2019 Midyear Valuations, Deals & Trends Report

2019 Mid-Year Tech M&A Report - Introduction

Tim Goddard

Good morning, afternoon, or evening, wherever you are in the world. Welcome to the Mid-Year 2019 Report on Tech M&A from Tech M&A Monthly. I'm Tim Goddard, EVP of Marketing here at the Corum Group, your host for this event.

Some quite the half year, so our agenda is packed. We'll start with a report from an event we've sponsored on a key trend we're following this year, Blue Collar Software. Then, we'll dive into our mid-year tech M&A report hitting all the sectors. And finally, we'll finish up with a special report on best practices and putting together buyers lists and making contact with buyers. Then if we have any time, we'll wrap with Q&A. So, if you have questions as we go, please input those into the Q&A window on the right of your screen.

Now we'll start here at HQ with Joel Espelien. Joel?

 

Blue Collar Software M&A Trends and Opportunities

Joel Espelien

I just had the pleasure of hosting a market spotlight webcast in collaboration with World Financial Symposiums on the topic of Blue Collar Software. This is an extremely important tech M&A trend that we're seeing across multiple verticals including manufacturing, transportation & logistics, utilities, building & construction, restaurants & hospitality, as well as agtech & food production. Opportunities are popping up across the value chain with new segments emerging in the first mile, middle mile, and last mile of these trillion dollar industries.

Our Blue Collar Panel included Phil Morris from Mariner in the manufacturing software space; Ray Lubeck from vMobile in the workforce augmentation and collaboration category; and Jeremy Holland from private equity leader Riverside. It was a great discussion with some fantastic insights.

I believe we are seeing a true renaissance in these Blue Collar Industries driven by new software solutions that are driving value, efficiency, reduction of waste, as well as significant improvements in employee happiness and customer satisfaction. I strongly encourage anyone with exposure to these industries to view the full webcast on demand at WFS.com.

 

2019 Mid-Year Tech M&A Report: Public Markets and Corum Index

Tim Goddard

Thanks, Joel. Now, to the Corum Research Team led by Elon Gasper. Elon?

Elon Gasper

Thanks. We begin with the public markets which roared back from their rough ending in 2018, delivering their best first-half performance in decades and posting many all-time highs despite trade tensions, recession signals, and interest-rate worries. North America led, but Asia and Europe also saw impressive gains as the long tech boom continues in this extraordinarily competitive environment amid the longest-ever US economic expansion and longest bull market too, driving M&A demand as traditional buyers try to keep up by tapping the growth, flexibility, and savvy that small tech companies provide.

Our Corum Index shows tech M&A deal volume constrained by supply and price discipline to about as many total deals as in H1 last year, with fewer but larger megadeals. PEs felt the pinch too, finding fewer platform plays while VCs, the proverbial smart money, took advantage of exit opportunities.

We encourage tech execs who aren't already exploring their strategic options to reconsider taking action to at least calibrate value while this unprecedented window of opportunity remains open.

 

2019 Mid-Year Tech M&A: Megadeals Trend

Elon Gasper

Megadeal distribution in 2019 reflects the overall trend toward Enterprise sectors as SaaS and digital transformation remake the business world. Seemingly left behind is the Consumer sector, but we did see Chinese live streamer YY pay $1.5 billion for Singapore's Big O, with its social media streaming app and short video service. YY extending its ambitions internationally as the Chinese mobile entertainment scene tightens.

 

2019 Mid-Year Tech M&A:  Megadeals – IT Services and the Internet Sectors

Elon Gasper

In IT Services, industrial robotics integrator, JR Automation Technologies, was bought for $1.4 billion at 2.4 times revenue by Hitachi, which entered the robotic systems integration market through this purchase, hoping to expand its IoT business in North America.

Massive chip consolidation continued. SoC semiconductor designer Cypress was acquired for $9 billion at 3.7 times revenue by rival German chipmaker, Infineon.

In the Internet sector, digital imaging company, Shutterfly was purchased for $1.75 billion by the publicly owned PE firm, Apollo Global Management, which plans to merge it with photo printing platform, Snapfish.

 

2019 Mid-Year Tech M&A: Megadeals – Vertical and Horizontal Sector

Elon Gasper

In Vertical, WABCO, which makes truck breaking and other vehicular control systems, was acquired by ZF Group, automotive supplier, for $7 billion as ZF steps up in the race toward autonomous vehicles.

Horizontal accounted for over half the total megadeal value. As here in Seattle, visualization specialist Tableau was bought for $15 billion by Salesforce, with plans to match Tableau with its AI platform.

We saw enterprise dominance in sector value trends too, as Horizontal and Vertical led the year for sales multiples, soaring to record highs. They were the top ones in EBITDA-based valuations too. The big difference there was how little the Consumer and Internet recovered after their dramatic fall late last year.

 

Top Strategic Tech Acquirers in the First Half of 2019

Elon Gasper

Among the top strategic acquirers, Constellation Software led again as it did for 2018, tightening its grip on that lead with an impressive 26 acquisitions, the most we've ever recorded in a first-half. Constellation made its purchases mostly in the Vertical sector through its widespread network of subsidiaries.

Constellation and J2 Global represent a group of aggressive buyers we call Consolidators, who've made continual, diverse M&A a major part of their business expansion strategy. Three other groups represented here includes Services buyers, with consulting giant Accenture doing 10 transactions to take second place again, as well as a NuMSP, which burst onto our leaderboard buying up hosting and other services providers after being founded just a year ago.

Tech giants were back in force, Apple with seven deals, followed by Microsoft and Amazon, plus veteran NTT, and burgeoning giant Salesforce climbing onto the chart with five, including its largest ever, Tableau.

The other two were specialists -- newcomer ACI rolling up payment processing firms, and Hexagon in geospatial and industrial.

 

1H 2019 Horizontal Tech M&A Report: Record Valuations & Customer Analytics

Elon Gasper

Next, deeper into our six sectors starting at the top with Horizontal. Amber?

Amber Stoner

The Horizontal sector set a new record high for sales multiples, while EBITDA multiples peaked in April, also near all-time highs.

Sales multiples increased across all Horizontal subsectors with EBITDA multiples largely following suit. HR & SCM were value standouts, trading at over seven times revenue.

In the customer analytics space, AI-enabled customer data platform, Lattice Engines, was acquired by commercial data vendor, Dun & Bradstreet, in its first transaction since being taken private.

Israeli conversational AI firm, Bonobo, was purchased for $45 million by Salesforce to enhance its sales cloud with Benobo's conversational intelligence.

Usabilla, a customer feedback company based in Amsterdam, was bought for $80 million -- almost six times revenue -- by SurveyMonkey, adding voice of customer technology to its customer feedback solutions.

 

2019 Mid-Year Tech M&A: Horizontal Sector – Marketing Automation

Amber Stoner

In the marketing automation field, data marketing giant Epsilon was sold for $4.4 billion to French ad titan Publicis in its largest purchase ever.

In Seattle, channel marketing automation specialist, Averetek, was picked up by E2open, a developer of cloud supply chain tools to extend its channel support solutions.

Salesfusion, a marketing automation platform, was bought by SugarCRM in a step that marks its first move into the marketing automation arena.

 

2019 Mid-Year Tech M&A: Horizontal Sector – AdTech Space

Amber Stoner

In the AdTech space, television analytics company, Data Plus Math, was purchased for $150 million by LiveRamp to improve its position in targeted TV advertising.

The ad server and dynamic content optimization businesses of Sizmek were snapped up by Amazon, boosting its advertising platform to take on Google.

 

2019 Mid-Year Tech M&A: Horizontal Sector – Workforce Management

Amber Stoner

In the workforce management, AI-enabled workforce automation company, Thoughtonomy, was bought for more than a $100 million, nearly eight times revenue, by its partner Blue Prism Group, adding SaaS capabilities to better target mid-market customers.

And mobile workforce management platform, Lighthouse.io, was picked up by TEAM Software, a provider of cloud-based technology solutions for security and cleaning contractors.

 

2019 Mid-Year Tech M&A: Horizontal Sector – BI Analytics

Amber Stoner

In the BI analytics market, Looker was acquired for $2.6 billion by Google as Google Cloud tries to keep up with AWS and Azure.

On the heels of that megadeal, big data analytics platform, Zoomdata, was bought by Logi Analytics, an embedded analytics software provider.

Process productivity platform, TimelinePI was snapped up by ABBYY to streamline its efforts in content analysis and natural language processing.

Data analysis firm, ClearStory, was acquired for $20 million, at four times revenue by data science and analytics developer, Alteryx.

And data analytics company, Infruit Labs, was picked up by BPM veteran Pegasystems.

Yasmin, what happened in the vertical space?

 

2019 Mid-Year Tech M&A: Vertical Sector Trends

Yasmin Khodamoradi

Vertical sales multiples have been trending up since their dip last December, while EBIDTA metrics are near all-time highs. Most subsectors were up from Q1, with healthcare seeing moderate increases in sales and EBITDA metrics, while multiples in the A/E/C space continued to outperform, at almost nine times sales.

 

2019 Mid-Year Tech M&A: Vertical Sector – Building Management

Yasmin Khodamoradi

In the building information management space, Building Systems Design, which provides software for calculating construction specifications, was acquired for $42 million by German construction software firm, RIB Software, to help fuel its growth in North America.

In France, BIM professional services provider, Lineis Group, was pocketed by AEC specialist, Graitec, as a bolt-on to reinforce its position in Europe.

And building specification solutions provider, Avitru, was bought by enterprise software giant Deltek.

 

2019 Mid-Year Tech M&A: Vertical Sector – Real Estate

Yasmin Khodamoradi

 In real estate, Constellation acquired cloud-based marketing solutions firm TORCHx and home listing SaaS provider, NewHomeListingService.com.

ZipLogix, a platform for managing transaction documents, was purchased by residential real estate software maker, Lone Wolf Technologies.

In Dubai, real estate technology provider, JRD Group, was picked up by its rival Property Finder.

And residential real estate workflow expert, CTM Software, was acquired by MRI Software to broaden its capabilities in document management workflow and electronic signature solutions.

 

2019 Mid-Year Tech M&A: Vertical Sector – EdTech Reporting and Assessment

Yasmin Khodamoradi

 In education, Norwegian digital learning business, Conexus, was acquired by Verdane Capital to accelerate its international expansion.

Edtech PaaS developer, Certica Solutions, snapped up the analytics tools of K-12 Dynamics and acquired predictive benchmark provider TE21.

In Salt Lake City, MasteryConnect, a firm specializing in assessment and competency software solutions, was acquired for over $42 million by Instructure.

And another K-12 assessment specialist, Assessment Technology, was pocketed by Weld North Education.

 

2019 Mid-Year Tech M&A: Megadeals in the Science Sector

Yasmin Khodamoradi

In the life sciences sector, clinical data management firm, Medidata Solutions, was acquired for $5.7 billion -- almost nine times revenue -- by Dassault Systèmes in its largest deal so far.

 

2019 Mid-Year Tech M&A: Life Science and Healthcare Sectors Acquisitions

Yasmin Khodamoradi

Pharmaceutical manufacturing software company, Zenith Technologies, was bought by Cognizant for its IoT capabilities.

And SaaS developer, ArisGlobal, was purchased by Nordic Capital to gain a foothold in the US healthcare market.

In the pharmacy business, ZappRx, a start-up that developes software for the management of specialty drugs, was purchased by Allscripts Healthcare Solutions.

Automated prescription pricing solution, Rx-Net, was acquired by pharmacy tech company, OmniSYS, adding a seller-side automated pricing solution to its portfolio.

And pharmacy assessment consulting company, Pharm Assess, was pocketed by pharmacy management firm, Rx30, to complement its retail business solutions suite.

Finally, OTTR Complete Transplant Management was bought for $16 million by molecular diagnostics company CareDx to tap into the predictive medicine market.

How did the consumer sector do, Yuliya?

 

2019 Mid-Year Tech M&A: Consumer Sector Trends

Yuliya Shnepa

In the Consumer market, sales multiples rose throughout the first half of the year. EBITDA metrics were shakier but within a narrow range.

The Gaming subsectors have remained steady this year, but the other consumer applications are up as ride-hailing, music and video streaming platforms mature

 

2019 Mid-Year Tech M&A: Consumer Sector – Ride-Sharing and Mobile Payments Acquisitions

Yuliya Shnepa

For example, after its March multi-billion acquisition by Uber, Dubai-based ride hailing app, Careem, picked up Cyacle, an Abu Dhabi bike-sharing startup, expanding into the micro-mobility space.

Speaking of which, the Brazilian micro-mobility and payments company, Grow Mobility, was bought by its Mexican rival Flinto, a mobile payments SaaS provider. Pre-paid mobile payments platform, Benefit Mobile, was acquired by National Gift Card, for its mobile-first technology and management, several of whom were placed in C-suites, including CTO.

 

2019 Mid-Year Tech M&A: Consumer Sector – E-Sports, Gambling & Betting Acquisitions

Yuliya Shnepa

On the e-sports playing field, Evil Geniuses was scored by investor PEAK6. Though the seller's more of a pro team and influencer than a tech player, this purchase shows the range of the burgeoning e-sports ecosystem, as does Infinite Esports & Entertainment being acquired by Immortals for more than $100 million. And e-sports platform, UMG, purchased by Gegs Capital for $27 million.

We have tracked strong M&A activity in betting this year, including last month's buyout of British casino games developer, Gamesys, by rival JPJ Group for about $620 million at an estimated 7.3 times EBITDA. JPJ also sold its online bingo operations to 888 Holdings, which followed up with the purchase of Betbright.

 

2019 Mid-Year Tech M&A: Consumer Sector – Video Game Acquisitions

Yuliya Shnepa

In video gaming, Pokemon Go creator, Niantic, acquired London-based AR game developer, Sensible Object. THQ-owned German media company, Koch, picked up game publisher 18POINT2 out of Australia for almost $3 million along with Prague-based Warhorse Studios for $48 million.

Finally, online multiplayer game developer, KIXEYE, was acquired by Sweden's Stillfront for $90 million.

 

2019 Mid-Year Tech M&A: Infrastructure Sector Trends and Acquisitions

Yasmin Khodamoradi

In the infrastructure sector, both sales and EBITDA multiples bounced back after a May drop.

The IT Services Management, Security, and Application Lifecycle Management subsectors remain the top three in sales valuations with application lifecycle management the only one among them to see a dip in sales multiples.

 

2019 Mid-Year Tech M&A: Infrastructure Sector – ID Management Space Acquisitions

Yasmin Khodamoradi

In the ID management space, Safe-BioPharma, a digital identity credential provider, was jointly acquired by electronic ID players, CertiPath and Zeva, to combine and extend their offerings.

Threat intelligence and identity monitoring firm, ID Agent, was picked up by Kaseya to enrich its IT security suite with Dark Web ID, a platform that monitors compromised personal information on the dark web.

Digital identity verification from IDology was bought for $300 million, nearly eight times revenue by England's identity data intelligence giant, GB Group, to strengthen its footprint in North America.

And Portland's customer ID and access management firm Janrain was purchased for $125 million by Akamai to improve its security access controls and ID management solutions.

 

2019 Mid-Year Tech M&A: Infrastructure – Cloud Security Space Acquisitions

Yasmin Khodamoradi

Palo Alto Networks made two acquisitions in the cloud security space, picking up serverless security firm PureSec and container security company, Twistlock, to improve its Prisma cloud security suite, paying over $450 million for the two companies.

Israel-based Luminate, a pioneer in software-defined perimeter tech for corporate applications in hybrid clouds was bought for $200 million by cybersecurity giant, Symantec.

UK-based cybersecurity provider, Sophos, went on a buying spree, snapping up cloud infrastructure security startup, Avid, boosting its cloud security capabilities. And DarkBytes, an endpoint security specialist to reinforce its endpoint detection and monitoring capabilities.

Another endpoint protection company, Endgame, was purchased for $234 million by Elastic, the company behind search engine Elasticsearch.

Security analytics tools developer, Interset, which utilizes machine learning to visualize attack paths, was acquired by app lifecycle management giant, Micro Focus, to extend its security, risk, and governance lineup.

 

2019 Mid-Year Tech M&A: Infrastructure – Anti-Bot Security Subsector Acquisitions

Yasmin Khodamoradi

We saw deals in the anti-bot security subsector, where bot mitigation startup, Distil Networks, was picked up by cybersecurity veteran, Imperva, to incorporate Distil's bot toolset into its platform.

Israeli AI startup, Unbotify, was acquired by Berlin-based Adjust, a mobile measurement company seeking to bolster its fraud prevention suite.

And in India, bot management company, ShieldSquare, was bought by a cybersecurity player Radware.

 

2019 Mid-Year Tech M&A: Infrastructure – IoT Software Acquisitions

Yasmin Khodamoradi

Driven by the IoT trend, French industrial IoT company, Sentryo, was acquired by Cisco to embed Sentryo's deep packet inspection capabilities into Cisco's platform.

M2MBlue, a connectivity platform developer based in the Netherlands, was bought by machine-to-machine managed services provider, Wireless Logic, to facilitate its expansion into the ultra-high data usage space.

And embedded software developer, Express Logic, was purchased by Microsoft, expanding its IoT footprint to a wider range of devices and challenging AWS for market dominance.

How did the Internet sector perform in the first half, Alden?

 

2019 Mid-Year Tech M&A: Internet Sector Trends and Megadeals

Alden Mendoza

After a two-year slide, both sales and EBITDA multiples have held steady since October as the Internet market has apparently normalized for now.

Within the very divergent subsectors, e-commerce has seen a notable recovery, while deals have continued in classifieds, food delivery, and travel.

Online classifieds and media giant, Axel Springer, was bought for $6.5 billion by KKR, capping a string of acquisitions in the German media and entertainment industry.

 

2019 Mid-Year Tech M&A: Internet Sector – Classifieds Acquisitions

Alden Mendoza

Classifies marketplace LesPAC was purchased for a little over $14 million by automotive classified website TRADER, making its first foray beyond the auto sector.

Recruiter.com was onboarded by recruitment software specialist, Truli Technologies, to improve its mobile hiring platform, VocalWorks.

In India, home rental platform, FastFox, was picked up by PropTiger, adding rentals to its real estate capabilities.

And dating classifieds website, Zoosk, was bought for $255 million by German dating company, Spark Networks, to gain a foothold in the North American market.

 

2019 Mid-Year Tech M&A: Internet Sector – Restaurant and Food Delivery Acquisitions

Alden Mendoza

This spring, Delivery Hero went on a little shopping spree, paying $172 million for the Emirates unit of Zomato, an Indian food delivery unicorn and buying out Hungrig.se, the third brand of its Swedish food delivery portfolio.

Singapore-based payment platform, Fave, rolled up two food-ordering startups, CutQ and Foodtime, hoping to accelerate its growth in Singapore and Malaysia.

Among other food delivery deals, non-tech companies ordered up some tech. DC-based meal delivery service, Galley Food, was purchased by US restaurant chain, sweetgreen, putting a recent investment by Fidelity to work.

And Snack box delivery service, Graze, was picked up by Unilever, while Indian groceries delivery startup, Veggie India, was acquired by Milkbasket, a subscription-based delivery service.

 

2019 Mid-Year Tech M&A: Internet Sector – Travel Space Acquisitions

Alden Mendoza

In Travel, Toronto-based online agency, FlightNetwork, was acquired by Finnish eTRAVELi Group in an effort to boost its North American presence. And Czech travel startup, Kiwi.com, was bought by PE firm, General Atlantic.

AI travel startup TRILL was picked up by Lonely Planet to move deeper into the influencer space and revamp its network of travel content producers.

In Europe, French home rental network, NightSwamping, was grabbed by HomeExchange, seeking to solidify its leadership in the peer-to-peer accommodation market. Also, German luxury travel operator, Enchanting Travels, was acquired by Travelopia.

Indian travel reservation platform, Yantra.com, was purchased by Ebix for $336M at two times revenue. Meanwhile, American Express picked up LoungeBuddy, a US-based airport lounge access service to expand its premium offerings. Additionally, hotel search engine, Room 77, was acquired by group travels specialist HotelPlanner.com.

What happened in IT Service market, Stephanie?

 

2019 Mid-Year Tech M&A: IT Service Market - Megadeals

Stephanie Jensen

Valuations for IT Services companies in developed markets increased from the start of the year to near record highs, while sales multiples for companies in emerging markets have spent the first half of the year fluctuating within a narrow band near all-time highs.

Starting with a megadeal, engineering consultancy Altran Technologies, was picked up for $4.1 billion at almost 18 times EBITDA by computer services giant, Capgemini, to keep up with larger competitors such as Accenture.

 

2019 Mid-Year Tech M&A: AI Software Development and Focused Systems Integrators

Stephanie Jensen

Among AI focused deals, KPMG acquired machine-learning startup, Recommender Labs, American CyberSystems merged with Innova, and another AI startup, Peachtree AI, was purchased by Search Discovery.

In H1, we saw many acquisitions of focused integrators across major ecosystems including Oracle, SAP, Microsoft, and Salesforce.

For example, Salesforce specialist, youperience, was acquired for $5.5 million by Indian IT company, Persistent Systems, to combine it with previously bought firm PARX, planning to create a boutique Salesforce partner in Europe.

Microsoft partner, NuSoft Solutions, was picked up by customer experience firm, Avtex, aiming to boost its expertise in implementing and integrating Microsoft Dynamics solutions.

And cloud managed ERP provider, Syntax, pocketed SAP integrator FIT out of Germany to expand its global presence, and Oracle professional EmeraldCube Solutions to strengthen its JD Edwards offering.

 

2019 Mid-Year Tech M&A: Governmental IT Services Megadeals

Stephanie Jensen

Another clear trend in 2019 is governmental IT services, where cyber intelligence and defense services firm, KeyW, was bought by Jacobs Engineering for $563 million expanding its offering in the intelligence and surveillance sectors. Defense contractor Peraton bought Solers, which specializes in the space and satellite industry.

 

2019 Mid-Year Tech M&A: IT Services – Other Megadeals

Stephanie Jensen

And our number two acquirer, services giant Accenture, purchased Australian defense IT services provider, BCT Solutions, along with many other focused services firms such as Seattle-based IoT company, Deja Vu Security, and Boston-based systems integrator, BRIDGE Energy, among its 13 acquisitions overall.

Elon Gasper

And just last week, veteran graphics software vendor, Corel, was bought by Private Equity KKR, six months after Corel acquired Seattle-based virtualization specialist, Parallels, reportedly for over a billion dollars.

These megadeals and consolidation rollups are reshaping the industry landscape into a disruptive environment that favors sellers even more.

And that's our report for the first half at 2019. Back to you.

 

Building Buyer Lists and Making Contact

Tim Goddard

Thanks, Elon and thanks to the entire team.

Now, picking up from last month's special report, I'd like to turn back to Amber Stoner, Director of Research at Corum to talk about "Building the Buyer's List & How to Contact." Amber?

Amber Stoner

Last month, we talked about preparation, research, and messaging, crafting the narrative that will tell your company's story. Once your message is sharp and clear, you need to start building your buyers' list and working on how you're going to make contact. Remember, the universe of buyers is massive.

As we said before, we saw nearly 3,000 buyers in the previous year alone, many of whom you've probably never heard of. Without a comprehensive research process, looking at the entire buyers' universe, it can be hard to know who is and is not a great buyer for your company. Don't assume that because a company isn't in your immediate space that it isn't a possible buyer. You need to spend time researching your list of potential buyers on an international level.

And remember, a great buyer of your product may not be a great buyer of your company. They are different.

At Corum, we have spent decades constructing our database of buyers, pulling from over half a dozen unique channels -- previous transactions, outside events, internal and external research, outside advisors. Our global research team is aggregating massive amounts of buyer and deal data every single day, around the clock, to constantly refine our Corum Buyer knowledge base.

Realize that this is so much more than just a list of company names. You need to figure out who the points of contact are, who their outside influencers are, and how you might approach them. This is where "buyer required knowledge" becomes a game changer to help drive the deal forward. Do you know and understand every potential buyer with this level of detail? If not, your deal could come to an abrupt halt before it even begins.

Utilizing our Corum Buyer knowledge base, we can begin to construct a target-specific universe of adjacent sectors that is tailored to the seller. Our clients are often very surprised by the opportunities in sectors they had never considered before.

And again, each target-specific universe is very unique to the client. One size does not fit all. A target specific universe for company A may put a heavy emphasis on Private Equity. Company B may be perfect for a Smart Logistics Buyer, and Company C might have a strong payment processing element that would be perfect for a strategic buyer in that space. Again, building this target specific universe requires deep research and insight to do it right.

 

Building Buyer Lists - Segmentation

Amber Stoner

We then segment this list, organizing each sector's target buyers in terms of fit to approach them accordingly. There's a very specific methodology to this. We have some nomenclature that we like to use, starting with the top and long list, which are exactly what they sound like. "Top list" companies are those where there is a very good evident fit. "Long list" companies have a less obvious fit, typically there is more education required on our part to enable them to understand the opportunities we are bringing them with you.

Then there are "Specials". These are companies that require any specific handling. Doesn't mean they're poor fit, but they need a far more customized approach, sometimes with various specific timing or both. They tend to be well informed about the space that the seller is in.

"Pending" encompasses companies that might not be an ideal fit, or not nearly as active in M&A. And "No Contact" companies are off limits for very specific reasons.

Generating this list alone is its own unique process that pulls from deep research into each potential buyer, while also really I highly collaborative process with our clients. Getting their input about previous business relationships, former colleagues, et cetera, helps provide sharp, vivid context to the landscape for each unique seller.

With a well-informed buyers' lists, we can then go on to create an auction environment of serious buyers who will help deliver an optimal outcome for you and your company.

 

Reaching Out to Potential Buyers

Amber Stoner

Finally, we reach out to potential buyers, but as we alluded to earlier, how you contact those buyers is crucial. This is where having a professional process and a trusted M&A advisor that is deeply connected to the universe of buyers can make the difference between achieving maximum value and being a deal disaster.

You need to put together an introductory letter after you've written the larger story with the executive summary. This is a document that would not identify the company, but would describe the opportunity and summarize the situation. This is something that we would advocate going out with early in the process, at the inception of your contact with buyers.

Also, you'll need a financial memo to be delivered only after an NDA is in place. That would contain historical and projected financials. You may want to present a formal valuation later in the process. This can help to screen initial interest.

And last but certainly not least, log everything. That will allow you to be dynamic in your responses.

Tim Goddard

Thanks, Amber. Great stuff.

 

2019 Mid-Year Tech M&A: Closing

Tim Goddard

I see we've gone a little over time here, so thanks for sticking with us. We'll follow up with your questions via email and hopefully we can meet you in person at one of our upcoming live events.

And with that, let's go to our close.