Embrace Software Acquires QSTRAT

"If you're in the software business and considering selling your company, make sure you hire the right people to help you sell your business. You can't do it by yourself. It's not worth attempting it." Those words of advice come from Steve Wargalla, former managing director of QSTRAT, a leading provider of quoting and sourcing software for manufacturing and distribution companies in the automotive, aerospace, and industrial sectors. With the assistance of Corum Group, Wargalla sold QSTRAT in November 2024 to Embrace Software, an acquirer of niche vertical-SaaS software companies.

Learning from experience

Wargalla learned from two experiences he had selling companies. The first experience Wargalla characterized as a "pretty much not knowing what you're doing kind of sale", one that didn’t have much structure and for which he said, “I'm sure we left a lot on the table.” While the second, the sale of QSTRAT, was driven by Corum's well-structured M&A process and by their team of dealmakers who have a wealth of experience helping founders and CEOs sell their technology companies ‒ an experience that led to an excellent outcome.

Underlying Wargalla's advice is the recognition that most company founders and CEOs do not really understand M&A. Wargalla puts it this way, "If you're in the software business you probably don't really understand the M&A process. Usually you're so focused on building your business, taking care of your people, that you really don't have a good understanding of how to sell your company.” His point: don’t do it alone, find the right people that can help you. And in Wargalla’s case, it was Corum that gave him the help he needed for an optimal exit.

Approaching Corum

Wargalla and John Dickey bought QSTRAT from its original owner in 2016. Wargalla had previous roles leading a number of information technology companies before his time at QSTRAT, while Dickey had extensive experience as a technology consultant in the automotive and manufacturing sectors. Both ran QSTRAT as managing directors ‒ Wargalla focusing on the company's growth and profitability, and Dickey focusing on business development. 

However, from the very first, Wargalla had a plan to exit the company after five years. In actuality, that exit happened after eight years in 2024. By 2023, Wargalla felt the time was right to retire, and at that point Dickey was looking for an investor and operating partner that could provide him with additional resources to expand the company.

With those objectives in mind, Wargalla approached Corum in late 2023 to help sell QSTRAT. Interestingly, he heard about Corum through a World Financial Symposiums seminar on artificial intelligence at which Corum was a platinum sponsor. He recalls, "I was trying to get up to speed on the latest trends in that area. And that was my initial introduction to Corum. After that I attended a Corum M&A seminar based on that introduction."

A structured process

What especially appealed to Wargalla and Dickey about Corum was their highly structured M&A process, a process that Corum calls "The Eight Stages for an Optimal Outcome." It is a detailed multi-step approach designed to find the right prospective buyers through an exhaustive global search. In addition, the process is designed to prepare sellers to engage with buyers, get sellers through the rigors of due diligence, and create an auction environment where competitive bids from multiple buyers lead to an optimal outcome for the seller. Wargalla characterized the process as one that gave him and Dickey a lot of confidence because, “we knew what was going on in every step.”

To find the right potential buyers, Corum accessed its proprietary database that contains the world's largest collection of information about buyers. Corum Senior Vice President Michael Stinson, who was Corum’s lead dealmaker on the transaction, notes that he had more than 170 companies on the potential buyers list. One of them was Embrace Software.

Embrace had a particular interest in QSTRAT because they were looking to add to their set of supply chain management solutions. Embrace saw QSTRAT's strategic sourcing and quoting software as an excellent fit for their industrial group, one that would help create a unified end-to-end platform that enhanced ROI for their manufacturing and supply chain solutions.

Wargalla and Dickey viewed Embrace as an attractive buyer because it was a larger company in a complementary business, one that had the potential to offer QSTRAT's employees opportunities to grow that they currently didn't have. They also liked Embrace’s strong alignment with QSTRATs culture and strategy, and their adoption of similar values and goals.

Those complementary viewpoints ultimately led to an offer from Embrace to acquire QSTRAT -- an offer that made both Wargalla and Dickey very happy. Stinson says, "We wanted a buyer that would allow John to move forward with the business and give him some resources and the chance to spread his wings and expand on what he and Steve had built as the foundation for the company. We also wanted to give Steve the opportunity to step back from the day-to-day grind of running a company and spend more time with his family." Embrace’s offer satisfied both objectives. It would provide Wargalla and Dickey a substantial amount of cash as well as the opportunity for more through an earnout. And with the acquisition, Embrace would be able to provide Dickey with additional capital and other resources to help grow QSTRAT's business. Embrace's offer also allowed Wargalla to step away from the business after a six month transition period was complete.

After the deal 

Dickey continues to be the managing director at QSTRAT, now an Embrace Software company. And Wargalla is currently enjoying his well-earned retirement. Asked what he plans to do in retirement, Wargalla pointed to spending some quality time with his grandchildren. "I need to teach them how to ski properly,” he replied ‒ an avid skier himself.

But Wargalla has not totally lost his interest in business. "I'll probably keep my toes in the water businesswise to some degree. I think it'll be interesting for sure."