The recent acquisition of Sierra Interactive had been in the works for months, but the founder of the local real estate customer relationship management company said the deal almost didn't happen due to the ongoing war between Russia and Ukraine.
The acquisition of Sierra Interactive by San Francisco-based Alpine Software Group (ASG) officially closed on Aug. 8, with undisclosed financial terms.
Sierra Interactive founder and then-CEO Ben Peskoe, though, said that his partnership with the private equity firm was “cemented” well before that — when several of his company's team members from Russia were relocated to another country away from the conflict between Russia and Ukraine with ASG’s assistance.
In January, Sierra Interactive had signed a letter of intent to sign with ASG. A few weeks later in February, Peskoe and COO Brandon Hedges flew to New York City to meet with members of the ASG team. One day, in the midst of a series of productive meetings, Peskoe took a break to watch a TV news segment about how Russia was starting to mobilize its forces along the Ukraine border. Plans, though, continued to move forward.
The deal was originally set to close on March 1. That all changed, though, after Russia invaded Ukraine on Feb. 24.
“Everything was lined up. Everything was agreed on,” Peskoe said. “This completely brought our process entirely to a halt. It was postponed. It wasn’t clear at all after months and months of preparation that we were even going to be able to move forward.”
The two sides went back to negotiations, after ASG confirmed that it would not be possible to move forward with a company that had a significant amount of its workforce impacted by the conflict. Neither Peskoe or ASG would not confirm the number of employees it had in Russia, due to safety concerns of the relocated workers.
At the time, the third-party company that had supplied Sierra with the workers in Russia were beginning to move part of its operations to another non-European country. ASG eventually said that the deal would be back on, provided that several requirements were met — one of which was to move those willing team members and their families to the chosen country.
During the next several months, Sierra Interactive worked in conjunction with the third-party company to relocate team members. In addition, ASG assisted with the costs associated with both legal and tax assistance for the team members and their spouses who were directly affected by the conflict and were seeking relocation.
Next week, Peskoe and other members of Sierra Interactive’s team will travel to the country where the Russian natives are living. The name of the country has been withheld to protect the identities and the safety of the relocated workers.
Although Peskoe and company have worked with many of the employees for as long as 12 years, it will be his first face-to-face visit with them — and will carry much more significance than a standard business trip, given the gravity of the situation.
“It really will,” he said.
From agency to SaaS platform
For its first 10 years, Sierra Interactive — headquartered out of an office at 1205 E. Washington St. in Butchertown — operated more of an agency that could cater its offerings to the needs of customers, who are entirely real estate agents. During that time, the company had no marketing program, but it still continued to grow solely by word of mouth.
In 2017, the company experienced a seminal moment by transitioning to more of a software-as-a-service (SaaS) model that could easily be scaled. Between 2017 and 2022, Sierra Interactive grew its revenue by about 50 times, Peskoe said, going from hundreds of customers to thousands. It also expanded its workforce from about 15 people to its current number of approximately 85 employees.
Venture capital and private equity firms began to take notice. After fielding call after call, Sierra Interactive decided to finally hire PEAK Technology Partners as an intermediary — initially with the intent of finding a minority investor.
PEAK had presented around a dozen suitors to Peskoe and the Sierra Interactive executive team, before they met the team at ASG, which is a portfolio company of Alpine Investors that buys and builds vertical SaaS companies. Since 2016, ASG has purchased 48 SaaS companies.
“For a long time, we just ignored it,” Peskoe said of the desire to move to the next phase. “But eventually, we realized that we had a pretty big vision for the product ... There was just a lot we wanted to do and that we needed to, and we needed more resources in every way in order to be able to accomplish it.”
Peskoe added that PEAK was able to provide the company with analysis in terms of its growth, customer retention and other key metrics “that we hadn't ever really needed to dial-in on because we've been growing so quickly that we never had to do it.”
ASG had a few success stories in working with PEAK, one of which was the 2020 acquisition of HomeBot, a platform in the real estate industry geared toward creating repeat and referral business for loan officers and real estate agents.
“Expanding to serve real estate firms and real estate brokers was a natural fit for us,” said Alice Song, president and head of M&A at ASG. “When we found Sierra and we met Ben … we just realized that Ben and his team had built a very strong product. And so we just saw even more opportunity to to keep on growing the business and helping them take the company to the next stage.”
Given its success with HomeBot over the last two years, Song said that real estate agent software had become “a thematic focus" for ASG.
Song mentioned that ASG has traditionally had headcount growth at any company it acquires. She said that the her company has budgeted in headcount growth for Sierra, but would not provide an amount of potential new hires.
"We see a lot of very high potential for [Sierra's] growth, so we are here for the long term and here to continue to support Sierra and its growth," she said.
Peskoe said that HomeBot founder Ernie Graham was actually brought into the process at one point — as Graham told the Sierra Interactive executive team his hesitancy about going through with an exit in 2020, before seeing the results that the company had since joining the ASG team.
Ultimately, Peskoe said there was something in his gut that told him that ASG was the right fit — especially after he heard about its “people-first methodology,” which would later be proven during the relocation of the Russian employees.
“I really felt like I knew from the very first time that we spoke with them," he said, "that they were the company that we wanted to do business with.”
