Founders role in an angel backed company – Corporate Acquisition

We have interviewed Bob Kelly at the Asian Business Angels Forum and AANZ Summit 2015, in Queenstown.

Bob Kelly questions whether founders should think about exit in the very beginning of the venture.

You can meet a quality network of investors and experts in early-stage company growth, acquisition and exits in person by registering your place at the 9th Annual NZ Angel Summit 2016.

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Role and Importance of IP in building Angel Venture Value #ABAF15NZ

#ABAF15NZ: Role and Importance of IP in building Angel Venture Value

A practical look at how IP can be leveraged to build value in ABC’s (Angel Backed Companies). Building revenue streams and IP portfolios.

What IP are Asian acquirers looking for? Do angels need to own the IP? What role does the exclusive licence play? What are sector specific consideration in IT vs. life science deals.

Moderator – # Anton Blijlevens (AJPark, NZ)

# Allan May (Life Science Angels, USA)

# Introduction to international panel and their ‘war stories’ about intellectual property in China, Australia, and New Zealand

# David Chen (AngelVest, China)

# David Hugues (NZ Plant and Food – Crown Research Institute, NZ)

# Jim Kalokerinos (Brisbane Angels, Australia)

Click here to watch video on youtube

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Jim Connor talks Acquisition Strategies #AANZSummit14

Angel Association New Zealand Summit 2014

Angel Association New Zealand Annual Summit 2014 welcomed Jim Connor, Board Director and founder of Californian Sandhill Angels to speak about how to find and engage with acquirers, all the elements needed and how to obtain information in the process of planning acquisition strategies.

Read more from Jim Connor here

 

To view this video on youtube click here

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Excellent outcome for New Zealand Angels

The successful sale of cloud-computing company GreenButton to Microsoft is a win for everyone involved in the venture’s journey from a one-man startup to a globally competitive, international company. It illustrates just why angels like me find investing in high growth startup companies so rewarding.

This transaction is an excellent outcome for New Zealand. It’s something we can all be proud of. Another team of smart Kiwis have shown they can create a terrific piece of software which will be used by potentially millions of people.

Its worth pointing out almost all the capital required to create the company came from New Zealand’s angel and venture investment community, reflecting the degree to which this community syndicates deals and supports each other.

Over 20 individual angels from three networks contributed – Angel HQ in Wellington, Enterprise Angels in Tauranga and Ice Angels in Auckland – as did early stage venture funds Movac, Sparkbox and Evander. Almost all the investors have indicated they will reinvest the returns straight back into their startup communities.

Its also important to acknowledge the support the company has had from the Government, including the NZ Venture Investment Fund, Callaghan Innovation and New Zealand Trade and Enterprise.

These entities were all instrumental in the company’s success and I am delighted this transaction represents a significantly positive return on the Government’s investment.

– Marcel van den Assum

 

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ACA Report 3: Corporate Acquirers & Acquisition Strategy

Another instalment from ACA Summit 2014.

This session on corporate acquirers was sponsored by Procter and Gamble. Steve Baggot represented the company on the panel. Also on the panel were Frank Ball from New Dominion Angels who moderated the session. Michael Loria from IBM and Peter Rosenblum from Foley Hoag Law Firm also spoke.

CORPORATE ACQUIRERS – how to engage, deal sizes, commoneerrors and what breaks deals

Steve Baggot from Proctor and Gamble, said they do a deal every three days. JVs, licensing etc

Foley Hoag – Peter Rosenblum noted his firm help clients create strategy around deals

IBM’s – Michael Loria said his firm try to approach opportunities without determining structure of the deal until they understand the opportunity. More and more they are seeing the need to incubate an opportunity they have spotted. Sometimes they may buy an “option opportunity” in that business and often want access to customer base and sales team. They tend to “either have to drive or absolutely sit in the back seat”. This then means they can have quite a long relationship with the opportunity before they buy it.

Building a relationship is vital. It’s a long process. Using relationships as a runway to an acquisition.

What happens to the people? At P&G many people are there from acquisitions.

Most of the opportunities they are looking for are ‘what is keeping people up at night’ – problems the company is trying to solve. Steve likes the things that are serendipitous, but these still have to meet the test of strategy and business fit.

Law firms like Foley Hoag often help with the match making between venture and acquirer. But specialised law firms are better at the strategy than the match making. They can also help with investment banker identification. But be wary of whether you actually need these guys.

How do acquirers communicate their needs? Check their website. But this is generally only a slice of what they need. Always be on the look out for big acquirers looking to Invite people to share what they are working on.

It’s often a good idea to contact regional offices. Most will have entres into the acquiring dept of the big corporate. Odds of reaching the relevant person or even the acquiring team or department on your own are about zero. Look for someone to provide an introduction.

Make sure your legal or investment banking teams have credibility with the acquirer. Make sure they know the acquirers strategy and market, intimately and practically. Be wary of the business development guys at investment banking firms. They can become conflicted. And be sure, in the same way you appreciate the conflicting drivers when you are talking to the sales team at a corporate acquirer too.
Neither care about how big the company is that they are acquiring.

Almost all corporate acquirers won’t be getting into DD until they are quite sure it is a strategic fit. Then if it is a fit “about 10 billion” people will show up on your door step. And will they require tons of data. Internal data and intel about the company and about your market.

They will then review the business fit to be sure the acquirer can extract the value. Some deals take 21 days, some two years.

One of the first questions to ask a potential acquirer is do you have people and budget for acquisition – you need a “yes” to both questions and dig a little deeper on this too. Be sure the answer is “yes”. Strategic and resource fit are important.

A lot of deals fall over on IP issues. Sometimes trade marks. Corporate acquirers generally want all IP in the company but not always. Software business – big bump in a deal is often caused if the relevant software is open source. Most big companies don’t like it. Contracts are another bump in the road. Distribution relationship can be a potential land-mine if it’s with a competitor of the acquirer. Even some existing customers can be a problem to an acquirer, especially if you can’t get rid of them easily so that your acquirer can sell to their own customer base.

As an Angel Investor director you have to help your companies understand how they will manage the business while acquisition is going on. So often the company falls over while a deal is being done… often running out of cash because they neglect sales generation.

The modern style of doing a deal is to set up an electronic data room. Be sure you know which things you should and shouldn’t show the acquirer. Some things they shouldn’t see until they have bought the business

Valuation is the biggest derailer. Passion gets in the way of a clear eyed view of the real value. Based on data and research plans. Ask yourself, how do we learn together to get to an aligned view on valuation. Look at comparables in the market. And look at the risk. What is it worth to us. But every case is specific.

The heart of the issue for Angel’s is  – what can we expect our Investee to do in the buyers environment – not necessarily what it is doing in its current environment.

It’s not about what you have but how the buyer might look at it.

On my way home from the ACA Summit 2014, via Boulder I visited Trimble Navigation – employing over 3000 people, selling over 500 products in 35 countries and making GPS receivers, laser rangefinders and inertial navigation systems. Trimble have acquired 80 (yup, 80!) companies in the last 4-5 years. Some of these from NZ. They just recently acquired an Auckland company for $10m+. So the message is clear, American buyers are active! Good news for New Zealand Angels and their Investees.

– Suse Reynolds, from Washington, DC, USA

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