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How to Build an Exit Strategy

Exit strategies for technology companies are like sex in high school – everyone talks about it but only a few are doing it right. The objective of this post is to layout a basic approach your company can use to achieve a successful exit. There are three major components to an exit strategy: 1) Understanding Exit Options, 2) Identifying Likely Exit Scenarios for Your Firm, and 3) Developing and Working a Specific Exit Plan. The post also includes a model you can use to estimate the value of a strategic acquisition, leveraged recap, sale to a minority investor, sale to a financial sponsor, or conversion of your business to a cash flow / lifestyle model.

Did Meetup Beat Facebook to Profitability?

Both Facebook and Meetup achieved important milestones recently. Facebook became cash flow positive while Meetup actually had real profits. Facebook’s news came via a blog post from Mark Zuckerberg, while Meetup’s information came from shareholder documents leaked to TechCrunch. While this post doesn’t get into the ethics of leaking, it does take a deep look at Meetup’s numbers. In a nutshell, Meetup is a great example of how a SaaS startup can scale revenues and profits from nothing to probably over $8 million in three years. While it may not be as exciting as what Twitter’s revenues could potentially be someday, Meetup is a great example of what a typical, successful startup can achieve.

So Private Equity Isn’t Evil After All . . . .

Private equity has been compared to ‘swarms of locusts” or “financial wolves” that fall on companies, devour all they can, and then move on. While such statements make good political theater it turns out that the reality of the situation is a bit different. As noted in the EY report “The most significant finding of our research is that, in aggregate, large businesses across Europe achieved impressive growth and performance improvement under PE ownership. Our findings show average per annum growth of 15% in profits, 5% in employment, and 9% in productivity from the time of acquisition to exit.” This post reviews the background behind the infamous locusts and financial wolves myths associated with private equity and explores the key findings of the EY report.

[ More ] September 15th, 2009 | 1 Comment | Posted in Management, Private Equity, Venture Capital |

How to Build an M&A Strategy

This post presents a basic primer on how to develop an M&A strategy for your company.  If your company is interested in leveraging mergers, acquisitions, or divestitures you should have a basic strategy that has been documented and reviewed/approved by key stakeholders such as the executive team, board of directors, key investors, and debt holders.  […]

[ More ] September 10th, 2009 | Comments Off on How to Build an M&A Strategy | Posted in Financial Literacy, M&A Series, Management, Private Equity, Venture Capital |

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