At Pledge 1% our mission is to encourage entrepreneurs and companies to give back to their communities through the donation of equity, product, profit and time to non-profits. We launched this program less than a year ago we already have over 1,000 members of our community. And it’s growing quickly. As entrepreneurs ourselves we’re always looking for new and innovative ideas that help us achieve our mission. Today we’re announcing a major new idea in connection with SRS Acquiom, EscrowUP. The idea behind EscrowUp is as brilliant as it is simple. When companies sell, buyers typically set aside a portion of the purchase price (often 10-15% of the total deal value) in case unexpected expenses come up. For simplicity sake these escrows are…
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Mergers and Acquisitions
Too Lijit
This morning Federated Media announced that it has acquired Lijit Networks in a private stock deal. I’m incredibly proud of what the Lijit team has accomplished in the almost 4 years we’ve been investors in the business – charting a course that wasn’t exactly always a straight line, but one that has always placed publishers first. As a result of this never wavering focus on web publishers, Lijit has built a large and ultimately very valuable company. I’ve always thought that Federated was the natural acquirer for Lijit (and we’ve been partners with Federated for some time now). Federated shares Lijit’s focus on publishers (“the best of the independent web”), but unlike Lijit, who helps publishers generate revenue through better…
A different take on the Google/YouTube deal
My partner Chris sent the following around. Its a more lighthearted way of looking at the Google/YouTube deal… YouTube is currently “delivering” 100,000,000 videos/day. I’m by no means a prolific consumer of YouTube content, but I’m going to guess that the average length of a YouTube video is about 1.5 minutes. That translates into 150,000,000 minutes wasted (or 2,500,000 hours) wasted each and every day watching YouTube videos (it would be interesting to know how many uniques that translates into). Assuming a 40 hour work week and 50 work weeks per year (2,000 work hours/yr/person), that means that there are 1,250 “man-years” wasted watching YouTube videos–that’s each and every day. And people say that technology hasn’t boosted productivity… I didn’t…
The missing step
This post is part of my ongoing series about mergers and acquisitions. You can take a look at the rest of my m&a posts here. So – you have a term sheet/letter of intent/memorandum of understanding fresh off your e-mail from the other party (this could for be an acquisition, partnership, join venture, financing, etc.). Now what? If you follow standard operating procedure you’l call your lawyer, mark up the draft and send some kind of response back to the other side. Sounds logical, but you’re missing a key step. I wrote a post a few months back about the importance of listening when you are around the negotiating table. The same is true before you even get to that…
M&A – Do your research
I’ve had an ongoing series running on my blog dealing with various topics related to mergers and acquisitions (link to the full serieshere). As part of that group of posts, Daniel Benel wrote a guest column from his perspective as an m&a professional at Verint. Yesterday he dropped me the following note: I was in a negotiation last week where the bankers on the other side had googled me and found my blog posting on your site and then started complaining that I NEVER believe projections! I thought it was pretty funny — not sure if it helped or hurt. While it’s amusing that this happened it brings up a good point about preparing for any negotiation (or fundraising pitch…
When should you sell your business?
Last week’s news that CA purchased Wily Technologies for $375m reminded me of a working theory that I’ve had for a while (which generally seems to be supported by market experience over time), which is that there are generally two time frames in a company’s life where it can extract the most value from being acquired. Below is my version of the ‘exit value curve’ for a software/technology business where the x-axis is time and the y-axis is value:The drop in value should probably be a lot sharper after the initial euphoria phase (but this image took me long enough to produce and I didn’t want to redraw it), but the basic idea is that companies are generally most valuable…
M&A Part IV – Timing
When I worked at Morgan Stanley in the mid 90’s we used to have a joke about the relationship between VP hours and analyst hours. The ratio of these hours was in the neighborhood of 7 to 1, so when your VP asked you to do an analysis or create something for a pitch book and said something like “ok – I know its 10pm, but this should only take you about an hour” you knew that you’d working until about 5am, give or take. I’ve found this relationship to be true of many lawyers as well (as in “I’ll get you this document in a few hours,” which typically translates to “I’ll get you this document at 11:59pm tonight”)….
Changing styles . . .
Brent wrote in recently to remind me that I wrote in M&A Part I – Lines in the Sand that I’d talk a bit about changes in my negotiating style over time. I actually interested to hear if other people have had similar experiences, because what I’m about to describe both seems like a natural progression and might also be termed ‘growing up’. I had an odd introduction to more formalized negotiation a few months into my first corporate job after leaving Wall Street. The company I worked for decided to embark on a few acquisitions and I was assigned to work on these with my boss who was the head of the business development group. Eventually we settled on…
M&A – A Corporate Development Perspective
I recently asked my friend Daniel Benel if he’d consider contributing to my M&A series. Daniel was a banker with Lehman Brothers (in NY and Tel Aviv) an is now a corporate development exec at Verint Systems (NASDAQ: VRNT). Despite having never bought one of my companies, he’s a great guy with a smart corporate development mind (rim shot). I thought he could add a corporate development perspective to the series. I’ll make sure he gets copies of any comments that get sent back, or feel free to reach him at the hyperlink attached to his name above.______________ Below are three topics on my mind related to acquisitions from a corporate development perspective (perhaps the beginning of a series): The Hockey Stick Projections –…
Your Exit
Here’s an interesting stat from a M&A update I received in my inbox a few days ago: Since 2000, the ratio of technology companies sold vs. going public is 10:1 (1,300 m&a deals vs just 125 IPOs). The moral of the story – be realistic. If you run a software company you are WAY more likely to sell your business than to go public. Time to start planning . . . now.