Exit Execution Workshop (Philadelphia) Part 2: Accidental Exits case studies
This is the second in a series of eight posts on Exits Execution – the Philadelphia Series. Basil explains the key considerations in executing an optimal exit for your technology company. The Exit Execution series follows the Exit Preparation presentation and Exit Strategies – The Waterloo Series available on the exits.partners blog.
This Exit Execution workshop was first presented at the Angel Capital Association Annual Summit in Philadelphia on May 9, 2016.
EXIT Execution – THE Philadelphia SERIES
PART 2 – ACCIDENTAL EXITS CASE STUDIES
Basil notes that luck and timing can sometimes be more important than a carefully designed and executed exit strategy. In this session, he recounts three exits that happened more by luck than design.
Vineyard Networks was pursued by Procera, a Swedish company, that perceived significant value in Vineyard’s technology. Basil negotiated a deal close to Vineyard’s asking price and significantly higher than Procera’s offer. The deal close in a remarkably short 4 months. This deal demonstrates when the buyer is keen, the price is higher and the transaction closes more quickly.
A more dramatic illustration occurred with the second company (under NDA) where a motivated buyer acquired a company that was only months from founding for its technology even prior to launching the first product.
In the third case, a software start-up approached a large industry player financing. The large company was so impressed with the technology that they bought the company, again before the first product as developed.
These cases demonstrate two things: First, if a small company has technology that a big company needs, the power in the negotiation and execution of the exit rests with the small company, despite the disparity in size. Power comes from having alternatives. Secondly, although most successful exits are a result of careful planning, preparation and execution, and the majority of exits fail, often for not having a cohesive plan, nonetheless, there are cases where exits happen by luck and circumstance, like these three.
You can’t plan on an “accidental” exit like one of these three. Your chances are much better with a considered strategy, comprehensive planning and disciplined execution.