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.

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).

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.

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.

 

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

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.

Lawrence Lerner Digitalization and Transformation Coach

January 6th, 2014

Firms get acquired for one of two reasons. Talent (acquihires) or a solid product/idea. Hotmail is one of the best examples. It was well thought out but not built. Microsoft paid quite a bit for an idea. Lawrence I Lerner \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Direct: +1.630.248.0663 Blog: RevolutionaryInnovator Twitter: @RevInnovator

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.

Michael Barnathan

January 6th, 2014

Whether or not the company is actually worth what the acquirer pays for it is another matter (Powerset comes to mind as an IP/product acquisition which was probably overhyped), but Microsoft's perception was certainly that it was valuable for what it was building.