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Selling Your Technology Company for Maximum Value: A comprehensive guide for entrepreneurs

Book Description

Most technology entrepreneurs start companies and spend years of their lives building them with the goal of generating significant wealth through a successful sale. For many, the sale of their company is a one-off event for which they have little or no experience, but whose outcome can make the difference between true financial security and years of frustration and regret. This book gives honest, practical advice for executives and shareholders of technology businesses on how to prepare their businesses and how to manage and optimise the sale process through to a successful completion for maximum value. The author draws on his direct experience from a 20-year career in technology and corporate finance, but also on the experience of others in the industry - notably, corporate finance advisers and lawyers, corporate development professionals working at some of the most acquisitive large technology companies and entrepreneurs who have sold their businesses. After every second chapter, there is a case study of a technology company that has been successfully sold, written from interviews with the key individuals involved. These give real-life experiences from diverse businesses, ranging from a pre-revenue company sold when its product was still in beta to a $100m revenue company sold in its fourteenth year. This is a practical guide that can be followed and consulted to give insight into every part of the sale process and to learn from others who have gone through it many times.

Table of Contents

  1. Cover
  2. Publising details
  3. Case Studies
  4. About the author
  5. Acknowledgements
  6. Introduction
  7. 1. When To Start Thinking About Selling
    1. Becoming known
    2. Getting your house in order
    3. Planning for sale opportunities
    4. Looking out for value triggers
    5. Case Study 1: The Sale of SiteAdvisor to McAfee
  8. 2. Strategy For Sale
    1. Preparing a pre-sale strategy for maximum value
    2. Value vs time graph
  9. 3. Choosing Advisers
    1. Do you need advisers?
    2. Appointing a new non-executive director with sale experience
    3. Appointing advisers at the right time
    4. What you should look for when choosing advisers
    5. Team building and beginning work on the Information Memorandum
    6. Case Study 2: The Sale of Kidaro to Microsoft
  10. 4. Preparing For The Sale Process
    1. Deciding who should lead the sale process
    2. Identifying Potential Acquirers
    3. Making a company easy to buy
    4. Solve all legal disputes early and include proof that they are not problems
    5. Lose any staff who might make your business look less valuable
    6. Test your preparation
    7. Do you need an office in San Jose?
    8. Management expectations
    9. Managing the expectations of families, staff and shareholders
  11. 5. Keeping The Business Running At Full Steam
    1. Whom to tell and whom not to tell
    2. Keeping everyone’s eyes on the ball and aligning interests
    3. Case Study 3: The Sale of TELLIT to Qualcomm
  12. 6: Starting The Sale Process
    1. Additional PR to get noticed
    2. Fresh Analyst Comment
    3. Information Memorandum (IM) and Executive Summary
    4. Rationale for sale
    5. Taking references
    6. Approaching potential acquirers
    7. Finding the right contacts
    8. Making first contact
    9. Following up
    10. Confidentiality
    11. Management presentation and preparation
    12. Next steps
    13. Keeping calm during the process
  13. 7: Value Estimation, Price Setting And Negotiation
    1. Estimating your standalone valuation and your strategic worth to each specific acquirer
    2. Second-guessing and understanding the acquirer’s price strategy and acquisition plan
    3. Competitive tension
    4. Price setting – who goes first?
    5. Bridging the gap
    6. Payments over time
    7. Cash vs shares and options
    8. Case Study 4: The Sale of buy.at to Time Warner
  14. 8: Running An Auction
    1. Deciding whether to run an auction
    2. The stages of an auction
    3. Gauging the levels of interest
    4. Understanding and managing the risks
    5. Bluffing – knowing when to bluff and how far to go
    6. Playing bidders off against each other
    7. Managing the process and the people
  15. 9: Negotiating And Signing Heads Of Terms
    1. Exclusivity
    2. Binding vs non-binding clauses
    3. Managing multiple termsheets
    4. Planning for legals – appointing lawyers and saving costs
    5. Saving costs on legal fees
    6. Case Study 5: The Sale of N4 to Experian
  16. 10: Due Diligence
    1. Online data room
    2. Acquirer due diligence process
    3. Managing their due diligence process
    4. Avoid unnecessary socialising
    5. Carrying out your own due diligence
    6. Creating points of leverage and value retention for when the acquirer wishes to reduce the price or hold back payment
    7. Understanding and agreeing the mechanics of completion
    8. Maintaining the smooth running of your company
    9. Moving on to contract creation
  17. 11: Contract Creation And Negotiation
    1. Understanding the basics of a Sale and Purchase Agreement (‘SPA’)
    2. Drafting
    3. Case Study 6: The Sale of KVS to Veritas (now Symantec)
  18. 12: Completion
    1. Preparing for completion
    2. Completion timing
    3. Completion actions
    4. Post-completion
  19. 13: Working Out The Earnout
    1. Case Study 7: The Sale of QAS to Experian
  20. Conclusion
    1. Preparation in advance
    2. The Sale Process