The IMPACT 2012 Conference was held last week in Philadephia, PA. The conference, organized by PACT, the Greater Philadelphia Alliance for Capital and Technologies, brought together a group of venture investors, private equity sponsors, CEOs of small technology businesses as well as advisors to these three groups. Signal Hill co-sponsored a Corporate Development Panel along with Silicon Valley Bank; Signal Hill Chairman & CEO Scott Wieler moderated the event. Panelists included Rob Thomas, VP of Business Development at IBM, Cherie Whitney, Senior Director of Corporate Development at EMC and Bob Pick, Senior VP of Corporate Development at Comcast. While many important themes and insights resulted from the panel, we thought it would be valuable to aggregate recommendations for companies looking to make a strategic exit.
Non-Deal Roadshows. When preparing for a strategic exit, relationships are the stepping stones to getting deals done; they lead the way into a company’s portfolio. Non-deal roadshows, which are basically introductions of your management team to the acquirer’s management team and/or relevant business unit heads, are most effective if started as early as 18 months to 2 years before you plan to exit; while you’re sowing the seeds for partnership and potential acquisition, you also make your company available for funding from the VC/strategic investment arms of the strategic acquirer.
Market Your Company to the Business Unit. Catching the eye of the corporate development division at a strategic acquirer is key since it is often the gatekeeper, but that’s just the first step. When feasible, it’s important to market your company to the operating group or business division that will be sponsoring or “championing” the acquisition; the group that will ultimately be managing the day-to-day operations of your business. Business unit buy-in is integral to moving a deal forward. Of potential deals with business unit buy-in, it is roughly estimated that only 10 to 15 percent get done, meaning that without buy-in, the chances of closing your deal dwindle drastically.
Make the Case for Cross-Selling. Strategic acquirers are always looking for synergy between businesses – that synergy isn’t limited to offering a complementary product or service. It’s important to make the case that your product will sell to their customers and that their product will sell to your customers. The opportunity to cross-sell makes your company a good fit, an essential part of the greater business.
Make Your Passion Palpable. Most strategic acquirers claim they can tell within the first 30 minutes of a management presentation how excited you are about your business and your people, versus just being in it for the money. Dedication level and passion for your business is often easy to gauge, especially for large companies who see management presentations every week. If you genuinely want to stay with your business, see it grow and become an integral part of a greater entity, conveying passion is fundamental (and should be easy).