**HeadSpin’s Troubled Past and Acquisition by PartnerOne**
HeadSpin, a mobile app testing startup, recently found itself in a fire sale after its founder, Manish Lachwani, was sentenced for fraud earlier this year. Canadian private equity firm PartnerOne acquired the company for $28.2 million, according to documents viewed by TechCrunch. This acquisition comes after HeadSpin’s troubled past, which saw its founder pleading guilty to wire fraud and securities fraud.
In 2020, HeadSpin’s board, which included Palo Alto Networks CEO Nikesh Arora, discovered that Lachwani had overstated the company’s revenue by nearly four times. This revelation led to pressure for Lachwani’s resignation, and Arora himself resigned from the board in January. The company had raised a substantial amount of funding prior to these allegations, with investments from Google Ventures, ICONIQ Capital, Dell Technologies Ventures, and more.
Following the fraud scandal, HeadSpin’s valuation took a significant hit. The company’s worth was reduced to $302 million, down from the $1.1 billion valuation it had achieved during its Series C round in February 2020. Despite operating under new leadership, HeadSpin faced challenges in attracting new investors during its attempt to raise additional funding in late 2022.
**HeadSpin’s Financial Performance and Valuation**
According to documents, HeadSpin generated $21 million in revenue in 2023, with its Q1 2024 revenue standing at $5 million. PartnerOne’s acquisition valued the company at approximately 1.4 times its revenue. Comparatively, the median M&A transaction multiple for deals announced or closed in Q1 2024 was 1.6 times, as per PitchBook data analysis. While PartnerOne declined to disclose the purchase price or HeadSpin’s revenue, these figures provide some insight into the company’s financial performance.
**The Fallout and Departure of HeadSpin’s Leadership**
Following the acquisition by PartnerOne, HeadSpin saw a significant shakeup in its leadership team. The new CEO, COO, and CTO all left the company post-acquisition, with PartnerOne confirming that these individuals received generous packages as part of the transaction. However, former employees did not fare as well. Most of them received nothing for their stock options, whether vested or unvested.
**Conclusion**
HeadSpin’s acquisition by PartnerOne marks the next chapter in the company’s troubled history. The mobile app testing startup, once valued at over a billion dollars, faced a significant setback due to its founder’s fraudulent activities. While the company continued to operate under new leadership, it struggled to attract new investors and secure additional funding. PartnerOne’s acquisition provides an opportunity for HeadSpin to move forward and rebuild. However, the departure of its newly appointed leadership raises questions about the company’s future direction and stability. Only time will tell if HeadSpin can regain its footing and overcome the challenges it has faced.