just naturally start their careers in hospitality. It’s like a go-to job when you start out, and a lot of the employers might see hospitality jobs as just like a holding position before someone really starts their career.  Where we recognize these are tough jobs. They require a commitment to teamwork, to customer service, and just business acumen to succeed there. And I’m proud to have been able to hire from that vertical and let those people use that experience to succeed in a software company. So we can utilize that valuable hospitality experience.

Just in these couple of months, I can see Vesta providing investment in these people that previously, as a much smaller business, we couldn’t afford to do. I’m really excited to see what happens and the opportunities that await our team.

At large viewpoint now, because we’re now owned by bigger company, we can offer a better benefits package. And just more certainty about the future. It’s a bit more reassurance for the team there. We benefit from generous investors, centralized resources, we’ve now got like legal expertise, HR, guidance, financial control, reporting. All stuff that we’ve kind of made do with before as a small business you just kind of figure it out. So that’s much more structured that’s really good. And our senior team enjoy more structure and guidance and tailored mentoring for their specific areas. We can now measure and improve our business in a way we just didn’t really do before.

And all this sort of combines like so you know Kobas can now provide a better service to our clients and it furthers our mission, which is to make it simple to provide great hospitality.

It’s a great answer and my last question to you is what advice would you give owners looking to sell their business?

I think that depends what someone wants to look back on. I feel a pretty strong deep obligation to our team to do what’s right for them. I can’t wait to see where their careers go from here, under this kind of new ownership. And I’m not so naive as to expect that Kobas’s never changes, or lasts forever, or whatever. But it will be really nice to walk into hospitality venues in the future and see it there in some form. You know, somewhere new.

I wanted to give both our people, and Kobas the platform, just the best chance of future success under new ownership. So the type of the buyer there was really important to me.

But I think over and above everything my advice is like vet your buyer.

Selling a business is unavoidably time consuming, expensive, and I’ve got to admit, it’s stressful. Of course, it can be worth it in the end. But that’s only so long as it goes smoothly and everyone does what they say they’ll do. I wouldn’t want to imagine like going through what we’ve been through and then have something unexpected happen at the last minute.

So yeah, I think my advice is that you’ll buyer look for chats like this with someone who’s had their business bought and figure it out from there.

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