Common M&A Misconception: I don’t want to go to market too early

Nathan Rothschild famously said, “I made my fortune by selling too early”.

 

We get it. You believe in your company, your business and your market. You have to have this belief or you (and your company) wouldn’t have gotten this far. This is a good thing, not a bad thing.

 

At the same time, however, this belief can create problems when it comes to thinking about the timing of selling your company. The issue is that you always think next year is going to be better than this year. And in your mind, you have good reasons for believing this. It usually sounds something like this:

 

“You don’t understand. Once we ship the new XYZ feature and port our new widget over to the new cloud platform, things are really going to take off.”

 

Or…

 

“We’re so close to landing the new customer/channel partner/strategic alliance. Once we have that in place, things are really going to take off.”

 

These things may well be true, but this view overlooks two basic details.

 

First, in a growing technology company you will always have cool new things coming over the horizon. That’s why technology companies have roadmaps — and goals. Are you going to wait until there is nothing exciting up ahead? If so, you’ve waited far too long and your company may not be sellable at all. Buyers need to know that they’re investing in something with potential, not something that has already reached its peak.

 

Second, it’s great that you’re hyper-focused on your business (and only your business), but the macro-environment does still exist. Really. Your product may be marginally more interesting with the XYZ feature than your competitors’, but does that outweigh the risk that the entire market for companies like yours may be significantly less attractive down the road?

 

Ask people who sold in 1999 or 2007 if they regret not waiting another few quarters until they added a few more features and customers. Once they get off the floor (from laughing at this ridiculous question), you’ll have your answer.

 

Bottom line: The biggest concern these days for anyone considering an exit should be missing this tech M&A market - clearly the best ever. It's much better to be too early than too late.

Posted by , Vice President, Client Services on 28 July 2017
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