Who are the logical buyers of software companies?
In general technology companies buy technology companies. Logical buyers are likely to be of a size that’s able to do the deal, but not so much bigger they see the opportunity as inconsequential. They are more likely to be a company in an adjacent market or an equity investor than a direct competitor. Though all the logical reasons for taking a competitor out exist, many see a higher long term pay-off moving into an adjacent market niche by acquiring a company located there with a strong customer base. Unfortunately, this also increases the risk as the company moves into an area it is less familiar with and has less experience in selling into and developing for.
How long will it take to sell my company?
You have a lot to gain by following a carefully measured process that provides time for: a) the collection and analysis of data for valuation, b) the qualification of prospective buyers and the execution of confidentiality agreements, c) the negotiation of the letter of intent, d) the completion of due diligence and finally, e) the negotiation of the definitive purchase agreement and the transfer of all applicable licenses. You should expect a 9 – 12 month process from the decision to sell to the close of the transaction and it can take longer.
Do you help with securing venture capital? Do you do IPOs?
No. We did at one time but learned early on that consulting, venture funding and IPOs distract from our core mission.
In order to sell my company, how big does my company have to be?
It’s easier to sell a big company than a small one. It’s easier to sell a company with an established market position than a start up with unproven technology, no matter how exciting it might be. It’s much easier to sell a profitable company than a company that’s not. However, small, unprofitable companies do sell.
How much is my company worth?
The market will tell us, but the process starts with a valuation that tells you, among other things, what companies like yours have recently sold for and what we believe is a fair market value given current market conditions.
What is required during due diligence?
Due diligence is a process that allows the buyer to verify the representations made by the seller upon which an offer has been based. Buyers will exhaustively review all technical, operational, and financial records looking for undisclosed problems, flaws in accounting practices, and verify ownership of intellectual property.
How do you protect confidentiality?
Corum Group understands the sensitive nature of each transaction requires total confidentiality. Employees, vendors and the competition need not know your intentions until you are ready to announce that a deal has closed. We guard your proprietary information by executing confidentiality agreements with qualified prospective buyers. Furthermore, we don’t provide comprehensive information about your company just because someone has signed a confidentiality or nondisclosure agreement. We start with preliminary summary information and provide more detail on an “as needed” basis only when appropriate.
Why do I need help to sell my company?
This also allows you the freedom to continue to focus on running your business throughout the sale process - a key aspect of maximizing your closing price.
What type and size companies does the Corum Group work with?
Corum works with privately held, software and IT services companies. We have worked with startup companies and companies with revenues in the $100 million range.
Who will I work with from the Corum Group?
A Corum M&A advisor is responsible for the success of the engagement and is your primary contact with targeted buyers. One and often two other M&A advisors provide geographic coverage and also insure we have an experienced person up to speed and available to step in when needed. Additionally, you will work with a team of researchers, writers and financial analysts that prepare the documents needed to take your company to market.
How long does it take to get my company in the market?
Corum has developed a well choreographed process that is usually able to get through the preparation phase in four to six weeks. However, the time line depends to a great degree on how well you are prepared at the beginning.
What role in the process do I have?
Our goal is to make sure you are focused on running your business and not unduly distracted by the process. Nonetheless you will have to review and approve the buyer lists, marketing strategies and the offering documents we write. These include an executive summary, blind letters and a financial package for buyer review. As qualified buyers express interest you will be involved in conference calls and meetings and in the due diligence endgame.
How well does the Corum Group know the buyers?
The Corum Group has been working exclusively in the software technology space for over 20 years and has established relationships with a large number of software companies and equity investors around the world that have the ability and interest in doing technology deals. In fact, we have negotiated deals with many of them. Our research staff is focused on software technology and we believe we have the most robust database of software companies, investors and trade associations in the world.
How is Corum compensated for its services?
Corum’s compensation comes primarily from success fees when a transaction is completed. If a transaction is not completed no fees are charged. In addition Corum charges a monthly retainer to help cover the firm’s administrative costs for such things as compilation of client information, valuation work and research and analysis, all of which are detail-oriented and time-consuming. The retainer also serves as a commitment from you that indicates your seriousness about pursuing a transaction as opposed to just testing the waters out of curiosity.
Should my accountant or lawyer help me find a buyer for my company?
While your legal and accounting advisors are important to the process and may have been involved in the merger and acquisition process, they are not likely to have the technical knowledge to truly understand your business or why buyers of tech companies do what they do. Without that knowledge their ability to market your company or negotiate the most favorable terms on your behalf will be hampered.
Corum was instrumental in helping us reach agreement with Constellation Software and the Friedman division. Without a doubt, the firm’s industry expertise, relations and deal experience were invaluable in this process.