The Journey to Acquisition - Interview with Katie Blakeley



Episode 15: Louisville Certified Financial Planner Jeb Jarrell interviews Katie Blakeley. She rose to lead PetFirst, a pet insurance company and played a significant role in its growth and ultimate sale to MetLife. Jeb and Katie explore her journey and what she learned.



Meet Katie Blakeley

Katie grew up in West Virginia and graduated with a degree in journalism and mass-communication, from Marshall University. She moved to Louisville and began working for Service Net. They handled service contracts and warranties.


The CEO was starting a pet insurance company. It became PetFirst pet insurance. She transitioned into a VP role in the new venture and had a significant role in the startup and growth of this company. Katie was eventually named CEO. PetFirst was acquired by MetLife in 2020. Her journey began roughly 18 years ago. It’s been her career up to this point.


Learning along the Way

Katie refers back to something she learned as Service Net. During her first year, she grew to understand the value of culture, having a sense of purpose. She grew to understand the importance of working with a team of highly-engaged people who were passionate about their impacts. As time went on, she realized other people working for other companies didn’t always get the benefit of working with a team like hers.


Maintaining Culture thought the Growth Period

PetFirst began with only a few employees, but had grown to 80 employees by the time it was acquired. As teams and companies expand, those personal connections can fray. Her team took the important step of documenting the culture and other important factors. This helped them to select the right candidates as they began to grow the organization.


The recognition of who/what PetFirst was and who/what it was not was critical. The company culture focused on 5 key values:

1. Bring your top-tier effort, or don’t bother.

2. Bring the fun!

3. Think big. It determines how you act and approach the situation.

4. Drive it and Own it.

5.


The Wearing of Many Hats

Jeb and Katie discuss how life in a startup is definitely different from life in a corporate culture. The work has to get done and it may range from taking out the garbage, to dealing with clients to managing company marketing and financials. Katie thrived in this environment because she was able to try on many different hats (figuratively, of course).


Working through the Problems

PetFirst was an innovative approach. An initial challenge was the technology platform required to support the pet healthcare insurance segment. They had to build that system from the ground up to meet the unique needs of their business and its policyholders.


By not being shackled to a legacy system, PetFirst could be nimble and flexible in approaching new opportunities.


As exciting as this sounds, they took on a fairly large technical debt as they grew and developed. Katie explains that they worked with in-house developers to maintain and strengthen their technical infrastructure, including the coding. When the company began to scale, some of the hard coding was not as robust as it needed to be to grow with the company. One of the key areas that began to fail was in auto-renewals of the insurance policies. This resulted in numerous policy cancellations. Cleaning up and building out the technical infrastructure absorbed a lot of time and effort. Those improvements finally began to yield positive results.


Funding the Growth

PetFirst decided to grow via private investment, instead of venture capital. The equity contributed by one of the co-founders turned out to be a terrific investment in both vision and execution, when the company was acquired in 2020. Jeb comments that they timed the tech-wave perfectly.


The Decision to Consider Selling the Business

The founders always had a grow-to-sell plan. Katie recognized the value of identifying a strategic buyer who could continue to scale the business. In 2013 Katie assumed the CEO role. The board was now clearly focused on selling the business. They took purposeful moves to prepare the business for a sale.


In 2019, the profitability was strong, the platform was built, distribution was in place and the team was ready. They attended an industry conference also attended by MetLife, who was already in the space. There might be a synergy based on partnering with MetLife, if they were interested.


A team from MetLife came to Jeffersonville, IN to meet with PetFirst, two weeks later. MetLife wasn’t interested in a partnership, but rather an acquisition. The ball began moving very quickly. A letter of intent was signed around Labor Day. The purchase agreement was executed before Thanksgiving. The deal was announced in December, in the Wall Street Journal.


Knowing Where to Focus

Jeb asks about some of the key metrics the PetFirst team focused on in preparing the company for a sale. Profitability was important. Also, the ability to further scale the business needed to be in place operationally and with the right technology. This became a key point of interest for MetLife.


In the period for 2014-2018, PetFirst may a number of important hires. This rounded out the leadership and executive team. They really worked in a complementary fashion. The team was also honest and candid about important issues. They needed to be authentic to effectively grow the business.


Focusing on Profitability Early

This was an important mindset for the company’s leadership. PetFirst was a profitable model and that advantage enabled them to scale. The profits could be reinvested in technology and other critical areas. Katie recalls they structure the right deals and lived within their means from the start. The focus on extending the lifespan of the customer yielded terrific results.


Katie also makes an important observation regarding the entire organization was taking ownership in all levels of the company. People were empowered to identify and develop many 1% improvements, constantly. Transparency on the metrics was important. Policies in force was an important metric. Everyone wanted to extend that customer lifespan. It dramatically impacted profitability. People were looking for solutions, everywhere. They took ownership in the solution.


What Did the Opportunity Look Like, in the Early Days?

The pet insurance industry was in its infancy. Very few pet owners insured their pets. Pet insurance offered an advantage for people. In the early days, people were spending money on their pets, which also included pet fashion. It was a humanization of the pet. At the same time, veterinary care was becoming increasingly expensive. People needed a solution like pet insurance. There were some interesting trends beginning to converge. PetFirst recognized it.


Katie comments that even today, “pet parents” who insure their pets represent only 3% of the market. With billions of dollars being spent for veterinary care, the opportunity is tremendous.


What Was the Biggest Surprise During the Process of Selling the Business?

Katie explains that it was extremely interesting. They could see the deadline. Years later, Katie wished she would have thought more about what it would be like after the sale.


Everyone was focused on diligence. The size of MetLife’s diligence team was almost as big as the entire PetFirst organization. Petfirst had an internal 4-person executive team involved in the diligence process. They didn’t want to necessarily publicize it. It was the volume of diligence requests that surprised Katie the most. There was a lot of emotion wrapped up in the process.


Katie discusses how they also secured a banking partner (i.e. broker) to help PetFirst to navigate the sale. The process began a little earlier than anticipated. They had worked with Harding, Shymanski & Company early on. It was this group who referred PetFirst to the broker partner, Duff & Phelps, out of Chicago.


PetFirst interviewed a number of potential broker partners to help them in the process. This overall preparation gave them the confidence moving into the diligence process and ultimately to the sale.


Okay, That’s Done

Katie explains how the eventual sale was actually a bit underwhelming. Everyone had been so focused on reaching the finish line (e.g. the sale) that when it finally occurred, they transitioned right into working as part of MetLife. There wasn’t a lot of time for champagne popping.


Overall, it went extremely well. Nonetheless, it took a bit to do the emotional reset. Everything had changed. The corporate culture began to set in and take over. It was subtle, but different.


Advantages in Regulation and Compliance Issues

While PetFirst navigated the regulation and compliance issues, they were relieved to now have the experience and expertise of the MetLife team who really understood this important aspect of the insurance industry. It was a welcomed relief.


Navigating the Post-Acquisition Environment

Jeb asks Katie about how it impacted her, now that she was part of the MetLife organization, while still leading the PetFirst group. Katie admits she thought the transition would be smooth. She’d already worked for a CEO and board. The difference was the pace. When a problem surfaced, the team was able to begin testing solutions quickly. Now, the corporate pace meant issues dragged on longer than she was used to having them. There were many new levels to have sign-off and approve potential solutions.


Katie explains that it’s a balance. There are tradeoffs. She thought it would just take a little more time to acclimate. Both she and MetLife wanted to invest in and grow the business.


During the summer of 2021, during the pandemic, she began to have candid conversations with herself and others. In the fall of 2021, she began surfacing the idea of an exit from the company. It wasn’t going to be her long-term home.


A New Chapter for Katie

As of the recording of this interview, Katie is still in transition. Her last day at MetLife was March 31st. This white-space was a bit uncomfortable, but it’s a time for reflection and clarity. She’s now glad to have the time to explore. She identifies so deeply with her work. She’s taking the time to identify what really excites her about work. It’s providing greater clarity.


Katie wants to work with business who are approaching the acquisition process. She really values the importance of cultural for companies to consider. It may be a consulting role. She’s enjoying the time with family and diving into things that interest her.


Katie admits she’s casting a wide net. It’s something she’s learned to become more comfortable with, as a result of this entire journey. It’s slowly beginning to come together.


What Advice would She Write on a Billboard?

Katie answers: “Take a pause.” Her mistakes, professional and personal, happen when she’s rushing. Even a deep breath can add clarity.


What’s the Worst Recommendation People Give?

Katie answers: “There’s so much bad advice out there. The danger is in looking for too much consensus, when it causes you to ignore your intuition. Know thyself.”


What would You Recommend Your Child Study in College?

Katie answers: “Finance.” She wishes she’d taken more time, early on, to understand the numbers better. If you can become comfortable with finance, you make a better business case and be successful in a number of roles. It’s a great foundation.


Katie concludes by commenting on the struggle for working parents, especially with children at home. Work-life balance is a farce. It’s important to be true to yourself, if you want to be the best parent. She’s still becoming comfortable with this realization.


I’d like to thank Katie Blakeley for taking the time to share her candor and advice for those who are thinking about selling the business or are beginning the process. It’s going to be an adventure.


At the end of the day, you should sit down with a qualified, investment advisor who can help you to think through your strategies. A good advisor will bring a solid perspective, but also know how to develop and implement your strategy. You can schedule a meeting with Louisville Certified Financial Planner Jeb Jarrell, by clicking this link.


Did You Like What You Heard Today?

As we wrap up today’s episode, we want to encourage you to subscribe, so you don’t miss upcoming episodes. Jeb Jarrell is here to help you to Maximize Your Return on Life.


If you’d like more information about Jeb Jarrell and his firm, visit Jeb’s website at PlentifulWealth.com. You can also follow him on Facebook.


Thanks for listening!


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