Special Report: 15 Tips for Finding Buyers
We are also seeing a lot of different kinds of buyers, so where do you find those buyers?
We're going to go to our dealmakers worldwide to talk about the different kind of buyers and different ways to find those buyers, starting with Jon Scott our managing director in our Amsterdam office.
These should always first on your list, the firms with strategic imperative to buy you. From the A list players like Microsoft and IBM down to the smallest firms, who may have even greater need. These are the companies that your technology will fit into, hopefully to give them a competitive edge. Good examples are a couple of recent transactions such as Zero Hero, an online ticket exchange platform that fit perfectly with Ticket Master’s suite of products. Another example is the sale of Cabforce in Finland selling to Cartrawler based in Ireland.
Thank you, Jon. Now to the Midwest and VP Rob Griggs.
Increasingly, we are seeing traditional firms buy technology companies to gain a competitive advantage. They are being very proactive in controlling their destiny. They do not want to be reliant on the tech giants controlling their technological solutions or licensing them critical code. A perfect example is Bosch in Germany, one of the largest privately held firms in the world—about $60 billion in sales—that outbid all technology firms including Google for a critical Internet of Things company, Inubit. Today they are one of the largest suppliers of IoT technology.
Thanks, Rob. Now on to Austin and Allan Wilson, who will discuss one of the largest buyers today, PE.
With over $3 trillion to invest, the Private Equity firms are the largest buyers of tech today. Corum provides research, education, and works with all of the PE firms in the world, including the aggressive Asian bidders who are sitting on mountains of cash. Often there are multiple sales to individual PE firms such as Riverside, Francisco Partners, Carlyle and Marlin Equity in order to do roll-ups. Some of these transactions are leveraged with bank debt. Nearly all are for cash.
Let's go on now to another kind of financial buyer, with family funds and private investors from Dave Levine.
In many industries such as natural resources, pharmaceuticals, and fashion, wealthy individuals and family investment funds have traditionally played a huge role in the development and growth of their industry. The same thing is beginning to happen in tech with the recent investment by some of our leading families like Bezos and Zuckerberg into some of the hottest new unicorn startups such as Convoy. Over $3B in transaction value has been completed by attendees at Corum events and we are seeing much greater activity by the families involved, instead of them simply turning over their funds to the wealth managers to invest.
Thank you, Dave. Now to Steve Jones in Atlantic City for more on PE.
In April, Corum reported that private equity portfolio companies are the hottest group of buyers today, gobbling up bolt-on or tuck-in companies in every imaginable sector. These portfolio companies are no longer working independently with their own staff identifying, negotiating and doing due diligence. Now they are simply a conduit to transactions, most the work being done directly by legions of specialists at the PE firms. There are even special sub funds of the major PE firms set up to move quickly on targets, often even the smallest companies with little more than an idea. Just this last quarter, we announced three such transactions: the sales of our clients Endeavor, Pipeline and Hospicesoft to PE-backed portfolio companies.
Thank you, Steve. Now what about those folks already using your product? Let's hear from Ivan Ruzic.
Don’t forget your customers when searching for a partner. Eager to expand, and not wanting to lose control of some critical technology to a competitor, they may be more than willing to talk to you. The advantage of a customer is they obviously already know the technology well, and have less concern about ROI as they have that additional financial benefit of being a user, often a major one, that now is not paying for something they previously licensed. However, such buyers are often not used to the speed of the transaction and may have a problem with sticker shock, as they are used to paying balance sheet related valuations which have no relevance in valuing a software company.