There are always great seminars and events going on in the Valley, and there’s always something interesting to learn, or a great speaker to listen to. The lawyers here are very commercial, and often have great nuggets of advice. They also have some amazing event space which is usually free if you know who to ask! Here are a couple of key takeaways from some of the recent events I have attended.
For a while now, private equity funds have been super active in dealmaking. There have been several landmark deals where private equity firms have taken public companies private, and also high levels of activity particularly with later stage companies, where private equity offers a real alternative to trade sales. Speed of transaction is a major benefit – most private equity companies can move a lot faster than a strategic can. Also in many cases the pricing is comparable, as there is lots of cash and competition amongst the private equity firms for the best assets. Something to watch out for: private equity firms tend to be much more active as owners of a business than a venture capitalist, so make sure you pick a partner you can work with to build value for the next phase of growth.
If you are set on a strategic deal, knowing your buyers beforehand is critical so that you understand the fit, whether that is product and technology, culture, geography or market, so you can capture that to your benefit in the deal. It is really true that the majority of M&A deals are done with companies that the buyers already had an existing relationship with, so time spent developing your presence and your strategic partnerships is time well spent.
Hiring a banker to plan your strategy, give you an outside view of your company and its value, manage the deal dynamics and process, get more buyers involved, take away the burden of a lot of the time consuming work and project management, will deliver really good value. Bankers help maximize value, keep both sides focused on what matters most, and get you the best overall deal. Yes I know this paragraph is a bit self serving, but I heard it at a panel, so it must be true…
And talking of strategic dealmakers… in other news all things Trump are keeping the Valley atwitter. His chief Valley supporter Peter Theil brought the great and the good of tech world to ascend in the golden elevator to meet our new President elect, and his family. It got everyone talking from Kara Swisher’s “As Trumplethinskin lets down his hair for tech, shame on Silicon Valley for climbing the Tower in silence” to Mark Suster’s “let Me Point out to you How Ridiculous the Trump Tech Meeting Was”. All in all it appears the tech industry has no idea of what is coming, but one thing is for sure, you will most likely see it first on an early morning tweet from The Tweeter In Chief.