Tech M&A activity continues to climb despite rising interest rates, stricter regulatory rules, and geopolitical tensions. Fueled by trillions of dollars of cash on hand and concerns about inflation, buyers ‒ especially, private equity firms ‒are acquiring companies, big and small, that offer attractive technology and services. In the great majority of cases, buyers are adding these companies as bolt-ons to other companies in their portfolios that are in the same line of business.
Don’t wait for perfection
In short, now is a great time to test the market for a possible sale of your company. If your company offers good technology or services, there are ready buyers for it. Waiting for your company to be "perfect" and then thinking once you reach that point, buyers will come calling is illusory. And if the phone does ring, all too often that caller is a bottom feeder dialing for deals, trying to buy your company cheaply. Buyers don't wait for companies to be perfect. In today's market, they're jumping at the opportunity to acquire companies that fit their strategy. In other words, it's the buyers who drive the demand for deals, not the sellers. By waiting until your company is perfect, thinking a "Prince Charming” buyer will arrive at your door, you'll miss the opportunity to capitalize on today's market and hurt your chance of getting an optimal M&A deal.
Don’t get trapped in a protracted cycle of financing rounds
In their move to build that perfect company, entrepreneurs often find themselves in a protracted cycle of financing rounds, where they seek to grow by getting periodic infusions of cash from investors, with each financing round at a higher price. While this gives the company infusions of capital to work with, it reduces what an entrepreneur will get when exiting the company. After all, investors expect a good a return on their money. Furthermore, trying to please investors who expect high returns can actually stand in the way of a sale by forcing the seller to demand an overly high and unrealistic price for their company.
Even the smallest, money-losing company with a negative balance sheet can sell in today's market. It’s not about your financial picture, it’s about the story you tell. It’s what you represent to the buyer's future with your technology edge, user-base, and domain expertise. Your thought leadership, properly presented, can help get you a high value for your company.
Get the right advisor
Now is an excellent time to pursue an acquisition, especially with an experienced M&A advisor like Corum. At the very least, pursuing an M&A process with Corum will calibrate what your company is worth in the current market. In addition, Corum's team of experienced CEOs who have run, sold, and bought companies will help you present your company in the best possible way to potential buyers, and put you in a position for an attractive offer. You may be surprised how much your company is worth.
Don't play the waiting game and miss getting that optimal outcome you deserve.