Tech M&A Myth #2: You Already Know Your Buyer

Continuing our series of M&A Myths, I’d like to discuss another common misperception – that you already know your buyer. True, it’s a good idea to grow your company with specific buyer targets in view, but don’t let yourself get too attached to just a handful of buyers. The tech sector is highly dynamic and it’s a mistake to set your sights too narrowly. Our buyer research teams speak in terms of the buyer universe, and that’s a literal reality in today’s market. Buyers are everywhere: strategic, PE groups with large portfolio holdings, and non-tech buyers as well, all with exceptional amounts of cash.

When it comes time to sell your company, you always benefit from buyer competition. The A list of most probable buyers will include your buyer most of the time, but the operative phrase there is “A list.” In addition, our experience shows that about 35% of the initial interest and 25% of the ultimate buyers come off the B list. It’s less intuitive, but these are excellent buyer candidates, confident that your company is the perfect missing piece of their puzzle, and they will outbid everyone else to acquire you.

At the conclusion of a professional global M&A process, following multiple conversations, WebEx sessions, visits from qualified buyers, submission of LOIs, selection of most favorable candidates, conclusion of due diligence, signature and closing, at that point you’ll know your buyer. 

If you'd like to learn more about buyers in Tech M&A, make sure to attend our upcoming webinar on the new world of buyers on August 14th

 

Posted by , Executive Vice President on 25 July 2014
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