I had a busy but very stimulating three days in gloriously warm silicon valley last week.
The “wow” bit at Microsoft’s Summit was Peter Moore’s session during which he showcased two super-cool 60 second slots of forthcoming games on X-Box…Peter’s enthusiasm was infectious and after watching the ads, I realised why “Gears of War” made it all the way to No. 1 as “Game of the Year”.
At the TiE Panel Discussion focused on M&A for software start-ups, there were some great comments from Mark Feldman.
Mark has spent almost 30 years in M&A in various capacities…He was also the Sr VP of Strategy at Virsa , a company acquired by SAP last year. Mark is also the author of “Five Frogs on a Log: A CEO’s Field Guide to Accelerating the Transition in Mergers, Acquisitions And Gut Wrenching Change”, that has been translated in 5 languages!
Some points from the discussion that I felt worth sharing:
- Ravi Mhatre shared his rule of thumb for valuing software companies: pre-revenue – $10m~$20m; small revenues – some multiple on the revenue; typical value being between $10m ~ $30m; fast growing, significant revenues (> $10m) – typically double-digit millions or more
- Compliance is probably the “hottest” area in terms of M&A activity by software acquirers
- “Security” is a close #2
- SalesForce is an oddity amongst software acquirers in the sense that it picks companies at a very early stage (ties in with their SaaS / AppXchange focus) and finally…
- …time-worn and blindingly obvious – but still worth repeating: The fastest way to an M&A transaction always goes through the field force and/or the product groups