Some companies are bought for huge sums, while other similar ones never get much notice. How to get on the road to the big acquisition.
Getting acquired for a huge price is the dream of virtually every start-up I see. So why are some companies acquired for eye-popping valuations while very similar ones never attract much interest? The difference often comes from smart exit planning.
One of the most important factors is getting on the radar of potential acquirers. “You would think that we have a market map with every company in our space and a priority list of the companies we would most like to acquire,” said the former head of business development for a highly acquisitive Fortune 500 technology company. “That couldn’t be further from the truth. We buy companies we know.”
Here are two recent examples from our portfolio. In February, eBay acquired WHI Solutions, a provider of software and digital catalog solutions for aftermarket auto parts distributors. Last month, 3M acquired CodeRyte Inc., which brings computer-assisted coding technology to healthcare providers.
The CEOs of both of these companies had sought out and developed strong strategic partnerships with their eventual acquirers. These relationships were in place about a year before the two smaller companies began their sale process. eBay and 3M were willing to pay the highest price, in part because they knew WHI and CodeRyte as well or better than the other bidders.
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