【天使系列】天使的退出策略—并购都是小于3000万
2008-11-30 16:36阅读：
天使的退出策略——通常并购都是小于3000万美元的Exit Strategy - Acquisitions are usually
under $30 million
The really interesting story these days about tech exits is not the
small number of really big acquisitions, it’s the big number of
smaller acquisitions. For the typical entrepreneur and angel
investor, these smaller transactions are an excellent way to make
several million dollar capital gains and should be part of every
company’s exit strategy.
I’ve written before on why this is a
great time to plan an early exit. The tech M&A market is
hot. Big companies know they are better at acquiring than
developing new ideas in house. And big companies have lots of
cash.
The financial media, and most bloggers, write about the really big
startup exits like Club Penguin, YouTube, Skype and MySpace.
Those are certainly exciting exits and great startup
stories.
But for the other
99.99% of entrepreneurs and investors, the really exciting news is
the large number of tech startups being bought for under $30
million. Many of these exit transactions are so small they aren’t
even press released. In my own portfolios, where I have been
generating some solid early exits, recent transactions have been in
the $15 to 30 million range.
Several smart VC bloggers have also been writing about this trend
over the past few years. I tried to find some quantitative data to
illustrate what’s going on in early tech acquisitions, but I wasn’t
successful. (I found one database that looked promising but didn’t
feel like parting with several thousand bucks to back up this post.
I also figured that many of the smaller transactions wouldn’t be
included anyway.)
The best reference I found was an article by Om Malik titled “The
New Road to Riches” which was in Business 2.0 a couple of years
ago.
He reports that the Mergerstat database, which
includes about 5,000 tech acquisitions per year, showed an average
selling price of $12 million.
I spent some time on Google searching for recent acquisitions of
tech companies and quickly pasted this list together. Most of these
are pretty big successes that millions of us use every day.
They are also great startups that all sold for $30 million or
less.
- Google bought Adscape for $23 million (now Adsense)
- Google bought Blogger for $20 million (rumored)
- Google bought Picasa for $ 5million
- Yahoo bought Oddpost for $20 million (rumored)
- Ask Jeeves bought LiveJournal for $25 million
- Yahoo bought Flickr for $30 million (rumored)
- AOL bought Weblogs Inc for $25 million (rumored)
- Yahoo bought del.icio.us for $30 – 35 million (rumored)
- Google bought Writely for $10 million
- Google bought MeasureMap for less than $5 million
- Yahoo bought WebJay for around $1 million (rumored)
- Yahoo bought Jumpcut for $15 million (rumored)
Why is this happening now?
One of my friends in a Fortune 500 company explained it to me this
way (paraphrased): We know we aren’t good at new ideas or startups.
We basically suck at building business from zero to $20 million in
value. But we think of ourselves as really good at growing values
from $20 million to $200 million or more. It’s a different skill
set than starting things. If we see an acquisition priced at $100
million, then our view is that it’s already out of our sweet spot
for adding value. But at $20 million, it’s really easy for me to
get it approved.
How should this affect the exit strategies for entrepreneurs and
angel investors?
It seems pretty clear that the optimum strategy for tech startups
today is to
design the
company, and its
corporate
DNA, so everyone is
aligned
around the idea of an exit transaction in the under $30 million
range. The good news is that these exits can often be completed in
just a few years from startup. They also have a much higher
probability of success than swinging for the fences and hoping for
a big NASDAQ IPO.
This exit strategy is nicely summarized in “The New Homerun” by Tom
Stein in Mergers & Acquisitions magazine, May 2008. He said:
“Startups must be content with hitting singles or doubles, that is,
a buyout of $50 million.”
As an angel investor that works well for me. What do you
think?
