Why do tech company owners sell their companies? In a recent Corum Tech M&A Monthly webcast, a seller's panel of four company founders and CEOs discussed why they sold their company or sought an investor.
More Life Balance
One reason to sell is a desire for more free time. After more than 20 years as the founder and CEO of MemberXP, the largest provider of solutions that credit unions use to collect and analyze customer feedback and member experiences, Constance Anderson longed for a better life balance. Thinking about the moment she knew it was time to sell, Anderson said, "I just didn't have life balance anymore. The company was successful and I'm grateful for that. But I was spending all my time really consumed by the business, and that's how I knew it was time to sell."
After Anderson sold her company to CU Solutions Group, a credit union service organization majority-owned by the Michigan Credit Union League, she took a well-deserved step back and relaxed, free of the daily grind of striving for a goal. She has no plans to return to the work-for- profit world but might get involved in a nonprofit, such as advising women entrepreneurs, a role she'd said she would find really fulfilling.
Opportunity to Grow
In Kevin Kelly's case, the need to grow his company, Altvia Solutions, LLC, a leading provider of flexible, web-based software solutions for Alternative Asset Fund Managers, Institutional Investors, and Impact Investors, led to a recapitalization deal with private investment firm Bow River Capital. Kelly's need for an investor was stimulated by ongoing changes in the private capital marketplace from 2016 through 2018. He recalled, "There was a lot of consolidation in our marketplace that we saw coming. We had an amazing opportunity to grow some long-standing client relationships and look at new clients. There were also some opportunities to accelerate product innovation and deliver more and better products."
With Bow River as an investment partner, Kelly could now execute on an expansion of Altvia's business and drive further innovation. Envisioning a bright future for his company, Kelley said, "We've hit a nice spot where you can catch your breath a little bit. We've got tremendous resources now to succeed and do what we want to do, which is ultimately change how private capital markets work."
Building a Business
Sometimes an investment is needed to turn a good idea into a profitable business. That was the case for Domenico Crapanzano, former CEO of Fing, a device recognition technology and network troubleshooting solutions provider in the IoT space. Crapanzano remembered the situation his company was in, "Fing was essentially three engineers with an app, about 20 million downloads and no revenues. I thought I could make a business out of it. So I bought the company and started spending a lot of time and money trying to develop it. We had a successful brand, but it took four years to get the company to a break-even point. I then realized I needed a significant investment to take it to the next level."
With the assistance of Corum, Fing was acquired by IT Asset Management platform Lansweeper. Crapanzano said that initially he engaged with Corum to assess the value of what he had built and to calibrate the market. After the sale, Crapanzano left Fling, though the rest of his team stayed. Recalling his experience, Crapanzano said selling was the right thing for the company, the people, and himself. "It was a really good outcome."
The Right Timing
In some cases, the right timing impels a company sale. Jay Fiske, co-founder, and president of MaestroSoft, a leading provider of event management solutions for nonprofits, had been contacted over the years by potential buyers. Although Fiske assumed he'd sell the company within a few years after starting it, it didn't happen that way. He said, "When we started the company in 1995, I figured it was a three or four or five-year lifespan. It was going to grow and someone was going to come along and buy it, and then I would move on and do something else. I never expected that it'd be a 25-year process." Over that period, the company went through some troubled times and wasn't ready for the market. Fortunately, Fiske developed a long-term relationship with Corum. This association paid off when Corum helped Fiske sell MaestroSoft to Arreva, a provider of an all-in-one, cloud-based fundraising and donor relationship management software for nonprofits.
That sale gave Fiske the peace of mind to know that his company was now in the hands of a good parent company. "I'm just much less stressed. All of the administrative things and financial things are being handled. I can focus. So I'm enjoying work. I'm working earlier and loving it."