Successful M&A at Coinbase

In the rapidly growing market of crypto, Coinbase has mastered the art of mergers and acquisitions.

They've accelerated their growth by obtaining technology, top-notch development teams, and customers to accelerate the company’s organic growth. But, acquisitions are complex, require careful planning, and can have a tremendous impact on teams on both sides of the transaction.

Coinbase is one of the world’s largest exchanges for cryptocurrencies, with over 43 million users in more than 100 countries worldwide. With the growth of bitcoin and other digital assets over the past few years, Coinbase has had to make itself resilient in a rapidly-changing environment while securely handling billions of dollars worth of assets.

We spoke to Aklil Ibssa from Coinbase’s Corporate Development and Ventures team, who is part of a team of 7 people responsible for mergers and acquisitions at Coinbase. We dug deep into the team processes that have led the company to successfully acquire over 15 companies in the past few years.

In this issue you’ll learn:

• Processes that Coinbase uses for successful M&A
  
• Working methodologies that power the team
  
• How to strengthen relationships while working in siloed teams

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💼 Getting Acquisitions Right: Careful Assessment and Integration

Aklil brought significant experience with him from LinkedIn, and has leveraged that knowledge in managing the process of M&A at Coinbase.

The general outline of the process is:

1. Identify areas where it makes sense to acquire a company rather than partnering with product and exec teams
2. Research the landscape in that particular domain, including identifying all of the players and bringing forward the top candidates
3. Educate the executives on the benefits of M&A for that specific domain and presenting the candidates that make the best targets. If there is alignment, the team goes into additional due diligence.
4. Perform due diligence, which includes choosing a leading candidate, offering price, and integration plan
5. Presentation and approval from the executive team
6. Creation of basic term sheet
7. Creation of a cross-functional integration plan

Aklil emphasized the importance of solid preparation in advance across the organization, because even the most straightforward acquisition ultimately involves several different departments.

“The process effectively consists of daily stand ups with corporate development, legal, and integration. You coordinate across HR operations, business, development, product, engineering literally every single area. You prepare everything, saying like, hey, we're going to be buying this company as a team and here’s why. Here’s the product strategy, here's the roadmap, and then you work through all these different work streams and create a shared document to keep up to date with a project tracker."

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🔐 Integration is Key

Having a plan in place before the finalization of the merger is one of the most important factors for Coinbase.

It’s complicated to combine the teams and cultures, so the preparation is an essential part of the business continuity after the merger.

"Integration is the primary reason why M&As fail. It is very important to manage the integration on every level. Internal planning around an acquisition starts with the first conversation with the company being acquired, says Aklil. They discuss together the key drivers for the acquisition, and Coinbase considers the team to be one of the essential parts of the merger. Choosing a company with a team they want to integrate is one of the criteria they consider key to the acquisition." 

The team goes through all aspects of the integration, how to port or compensate customers, how the org chart will look, etc. “We do like things like customer overlap analysis to figure out, Okay, this customer already has this, and this is the functionality that is missing. And then on the product side, typically by the time it hits the post-term sheet, there's already a roadmap written that's been battle tested and approved by a cross functional team.

🤝 Siloed Team Relationship Builders

In some ways, the Corporate Development team is working cross-functionally, as described above, but most of the day-to-day work is fairly siloed at Coinbase.

When they were working in the office, the company had a variety of ways of building cross-team camaraderie and culture:

“We would have happy hours every Friday afternoon, and the CEO would be jamming with the customer support team. It was great for developing relationships throughout the company.”

In addition to happy hours, Coinbase also has a mix of formal and informal meetings for getting work done, so there are ample opportunities to get together with colleagues. Informal “coffee catch ups” are meetings that are set up with no agenda on a regular basis, both for status updates and for developing the bonds between the team members.

💻 Transitioning to Remote: Team Building Challenges and Responses

In-person happy hours and coffee meetings were a big part of building cross-team relationships before, so at first the move to work from home had a huge impact.  

Switching from stand-ups to office hours helped the shift:

"At first, everybody was adjusting to what it means to do this job remotely. And there are a lot of things in corp dev where you just need to be in person. For example, if I am trying to get this deal through and this executive hasn’t had time to provide their feedback, I can grab them in the hallway and get that informally. At first those little things were tough for us to adjust to, but after maybe a couple months we figured it out. There’s more to do, like we haven’t found a replacement for happy hours, but the people that are important for you to stay close to do your job effectively have remained largely unchanged, and you learn how to function remotely with them."

Coinbase has introduced a number of touchpoints that have increased the team and organizational cohesion while working from home including office hours, extending weekly meetings, and building out async channels on Slack. 

While there still may be more to do in terms of getting more cross-company collaboration, the team has truly come a long way in a short time.

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