Eighteen months ago, Netflix had a stock value of $84. One analyst was quoted as saying that it MIGHT reach $130 that summer. Well, two summers later, Netflix is worth more than $330. Different cycle, different perspective, but it’s still the same company.
You just can’t predict the vagaries of the market, the windows of opportunity open and close without warning. And we’ve seen that the rise and fall of the M&A market closely follows the patterns of the stock market.
Right now we’re in the busiest M&A market we’ve seen since the dot-com boom of 1999. Certainly the window of opportunity is wide open right now, especially if you’re a tech CEO or on the board of a software company.
Here are a few factors to keep in mind when watching the clock and gauging your opportunity.
Unlike other businesses, in tech, fast-growth software and services companies are almost never multi-generational. That means you HAVE to look for future partnerships.
Even with an active tech IPO market, fewer than 1% of tech businesses will go public, again, meaning you need to look for partnerships.
Finally, consider what the odds are of a disruptive technology impacting you and your company negatively. Conversely, what are the odds that it will be you and your company possessing that disruptive technology. If you’re playing the odds, you can see which side the numbers fall on.
Given the current market, it’s easy to see that exploring your growth and exit options is a win/win proposition right now, so don’t hesitate.