Like every other technology company, we were getting inundated regularly with calls from a variety of investors and potential buyers, so when we were getting serious about exploring an exit, we asked ourselves “do we really need to hire and pay for an advisory firm to help us”? After a long internal discussion, our shareholders decided it was worth the “insurance” to use an experienced M&A firm to help us through the process – after all, you only get to sell your company once. We are glad we did and are especially fortunate that we selected Tequity from the firms we evaluated.
Some of the surprises and lessons we took away:
#1: Finding the right potential buyers can be very difficult. In the end, the company that purchased us was an organization we weren’t initially familiar with. We would never have identified them as a potential buyer if left to our own devices.
#2: Getting your company ready is far more work and effort than you think. Once we started working with Tequity we realized we didn’t fully know what buyers would be asking for. Tequity understands what types of information are most important at each stage of the engagement. Their process is simple, logical, and organized in a lot of small bites of time. Had we attempted to prepare our own material, the information would have been incomplete. As it was, our selected buyer complimented us on the quality of the information we had prepared for their initial review – the reason we were prepared is that we followed the list of information Tequity asked us to gather. This helped create a positive first impression with our buyer and it helped to shorten the workload associated with the preparation of the information for the more formal due diligence process.
#3: When the offers start coming in, you’d think that negotiations would be easy, but it was here we found Tequity especially invaluable in knowing how to pin down details we were unaware of and giving us insight into details that could have resulted in potential price claw backs. Getting all the substantial business points clarified at the offer stage and stretching buyers to substantially improve is something we found to be their strong point. Receiving multiple bids gave us comfort of what our true “market value” was. Tequity negotiated both a better valuation and improved the terms under which we received payment. When we first engaged them, they said they’d more than pay for themselves, AND THEY DID!
#4: A high priority for our shareholders was finding a strategic buyer: ideally a larger company that would look after our customers and drive increased revenue opportunities, as well as new learning and career path opportunities for our team. Tequity had the right touch here as well. Without having to compromise in other aspects of our transaction, we combined with a great company whose cultural fit and management style align with ours, which for us was the ultimate great outcome.
Glenn James, Co-Founder & Principal, DEV6