Acquisitions · Saas

Non-IP exit and acquisition strategy

Daniel Eberhard CEO, Koho

January 6th, 2014

Hello  fellow FD's.

Quick and dirty one for you. 

Outside of complementary or competitive IP, what kind of assets should a start up look to develop in order generate acquisition interest? Effectively, why do firms acquire companies which don't have IP? I understand eliminating competitive threats is a major one but what are the others major factors? If we can take it one further, what can an organization do internally to ensure they are preparing for acquisition pro-actively? 

If it helps, this is in the context of an SaaS platform which reaches multiple industries, though general feedback is still welcome. 

Much appreciated, 

John Wallace President at Apps Incorporated

January 6th, 2014

Customers, process, and team. For acquisition, make sure you know your numbers and how to reliably achieve them.

Dimitry Rotstein Founder at Miranor

January 6th, 2014

One of the most common reasons for acquisition is hiring. So much so, in fact, that there is a special word for it - "acquihire". In such a case the only important asset is the team, whereas the product, the business, and such mean next to nothing in and of themselves. To be proactive for acquihire is to prove that you are impressive people that can get the work done.

Will Koffel Co-Founder at Outlearn

January 6th, 2014

Your intellectual property goes beyond patents, trademarks, and algorithms.  It's bundled up in all the mistakes you made on your way to a successful product.  That institutional knowledge makes you valuable to a bigger company, because the bigger the company, the bigger it costs to make mistakes.  So in practice, that means 1) product (even if it's "copyable" by a competitor, they will likely copy the wrong parts and be seen as derivative anyway, and 2) team, who will bring a necessary confidence to the table when strategically integrating your product into the larger business.

Fintan Ryan Industry Analyst at RedMonk

January 6th, 2014

Team, process and knowledge. A strong effective engineering team is always of interest to other companies.

Michael Barnathan

January 6th, 2014

Strategic product fit is a big factor, as is engineering talent. Some high-profile acquisitions also happen for what seems like PR ops for larger companies (usually only if you're a "sweetheart" of your industry).

Anthony Zeoli Digital Strategy and WordPress Consultant and Trainer

January 6th, 2014

In my experience, investors look for patent applications filed. They also want to make sure that the company's business is secured and all employees have their employment contracts signed. That's as much as I know, but others may have more information. You probably want to trademark your name for the verticals you're operating in as well. Tony Zeoli, Founding Partner WordPress | Digital Strategy | IA & UxD 810 W. 4th St, #309, Winston-Salem NC 27101 ✉ az@digitalstrategyworks.com | Visit Our Site ☎ 917.705.4700 My profiles: [image: Facebook] [image: Twitter] [image: LinkedIn] Contact me: [image: Google Talk] djtonyz [image: Skype] tonyzeoli More words: BuddyPress - Build Social Networks with WordPress

Scott Brittain CTO Snap Kitchen (We're hiring!)

January 6th, 2014

1. Always be killing your core business. Revenue and customers win.  #MandatoryResponse

2. Compile an acquirer list.  Who would you be a good fit with (as Barnathan indicates)? Who can you help? Who would help you?

3. Raise your corporate and individual visibility for the companies on your acquirer list.  Blog, tweet, attend, stand out, contribute, open source, pontificate, network, etc.

4. Build complementary value props and features for the acquirer list products.

 

Michael Barnathan

January 6th, 2014

Not just an idea, but a product, team, or IP required to execute on the idea. If Microsoft simply wanted to get into the email business, they could have built a Hotmail clone on their own - ideas aren't secret anymore once they're out on the market.

Tom Maiaroto Full Stack Consultant

January 6th, 2014

As far as patents go here's my experience with filing them and from talking to people about them. 

- They are expensive. So keep in mind as a bootstrapped startup, your money is often better spent elsewhere. because...

- Doom music. Patent trolls...And actual legitimate patent holders will litigate. You won't have the ability to defend your patent, its territory will get smaller and you may even end up with a useless patent. Or no patent at all. Just a bunch of wasted money.

- Sometimes with technology there's a million ways to achieve the same goals so even if you do patent your method, there's nothing to say someone else's legitimately different method to accomplish the same goals can't exist perfectly fine and happy in the same world (er country I suppose in this case).

- Oh right countries. You can file patents in the US, internationally, or in different countries and just because you have one in the US doesn't mean someone else can't have one in another country. Ain't that a bitch?

- Now, not to list all negatives. People DO buy and sell patents. So don't discount having one just for that purpose. However, if you're going that route, you almost need to model your entire startup around that. Which means any other work may end up being fodder. Could be good or bad depending.

Bottom line, the patent system is a little broken for our needs and now it's also a first to file system which is even more hectic crazy. Being first to market and having a well oiled machine (when it comes to your employees and company, product value, user experience, etc.) is far more important in MOST (though not all apparently) cases. 

Ryan Nurmela Managing Director at bigCampus, Inc.

January 6th, 2014

Process, scalability, brand, assets (personnel, goods, space, etc.). If you're not selling IP, then you're most likely selling the capacity/capability to do something. Such that, if you handed the company over to someone else they'd be able to utilize that capacity/capability. You can think of buying a company much like buying any other product, "How useful is this?" The better you can answer that question, the better off you'll be in a sale. Execution can be stronger than IP in many cases. Ryan Nurmela Co-Founder & CEO, QuantumCamp Chairman, Leaf Education 510-367-3279