Timothy Goddard (cont’d)
So, let's now hear about how this is working in a specific case, and I'll turn things back over to Bruce Milne, Bruce?
Bruce Milne
Let's end today's presentation with a case study. In this case, it was a $3M company. They got two offers of five to $8M. Their target had been only four or five, so they felt pretty good. The problem? The offers fell apart. One buyer had stock problems. In the other, the champion left. The company then went on hiatus, and we used the time to improve. They built a tighter business model based on the preparation they had done and the research. They used the market feedback to reposition product lines and to reprice not only the product but ongoing support. More importantly, those relationships they had built with non-buyers we had introduced them to were used to build some profitable connections that really increased their value.
We reentered the market 18 months later and sold the company for $40M on a 90% recap, meaning that the company founders kept 10%. They pocketed $36M. Then around two years later, the buyer, a PE firm, sold it again for over $100M. Our client, the founders, got another $10M. In all, they received $46M, around 10 times their expected price for the company originally, all of that because of the process they went through and what they learned and how they applied that during the hiatus period. Tim, I'll turn it over to you.
Timothy Goddard
Thanks, Bruce. We've now got just a bit of time for some Q and A. So if you have any questions about this process, about the research report earlier, please do get those in. We'll try to answer them here and if we don't have time, we will get to them via email afterward. One that has come in, and it's a logical question, that Bruce, I'll turn over to you, what can I do to make sure my M&A process doesn't fail, Bruce?
Bruce Milne
Well, probably the number one thing is just to get educated. Read as much as you can. Go to conferences that talk about how you go through the process of focusing on those areas that you may feel you're weak. For example, preparation, your documents, that sort of thing. There's quite a lot of conferences on our website, both Selling Up, Selling Out, as well as the Merge Briefing, and then we also co-sponsor with the World Financial Symposium and other organizations. So take a look there is a good start.
Timothy Goddard
That's a good answer, and we've also got, we mentioned the WFS and we've actually got three events coming up with the World Financial Symposium this fall in both London, New York, as well as our first ever in Sydney, Australia, which we're looking forward to. So that should be great. With no other questions having come in, if you've got any, feel free to reach out to us via our website or email. But in the meantime, thank you very much for attending, and hopefully, we'll see you back for our mid-year next month. Let's go to our close.
This is a segment from Tech M&A Monthly:What Happens If You Don’t Sell (June) webcast. For more information, please visit Corum Group's Software M&A Webcast Archive.