Author: David Rowat

Exits Execution

Fiduciary Duty.  This paper describes how the Board of Directors of a technology company can exercise its fiduciary duty to supervise the work of management and its M&A advisors without becoming entangled in the process.  This follows the ideal separation of responsibilities for a well-governed company as detailed in the guide: Board governance...

Exits Strategy

Before the correction, the stock markets in general, and technology and software in particular, had a multi-year run never seen before.  The sudden reappearance of inflation and the rise in interest rates to combat it caused a correction in late 2021.  There has been a lukewarm rebound recently but few are convinced that the correction is over.  Many are nervous that there is more unwelcome news to come. So how has technology fared during these ...

M&A BLOG

Strategic Exits is the leading M&A advisor for entrepreneurs in the tech industry.  We design and execute optimum business exit strategies, putting more money into the pockets of founders and their angel investors.  We only provide M&A advisory services on the sell side to technology companies. We focus on the tech industry because we were once founders and executives too.  We have experienced the successes and challenges of tech busines...

Valuation

Updated July 13, 2022 The Software-as-a-Service (SaaS) model has fundamentally altered how enterprise software was delivered and maintained, its cost structure, and most importantly, how it was paid for.  Until the 2000s, software companies developed software and sold it to enterprises often with a substantial installation fee and an annual maintenance fee.  The customers received upgrades from time to time.  The software vendor incurred signifi...

Exits Preparation

When financial markets decline suddenly, everyone becomes an economist explaining what is happening and why this time it is different than all the downturns that came before it.  The downturn of 2022 may turn out to be a normal market correction in one of the most sustained financial bull markets in a century. But it could also be only the start of a prolonged term of financial setbacks that has been creeping up on us for years. The pr...

Exits Preparation

If you are a tech entrepreneur looking to sell your company, you want to see this video. It explains how to build a Financial Model that shortens the exhausting diligence process in two ways: first, it gathers all the historical, budget and future financial projections in one comprehensive Excel model, and second, it calculates the Normalized EBITDA used to value your company.Follow the process explained in the vi...

Uncategorized

M&A Fee Data Used to be Scarce: The size and terms of fees that M&A advisors charge for selling a company has been a hot topic in the tech industry for decades. Until the decade of 2010, data was scarce, and largely unpublished. M&A advisors would furtively gather in dark corners at finance conferences to discuss fees, but they were guarding information more than sharing it. The lack of transparency led to wide disparities in M&...

Valuation

(updated July 9, 2022) When an exit is on the horizon, tech entrepreneurs need to come up with a way to value their company. Software as a Service (SaaS) companies are almost always valued using a Revenue Multiple. This is described in the companion article: Methods for Valuing Technology Companies. SaaS company valuation starts with the current average...

Valuation

Valuing technology companies by historical and projected financial performance requires different methods. Selecting the best method for your company depends on its stage of growth, profitability and many other factors. One size does not fit all. Further, there are many non-financial factors that can be used in very early tech company valuations. These factors can be used even before they generate revenue. Valuing pre-revenue tech companies is expl...

Valuation

Who Buys Technology Companies and When? Unless you plan to build a company over several decades, you should plan how your company will eventually exit. If you are not planning to take your company public, then you need to look for another company that will acquire you. There are many types of acquirers for technology companies: companies of all sizes (not just the big ones); private equity (PE) and similar funds; fa...