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The marriage of two companies 

Walking Down the Aisle

Marriage is often used to describe the union of two companies, everything from dating to consummation. I recently gave my daughter away at her wedding, which in large part explains the big gap between my last post and this, and it made me think about the union of two companies.

How do you know if it’s the right deal?  How do you know if it’s the right company? Read more…

A big company just bought your competitor. Now what?

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Often a big company will come into your market and acquire one of your competitors for what seems like a lot of money.  One of the first thoughts that goes through your mind as the CEO is, “Why not my company?”

It shouldn’t really matter if an acquirer buys your competitor because you’re focused on building your company and developing your product, except it means that you weren’t acquired. Not only weren’t you acquired but your competition just got a big financial backer and a lot more resources.

I’m not sure which is worse actually – To be in the conversation but know that Big Co. picked someone else or if you weren’t even being considered by Big Co.

Hopefully you were at least in the conversation, meaning while Big Co. was looking at the various companies in a particular space of interest they were at least talking to you, too.

But maybe they weren’t. Read more…

Top 5 Reasons Companies Fail to Scale

 

top-5Running an insanely fast-growing company is a little like playing a game of Whac-A-Mole.  Running a growing company has a little art to it and lots of guesswork. A system that worked for signing up and registering customers last week, for example, might not work next month when the number of customers has significantly increased. As a CEO your job, essentially, is to keep whacking the mole. Read more…

The Value of Revenue Growth

The single most important factor in determining the valuation of a software company is the revenue growth rate.

In real estate what matters is location, location, location.  In software it’s growth, growth, and growth.

Software companies are primarily valued based on revenue multiples. What drives the revenue multiple is expectations for future revenue growth and related profitability, which typically focuses on gross margins, not bottom line profitability.

While valuation for both traditional and Software as a Service (“SaaS”) models are based on the same concepts, over the last few years SaaS companies have been growing faster and commanding higher revenue multiples. Read more…

How do you know when to sell your company?

Selling

You’re a CEO of a VC backed tech company. You’re company is going along pretty well.  But what do you do long term?

Do you continue your drive to an IPO or do you consider selling?

If you consider selling, how do you know when to sell?

Or asked another way, when do you know it’s the right time to sell the company?

Read more…

3 Tips for a Tech CEO in acquisition discussions

Chess

Every now and then you may get a larger company asking about buying your smaller company.  How do you respond?

Do you say I’m not interested?  Do you tell them to make an offer?  Do you act nonchalant?  Do you chase after the opportunity?

There are a lot of different scenarios to play out but there are some basic positions to take and a mindset to understand. Read more…

What’s Your Company’s Personality?

Company CultureYour company has or will have a culture and a personality.  You can have it determined for you or you can make it what you want.

If you’re an early stage company you have the opportunity to start fresh. If you’re around 25-50 people, it’s a great time to lock in the culture you want, maybe tweak it a bit.  If you’re bigger and don’t like what you have, or don’t know what you have, it’s an opportunity to make it what you want.

Core Values are the rules and boundaries that define a company’s culture and provide a final “Should/Shouldn’t” test for all behaviors and decisions by everyone in the firm.  So to define your culture you must first define your Core Values. Read more…