Case study: How a radical approach got this startup acquired within one year

Trusting a fractional leader with a radical approach can be daunting  – in this case study we’re showcasing how it worked out for this software development company. Read on to also find out Stephen’s view on a hot topic: how do you pay a fractional leader when you’re just getting started?

For privacy reasons, the name of the client company cannot be disclosed. For the purpose of this case study, we will call the client company Nexus.


Nexus is a European-based software development and professional services firm active in the financial services industry. They build solutions around specific software used by a specific industry.

They started like many other startups – a small group of dedicated founders, in this case four, in a tiny room the university had let them use as a favour, building software they believed in. They focused their entire work on building solutions around a specific ISV (Independent Software Vendor).

Around 6 months into their start-up, the CEO of Nexus (we’ll call him Christian) reached out to Stephen Grossman, a fractional leader, whom he knew from a previous company they had both worked at. His ask was clear – help them acquire more clients and grow the business. At the time, Nexus only had one client, and the founding team was terrified of what would happen if that particular client walked away. 

Stephen was familiar with the industry, and agreed to help Nexus – if they would agree with his proposed strategy.

“I knew that vendor, I knew the environment, I knew the ecosystem. So I said, I can help you, but the strategy is going to be fairly radical.”

How radical? Instead of focusing on organic growth, which could turn into a very long game, he proposed getting Nexus on the ISV’s radar and ultimately getting the vendor to buy Nexus. But to achieve that, Nexus would have to target clients and win contracts the ISV coveted but could not convert to their platform.

The founders agreed to Stephen’s proposal, and the team began working on their first target: acquiring the clients the ISV could not get or keep. By strategically choosing a few accounts to focus on, not just clients the vendor wanted but the clients the vendor was most vulnerable with, the team was confident Nexus would get noticed and the vendor would be willing to sit at the table and discuss options.

Stephen’s knowledge of the industry and his extensive network played a key role in this phase. While Nexus had build quality software and had strong consulting services, they were too small a company to be noticed by the large clients the vendor was looking at. Having Stephen on their side meant they could get a seat at the table – then it was their job to secure the clients. 

Within a year, Nexus and Stephen had landed 4 major clients, which were not only of interest to the vendor, but also active in markets the ISV was struggling to penetrate, such as Latin America and Eastern Europe.

How do you pay a fractional leader when you’re just getting started?

I don’t advise working on a success fee basis. It’s not the right incentive for the fractional leader you bring on, and they could gamble with your business in an unhealthy way or push you in a direction because it suits their own financial game.

When you’re hiring a fractional leader and paying them, yes, it will hurt, but you have the power to terminate the contract if they’re not performing and they’re not working in your best interest.

In Nexus’ case, they paid me a a normal, respectful amount of money. Enough to be doable for them, but also a bit painful - I needed to know they’re invested. It was still lower than my normal fee. As an extraordinary exception and because we knew each other for a long time, we agreed to that, and there was a small success fee when the company was sold to compensate for the lower fee. But generally, I really don’t advise it. Trust played a big role in this particular instance.

Landing 4 major clients got Nexus noticed, and a meeting between them and the ISV was arranged. Here Stephen’s experience in the industry played again a key role – he knew the vendor, and the playbook they used. 

If you’re going to bring in a fractional leader, you need to make sure you get to know them and what they’re capable of. You want to know they have certain knowledge and skills – maybe they know the market, maybe they know the people you need to talk to, maybe they know the region you’re focusing on. And sometimes maybe it’s not any of that, maybe it’s just the fact they’ve done what you’re trying to do so many times that they know the game, they know how to play it. 

When the ISV sent someone without power of decision to the very first meeting with Stephen and Christian, Stephen was blunt and intentionally gave the junior manager a difficult time, knowing who he would complain to and how it would be received. To Christian, this seemed like another radical (and even dangerous) approach. The CEO panicked that the strategy had failed before it could take off. But Stephen knew why the ISV set up the meeting the way they did, how they thought it would play out and how they would need to recover and respond to such a disastrous meeting. 

Stephen explained to Christian:  We didn’t need the meeting today, they did. But they were testing and hoping it was the other way around. They’re now going to realize that they messed up. So, you will get a phone call in the next few weeks, and the CEO will make an excuse that she’s traveling in the region and wants to come visit you. That’s when they will make an offer to buy Nexus.

Two weeks later, Christian got a call indeed, and a sit-down with the vendors’ CEO took place. They were ready to buy Nexus – why? They had tried to build the widgets Nexus had developed for years unsuccessfully, and they knew that acquiring them would be much more efficient than continuing to try to develop them in-house. But most importantly, Nexus had key clients in their hands. They could go agnostic and shift these large accounts to a competing ISV.

Negotiating took a few rounds of back-and-forth, and came with its own challenges, such as a last minute shareholder dispute over the deal. Stephen was able to advise and negotiate with all the stakeholders throughout this process, ensuring everyone came to a mutually acceptable agreement, and that Nexus got a good deal from the ISV.

Twelve months had passed since Christian first reached out to Stephen asking him for help to acquire more clients. Now, Nexus was being bought by the very ISV they were developing software and services around.

Once the deal was closed, Stephen finalised his work with Nexus. His work was done, and the one year of commitment had passed.

Half a year from the acquisition, Nexus had moved into a premier office in a capital city and had grown to over 150 employees. The CEO and one other co-founder of Nexus decided to stay on, getting the chance to continue building the software and services they wanted, with the backing of a major vendor. He did a great job in scaling the company further, and was eventually bought out fully a few years later.

Stephen Grossman is one of Masters’ of Scale Fractional Leaders.

Are you interested in working with one of our Fractional Leaders? Contact us at