Unleash Animal Spirits to Increase Your Business Selling Price (a short video)

 Click Here to Watch Our Short Video         The Key to driving strategic value in the sale of a technology company is to move buyers up from their starting price based on a conservative Cash Flow multiple. As a seller, you must first earn your strategic value by building a great company. In your business sale, that must be captured and articulated in a competitive M&A process in order to unleash your optimized selling price. In this series of videos we will present 7 factors that we use to drive maximum strategic value.

We like to call this valuation component the defensive factor. This is very real in the information technology arena. What is the value to a large firm of preventing his competitor from acquiring your technology and improving their competitive position in the marketplace. One of our clients had an healthcare outcomes database and nurse staffing software algorithm. The owner was the recognized expert in this area and had industry credibility.

This was a small add on application to two large industry players' integrated hospital applications suite. This module was viewed as providing a slight features advantage to the company that could integrate it with their main systems. The selling price for one of these major software systems to a hospital chain was often more than $50 million.

We had arranged for a corporate visit with one of these large players. During a break in the formal scheduled agenda our client intimated that the other major player was interested in her company. Within 24 hours of that meeting we had a very generous letter of intent in our hands and a message of some urgency to get the letter dual signed by our client.

The thought that their competitor could own this technology and leverage it to provide a more compelling total offering resulted in them offering well more than the financial metrics would normally have garnered. The value paid for our client was determined, not by the financial performance of our client, but by the competitive edge they could provide post acquisition. Our client did very well on her company sale.

We want the buyer to consider the potential value creation of your assets in their hands post acquisition and to base their price on this view, not your 5 X multiple of EBITDA. By stimulating the animal spirits in the competitive marketplace we are able to help our clients optimize their outcomes.