POST-COVID M&A: Tackling Liquidity Issues and Boosting Valuation in a Post-Covid Market - Ascent Conference

POST-COVID M&A: Tackling Liquidity Issues and Boosting Valuation in a Post-Covid Market

Julien Meyer @ NorthStar Venture Partners, Steve Little @ Zero Limits Ventures LLC and Angelica Carr @ Aim Business Coaching
Startup Grad School Stage
Ascent Conference 2020

Julien Meyer [00:00:02] All right, well, welcome, everyone, to this 12:00 p.m. talk here to is on October 1st, 2020. My name is Julien Meyer. I’m here with Steve and Angelica. We’re going to introduce themselves in a moment. We are part of a panel that is going to be talking about post covid M&A today. We’re going to be talking about tackling liquidity issues and boosting valuations in a post covid marketplace. So thank you all for joining us here. This virtual conference. We’re excited to be here with you all. As I mentioned, my name is Julien Meyer. I represent a firm called North Star Venture Partners. We are a lower middle market technology M&A firm. So we work primarily with SaaS companies. We work with a lot of different software companies, everything from A.I. to big data to computing to software startups that are in that lower middle market. Really, five to 50 million dollar range is kind of our special special area of expertize. We’ve been at this for years. We actually were under a different name called MGI Capital Primarily and switch to North Star about 18 months ago. So if you heard of MGI, that’s the same firm we just switched. So really happy and excited to be here. I’m going to be mediating today’s talk and I’ll talk a little bit more about search partners towards the end. But I will allow Angelica Carr from a business coaching to introduce yourself and then Steven Whittle from Zero Limited Ventures. Who are the two analysts joining me on this talk about to introduce themselves. So, Angelica, please.

Angelica Carr [00:01:29] Thank you for that, Julianne. I’m Angelica Carr of a business coaching on the founder and an executive coach. And as far back as I can remember, I’ve been really curious about culture and change and their effects on all different areas of life. And this passion turned into management studies at university management consultancy in DC and then business development in Europe. And then I was just very naturally drawn to M&A being, I suppose, intrigued by its power to transform individuals, companies, the market and the whole economy. But I was also really intrigued by the challenges of M&A. So even before covid, the failure rate of M&A was about 80 percent. So I trained and it’s crazy trained in M&A integration to learn more about how to increase the odds of these gloomy odds. And at the same time, I was a director and a major shareholder in a UK advice and wealth management business where I saw and still see I’m still there deals, financing dilemmas and integration first hand. And I now run a business coaching and we specialize in change and crisis management. There’s a lot of corporate culture, culture, due diligence and of course everything is focused on M&A. I offer talks and M&A training workshops for not just leadership, but also the integration teams of a deal. And I think it’s quite rare in the M&A world. I also offer training for the employees going through a merger. I offer individual and team coaching and also work with funders to help them select investments and work with firms in their portfolio. I collaborate with some amazing people, having chosen my preferred experts in the different areas of M&A and of course in the different countries. I’m very proud to be Swedish. I not operate out of London and Alvino in France with representation in Boston and yeah, it now feels pretty liberating to do manage OK in this virtual space. So we pretty much off everything on sume. Now, in my free time, I explore different cultures. So culture is still a huge theme privately and professionally. I love family time and I keep saying. In these times, by teaching yoga and meditation, that’s my little intro.

Julien Meyer [00:05:09] That’s wonderful. Thank you so much, Angelica, for that intro there. And I’m sure we’ll learn more about him. Business continues to go through here. Stephen, Stephen, from Zero Limited Ventures. Happy you can introduce yourself.

Steve Little [00:05:20] Yeah. Well, thank you. Thanks for having me. I appreciate being here. And thanks for that introduction. Angelica was very nice. So my story starts when I was 13. I started my first business and so then I was 15 for about two hundred and forty seven thousand dollars and those are 1973 dollars. So that was a pretty significant event back then. But the reason I start there is really not that event. It’s what I learned in the process of selling my first business as a 15 year old about what drives the value of a business. It’s a lesson I took with me throughout the years. I built six software companies, took them each to nine figure exits. I retired a couple of times in the process, moved out to the Bay Area and hooked up with some top tier venture people out there and repeated that performance for them and took six of their companies out for eight and nine figure exits, companies that they pretty much written off in their portfolio and sort of earned a reputation as the guy who gets more. I then retired for, I think probably the sixth time and I was doing some casual consulting for small and middle market companies, you know, sort of sitting on my back porch taking phone calls, which was pretty nice. And and I started noticing a really interesting trend. I noticed that very few of the founding CEOs that were working with me had a clearly defined exit strategy. In other words, they had an idea for an exit like, you know, we’re going to grow and someone’s going to buy us or we’re going to give it to our kids or we’re going to maybe we’ll go public someday or something like that. But it wasn’t a strategy. But actually, more importantly than that, I would pursue a line of questioning, looking to see how much they knew about what was driving the value of their business, and I was dismayed to see that none of them really had a clear understanding of what was driving value. Typically, they answer the question, you know, like, what do you mean? Like revenue and earnings? Because, of course, we have this thing called valuation in our industry that we focus on. And and a lot of people have the understanding of what I like to say, the misunderstanding, that valuation equals transaction value. So they don’t really pay attention to the other factors that are really driving value. And the unfortunate outcome of that is they might get five, 10, 15, even 20 years down the road and be disappointed by what their business is actually worth in the market. And it’s not that they’ve done anything wrong, it’s that they never actually focused on value. So I just made a decision that I’d heard that enough. And this was something that I apparently knew how to do automatically. So I figured I’d go ahead and launch zero limited ventures, which I did in 2010. And and since then, we’ve helped hundreds of businesses establish accelerated rates of value and move through the acquisition process, getting as much as two to 400 percent greater value returns than they would have otherwise gotten. So it’s been a lot of fun. We, you know, we get to be very selective. We get to have a big impact on people’s lives. We also are very focused on creating impact in the world. I have a number of different philanthropic interests that that I pursue. And of course, I encourage our founders as we’re going to turn, you know, large cash flow or large capital windfalls over to them to start looking at how they can have a bigger impact on the world as well. So I’m glad to be here and I hope I’m able to deliver value to everybody listening.

Julien Meyer [00:09:04] That’s wonderful. Thank you, Steve. Thank you both for your introductions there. I’m really excited to not just be mediating this talk to the panelists. It’s an honor to share the virtual state share with you. So I’m really excited to get into this talk and the way we’re going to do it. For all of our viewers out there, buddy, here attending the conference is we’re going to try and say, excuse me, stay pretty SustainX with our responses to the questions that we’re going to be going through today. But if at any point in time you find something interesting that you want to discuss, I’m pretty sure myself and the other panelists here will gladly say, you know, feel free to email us. As you can see below, if you have questions on anything we discuss to feel like you want a more full answer, we just have to abide by the time allotted for the conference. But I think all three of us would say that we’re happy to connect with anybody here.

Steve Little [00:09:44] Some absolutely no question about that lately.

Julien Meyer [00:09:47] Yeah, wonderful. So jumping right into it, guys here. Thank you so much again for those introductions there. The way that we’re going to do this for the attendees is I’m going to ask a question and all three of us are going to kind of rotate round robin on an answer. They said we’re going to try and keep them pretty succinct, but if you have any questions right down after the conference to discuss. But, Steve, you mentioned a great point that I really think transitions really well into this first question here. Why should founders and VCs care about M&A activity in general? Right. What is it about mergers and acquisitions that’s so important? Because I think it’s a daunting word. Sometimes M&A is a daunting kind of, you know, phrase to say to folks. They’re like, well, I’m not even there yet. I’m just starting this thing you mentioned. And it’s something that actually prompted us to start our firm because I’m someone who has sold software companies on my own as well. You mentioned that a lot of founders and I think this is as well, oddly enough, don’t always pay attention to that exit planning early enough in the process. We have found that oftentimes we ask these folks to have an exit plan or like we did a valuation a few years ago for a fund raiser, and that’s really about it. And so, Steve, I wonder if you could briefly speak a minute or two on that point that you’re making, because I think that that kind of is an answer to this question here. Again, why should we care about M&A and M&A activity? Steve, if you could just touch on that.

Steve Little [00:11:03] I think that pressure and I think that I appreciate that. And and you’re right, it is a really critical principle. It’s one that business owners don’t focus on. And it’s always been a bit of a mystery to me why they don’t. But but they don’t. So they have it. Before I answer it, I do want to establish one principle that’s sort of a foundation, and that is to understand that there are limits anyway. We believe that businesses are sold, not bought. And here’s what I mean by that great point. You know, it is that understanding the buying market for a business, whether you want to sell it now or not, is what reveals the important information about the optimal timing for the acquisition of the business in order to maximize the rate of return. And also it reveals what is truly driving the value of the business. So in order to. Actually build value in your business, you need to understand what the buying market for the business is right now. What I mean by that is business owners monitor a lot of different things. They monitor their revenue and their earnings, their customer growth or profitability, their lifetime value, all kinds of things. But almost none of them are, very few focus on monitoring and managing the value growth of the business. In fact, most of them don’t really even know what’s driving the value of their business. And so, like I said earlier, it’s important for business owners to understand that this calculation of this thing called valuation, which is a set of calculations relating revenue, earnings and other market factors and so forth, is an important thing to understand. But most importantly, you need to understand that it does not equal transaction value. The key to knowing and understanding the transaction value of your business is understanding all of the most critical value drivers that actually accelerate the value of the business over time. You know, I like to tell business owners like, you know, there’s going to be an exit, maybe not now and maybe not two years from now, but there’s going to be an exit. Whether you sell it, whether you give it to your family, whether you take it public or whether you keel over dead at your desk, there’s going to be an exit. And the bottom line is you want this thing you’re investing your life’s work in to be as valuable as possible when that exit event occurs. So you have to be proactive and understand what is the value of my business. And to do that, you need to understand the buying dynamics of the market. That means you need to understand who the potential buyers would be and what each of them is going to value. Uniquely in your business, not all buyers are going to see your business the same way. Every buyer at every stage of every business, there’s multiple potential buyers. And every buyer is going to value your business uniquely and differently, it’s going to be related to some factor that’s associated with how much more valuable their business will be by owning your business and understanding. That is what helps you evaluate where to make value based investments in your business. If you knew that investing in customer acquisition in an illustration is more valuable to you in terms of a rate of return at acquisition than intellectual property or brand or or people, then you could make a better decision about your business that allows you to build a more resilient, more valuable asset in the business itself. In the buying market is the critical piece.

Julien Meyer [00:14:59] That’s that’s so right. Thank you, Steve. I think it’s a perfect answer. And I think it points to the fact that if anything, you should be paying attention to the exit earlier in the process, because you said at some point there’s going to be an exit. That’s just the truth. The situation that.

Steve Little [00:15:11] People have come to me and say, hey, I want to start a business, what’s the first thing I can do? I say, develop your exit strategy.

Julien Meyer [00:15:16] Right.

Steve Little [00:15:17] Look at me like I’m crazy. I’m going to I’m serious because it’s going to show you the road is going to tell you exactly what you got to do.

Julien Meyer [00:15:24] You know, and we say the same thing here, Steve. And it’s funny because you see so many founders at the beginning of their journey, they raised this angel money remains to be seen money. And they spend a whole bunch of it on an office or they spend a whole bunch of it on PR or on marketing or on hiring or whatever it is. And those things are great and they’re essential to the business. But, you know, the most challenging part of being an entrepreneur, truthfully, is not having a roadmap. It’s not having a boss. It’s not having someone to tell you what to do on a day to day basis. And oddly enough, if they were just to take the time to invest in that exit strategy early on, whether it’s time or money, hiring a firm or doing it on your own is as important as you know when you decide to do, which is the beginning. But I think more importantly, what’s odd is that we find as bankers and M&A advisors that sometimes there’s a little bit of this abrasiveness between, you know, founders or because they’re like, oh, well, they just want our money and they just want to do deals. And, well, we want to do deals, but we get compensated based on you being successful. And for us, relationships could be a year, two years, three to five years. And we are happy to deliver value oftentimes from nothing whatsoever. Email exchanges what not to win that business later on the process. I think it kind of behooves founders and VCs and board members potentially to engage with M&A firms early on. And to that point, and I’d like to see kind of what your thoughts are on this here, because as some of that’s a little bit more involved coaching side of things, as you discussed, I wonder how you respond to this question here.

Angelica Carr [00:16:45] It’s interesting what you just mentioned. Those are great, really great points, Stephen. You just said, Julia, are not entrepreneurs not having a roadmap. And I think all of these entrepreneurial traits that. Just just come naturally to entrepreneurs. They just need to be magnified in a crisis like we’re in now. And I think I just want to touch. I agree with all those points. I’m fascinated by the discussion around valuation. I think to go back to the question, why should founders care about M&A activity? I think we need to talk about transformation and positioning here and just to go back with some fundamentals. So generally, M&A is always an opportunity to capitalize on the success of the business. It can be a route to speed up success and more vulnerable founders cantante M&A to reduce risk, perhaps to avoid collapse in a crisis. But it can also be a really powerful strategy for repositioning a business. And I think more specifically in this pandemic, M&A can be key for meeting new needs. We’ve seen. Fast and huge changes on the market, and we’ve also seen that the new customer emerging from this crisis is so very different from Precook covid and that’s not just in the behavior, the attitudes, but really fundamental values have changed here. So it’s just like many past crises, but some very often we see some temporary shifts. But I think this time it’s transformation on a much larger scale. And of course, M&A allows you to compliment different assets that make you stand out. So we see much bigger competition now. M&A can help boost resilience. You touched on that for resilience, for disruptions right now in the crisis, but also in the future and also for meeting a much more volatile. It’s going to be slow. It’s going to be volatile, the demand as we very eventually recover.

Julien Meyer [00:19:29] Right. Absolutely. And thank you, Angelica, I think that’s perfect for you kind of continuing the conversation on what our talk is about, which is, you know, covid-19 being here and having affected pretty much everyone, every business in some way, shape or form, you know, in the impact that it’s had on M&A activity. And I think you it’s such a good job of explaining, you know, how to look at M&A now in a crisis like this or in crisis times. And, you know, I think for us, as North Star, as a company that primarily would look to work with Celsi clients, software companies, technology companies, we did our first full virtual deal. We sold a UK based company to a Canadian publicly traded company without one meeting, which to me was Apple, which excuse me, about one in-person meeting, plenty of resume and phone calls. But that was very interesting because it goes to show that you can still get deals done, things can still move forward. And, you know, oddly enough, we haven’t really seen a slowdown in our business. If anything, we’ve seen a little bit of an acceleration due to the fact that, you know, some players are maybe folding and are forced to look for that exit or some players have capital that they didn’t deploy and now they’re looking to deploy that capital as we get into year end and Q1 of next year to make up for the time that was lost and really, you know, Q2, Q3 of this year without being able to do some of those projects. And so for us, you know, as a company that primarily sells software companies, we’re actually doing relatively well. And I wonder in terms of, you know, overall M&A activity and your firm’s founders, it may be a little bit scared because we’ve had those conversations to say, hey, I’ve built this business. Is it never going to sell now? Am I in trouble? What’s going on in the marketplace? I wonder if, you know, Steve will start with you and Angelical cycle back, but maybe you could speak to those founders a little bit and either reassure them or let them know what’s going on in the marketplace in this corporate world.

Steve Little [00:21:14] And this is a great question, Julie, and I appreciate you including it today. And we’re seeing very much what you’re seeing. I haven’t seen any slowdown to speak of. I have seen some changes and I’ll share that with you. But but this is not the sky is falling. This is we’re going to play the game a little bit differently is how it works out. And so I’ve seen three principal effects. Many businesses are thriving and accelerating value growth because they responded to covered by focusing their attention and taking action on creating or boosting resilience, recoverability and qualitative aspects of their business. So they didn’t expect to do the same things every day. They recognize the need for change and they immediately went into action on change. They focused on deepening relationship with customers, partners, stakeholders, solidifying IP strategies or brand identity, providing personal incentives to their team members and so forth. It turns out that, you know, the factors associated with resilience and recovery, predictability, scalability, stability during a crisis are the same factors that boost value. So when covid first emerged, we hosted a series of conferences and mastermind discussions for free with hundreds of business owners to help identify the most available levers to increase resilience, recovery and the quality of their business and therefore the value of their business. And so in the end, those business are not only thriving, but in most cases they’re more valuable than they were four covid because it gave them an opportunity to really focus on the value metric of their business as opposed to just, you know, running after revenue and earnings. Now, I’ve also seen others who unfortunately froze in place, and so I tried to hang on to status quo business strategies and opportunities. Right. They left their operations untouched. They didn’t they didn’t pivot. Right, they didn’t consider what drives value and they’ve subsequently left behind and many of them and very compromising circumstances may already be out of business or they might be terminal. And, you know, just waiting to go or either way is going to be very difficult for them to pull out of the dove that they’re in because they’re going to have to really play catch up to those people that were proactive and took action right away. Then there’s also the business owners for whom covid sort of took the shine off the apple, so to speak. I think this is what you were talking about, Julian, where, you know, they might have been they might have been sort of moving in this direction anyway. They were thinking it it’s about time to hang up the shingle, so to speak, or, you know, hang up the hat, whatever analogy you want to use. And and you know this here. And it’s just like all these new challenges and new problems. And I was tired anyway, for crying out loud. There’s a lot of those guys are calling us saying, hey, you well, let’s just move this thing out. You know, we want to get on to the next thing in our lives. I’m seeing a little bit of that. But but they’re not in trouble. They’re really just, you know, making a decision that they were going to make anyway. And in a lot of ways, that’s what this covid virus is all about. It’s been predicted neurologically, if nothing else, that, you know, what it’s really doing is accelerating things that were going to happen anyway. So that’s just a micro case of that.

Julien Meyer [00:24:51] Steve, I want to I want to put a pin in that answer right there. If you could keep that fresh in your mind. I know that our next question here is going to touch on some of what you just said a little bit, you know, like for the audience to get even more on that as we get into that next question. And in the meantime, Angelica, if you could chime in here and give us your thoughts as well, expanded upon what you were saying in that former slide here on how you feel the impact.

Angelica Carr [00:25:14] Yeah, thank you. Thank you for a great insight, Steve. And I think the. Yeah, the shifts. I agree with that. The shifts in both the market, the customer have just been accelerated by covid. And we’ve seen I also through a big series of free events, I did some forums for executives and was just so inspired by the need for them to collaborate and learn from each other and really expose themselves to being vulnerable in a crisis. And I think that’s what we need a lot more. We need collaboration on all different levels. I think the in terms of how the impact on M&A, I think in the beginning we had, of course, covid being just about surviving and putting out fires, cutting costs. And as in every crisis, there’s initially a drying up of funds and deal making. So the first quarter of the year, I think there was a seven year drop in M&A. Now, that’s a shift. We’ve seen the global activity picking up at the end of the first half. July looked really good. And I think overall that’s a reduction in activity, but still plenty happening there. And that’s very much the the feeling I get from clients and working with teams. Generally, there’s a lot of pain everywhere, of course, but there’s also a big lot of opportunities. And yeah, we’ve seen I’m sure we’ve all been hugely inspired by all the innovation. I mentioned collaboration, but innovation. And in this pandemic, it’s, of course, very sector dependent. Yeah, of course, acquirers really quickly snapping up a home, fitness distance, education, all kinds of start ups close to me in terms of what I’ve seen and the impact I’ve had, the full range I’ve had a forced sale price is driven down, acquisitions being shelved, but also deals closing. So it’s been a very different activity everywhere around me. And I think it’s an interesting logistical challenge that we might have underestimated is not being able to physically meet. So, you know, in the beginning of the covid executive, we’re thinking, well, we’ll pursue this deal later on when we can negotiate face to face. Yes. In negotiations. And what cultural do due diligence generally is not ideal without teams meeting properly and but people adapt, then I think that’s another great thing. We’ve seen people adapt and I’ve seen some remarkable creativity. And so people. Executives thought, well, we’re just going to put these things on hold and expecting the crisis to pass quickly. But of course, it didn’t. So now people are coming up with solutions and doing negotiations and due diligence on the whole package on stem cell adaptation is key here as well.

Julien Meyer [00:28:46] That’s right. And thank you again, Angelica. It seems like the perfect transition here to question your using M&A potentially you of additional raises, which we’ve noticed definitely are firm. We don’t touch raises all that often. Sometimes we consult for a company that’s raising, but we have seen a slowdown in deployment of capital on the raising side of things. We haven’t necessarily seen a slowdown in capital deployment on the M&A side of things. And I think that, you know, what you both spoke to in the last question is this idea in the sense of collaboration, which as a New York based investment bank, I’ve noticed a lot of people get a lot nicer last couple of months. And I think that that is actually pushing forward what I used to consider relatively antiquated industry. I had worked with bankers before. I actually grew up in a family with investment bankers. And I always looked at it as this big old, slow moving bureaucratic tool. And now, at least since we’ve been in business and since Copan has kind of affected things, we’ve noticed that there’s a lot more collaboration among players. There’s a lot more negotiations happening, there’s a lot more deals and there’s a lot more empathy. And I think that’s awesome because M&A and investment banking is needed. Then in general, in the sign, it’s a little bit off topic in terms of using M&A as a liquidity tool or in lieu of some raises here. But, you know, I think let’s just round-robin this in real quick. And Jelica, if you want to touch on it and then Steve and then I’ll kind of wrap up and I do want to be cognizant of time here. What the three thirty five mark is I’m looking at excuse me, twelve thirty five Mark. We have about ten, ten, fifteen minutes left. So I just want to be cognizant of that.

Julien Meyer [00:30:22] OK, so briefly. So you’re asking about liquidity.

Julien Meyer [00:30:27] Yeah. Confounders look at M&A is more of a tool because I think sometimes there’s the stigma around M&A. I’m not even going to talk to a banker until I’m a billion dollar company. Right. Is there an opportunity for founders to use M&A potentially as a tool and sell off their portion of the business or get owned by a parent company, become a subsidiary so they can still realize their dream? How do you both feel about that?

Julien Meyer [00:30:49] Yeah, I think definitely liquidity can be a money can be used for liquidity, but I think it’s important to remember that the choice also depends on so many different factors. So it’s a founder’s situation. It’s the the terms of the deal. The desired outcome is the focus on closure of the deal. And the money is set to be to continue to be part of the vision, the brand that you’ve been building up through resilience, hard work, great team, etc.. And also in the crisis, I’ve worked with many leaders who were really suffering. And I think this is I think we just need to remind ourselves of the human and humanitarian aspect of the crisis. So, yeah, lots of suffering from a sense of helplessness, fear, of course, and all the responsibility, I’d say on a personal level, responsibility for the workforce, for profit, etc.. So the whole humanitarian aspect of covid makes it hard to be a strong and energetic leader, which is exactly what you need to be to go through them.And I’m sure you’ve seen that or it’s complex seminar’s complex and high risk even without covid. So so that’s another factor. I think we need to remind ourselves you just need to be in the right frame of mind. So if it’s not the right time for Emini or if you don’t want your shares diluted by additional RAICES, you may want to buy your time by using other options. So, you know, we always sell lemonade, but we still have to be realistic in a crisis until we have more stability. You might want to shed cost selling liquid assets, using temporary business models, government support schemes, seeking stakeholder concessions. Everyone is much more receptive to change. Now, of course, if you’re a fan, which is always key. So if you do feel X as an exit is acceptable or necessary, partial exit as well may be a good outcome and some cash on the table, but still in the game for further upside. And investors may want this for the founders to still be active and incentivized thoughts around them.

Julien Meyer [00:33:40] Yeah, I think those are great points. Thank you. In talking to Steve, would love your thoughts on this as well.

Steve Little [00:33:45] Yeah. So in the interest of time, you know, because I think we got one more. I mean, I would say yes, absolutely. It’s an effective liquidity event, especially now more than ever. It’s also the case that I think that the optimum timing for a company’s founders to exit a company is, generally speaking, far earlier than they ever think it is. And so it’s actually a great opportunity to help them bring in more resource, more capital, more skill, more experience, people who can actually accelerate the growth and value of the business that they started while also freeing them to prepare for what’s coming next. So I absolutely recommend this as a strategy. I think it’s a brilliant way to help founders accelerate the return they get. Matter of fact, in most of our cases, we position our founders who take a partial in the front, you know, maybe sell a majority share or something like that and stay on board for a short period of time or even longer be a couple of years, not too long. But the second bite of the apple is bigger than the first bite. So they get another ride later on. So I absolutely think it’s a brilliant liquidity strategy for founders. And of course, there’s a lot of provisions there. I don’t want to generalize to everybody in every case, but it’s definitely something worth looking at. No question about it.

Julien Meyer [00:35:13] I think that’s great. And Steve, just to kind of put a pin in this question and follow up on the point you just made, I think that founders shouldn’t be scared of approaching M&A firms, investment bankers, whatever it is, early on in the process. Like I said before, we’re always happy to take your call. And, you know, the truth is, is that there’s a lot more to M&A than just selling a company. And it’s a lot more structured. There’s a lot more negotiations. There’s divestiture subsidiaries, joint ventures, post liquidation events that we can structure for you.

Steve Little [00:35:39] It’s an infinite variety of things. You know what? I used to give a presentation years ago. I’d go around the country and back when we did that kind of thing, go around the country and present. Entrepreneurs and there is one slide that presented, you know, 20 to 30 different options for, you know, an exit. It’s not just buy or go public. It is lots of options.

Julien Meyer [00:36:02] And I think that folks need to not be afraid to talk to their M&A advisers or bankers earlier on in that process. So in the end, the essence of time here, just trying to stay focused. Is Buchanan hitting this deadline? This is a big one, the effects of covid-19 valuations. I think this is probably something that everybody at this conference wants to know. And it’s one that’s going to take some follow. It’s one that’s going to take some digging into each unique case by case basis. So rather than go into it on a case by case basis or what it means, I’m thinking maybe we could just give one or two quick sentences on how we’ve seen covid affecting valuations, whether it’s positive or negative. And so maybe we’ll just rapid-fire this question. And then as we put our contact information up after this, folks can follow up with this with us on these questions. So, Steve, I’ll let you go and Jelica and then I’ll go and we will go from there.

Steve Little [00:36:52] All right. Awesome. So I think in general, if you apply some of the basic principles we’ve already talked about in the earlier questions, I think you’re in a position to actually not experience any dilution in your value. We’re still getting very accelerated values for the companies that we’re selling. We’re not seeing compression in value when the company is focused on implementing resilience and recovery strategies that leverage the opportunity that’s before them. So, you know, if you’re worried about that, my take my my suggestion to the people listening is don’t worry about that. Get the right team involved. There are plenty of ways that we can get you positioned for a high value action.

Julien Meyer [00:37:36] Thank you, Steve and Jelka, thoughts, positive, negative.

Angelica Carr [00:37:39] Yeah, just to add to that, I have so many ideas and points on this, but just to add, I know we’re running out of time. I think to add, we need to go beyond numbers a bit and I think very relevant. Here is how a founder has reacted to covid is is key. So throwing that into a valuation scene that’s completely shifted since covid. Yeah. So when investors and acquirers are looking at the founder, they will inevitably look at how they reacted to COGAT, how resilient they were to disruption, how they communicated and engaged with all the different stakeholders, shareholders, employees, suppliers, clients. Also how and this is key, of course, how they looked at those changes in the market and the customer and adjust to the changes to reflect the new market and or so how resilient they were, how and how they they planned around risk. So I think we need to throw that into the the conventional. There’s a lot of the valuation fundamentals, of course, still hold. But we need to just look at valuation with a very open mind reflecting the crisis.

Julien Meyer [00:39:06] Right. And as you said, being able to adapt and change is such a key business skill and so helpful, you know, when it comes to how your company is going to be perceived. I think, you know, folks that maybe haven’t undergone in M&A process don’t understand that, you know, the painting of the picture in the painting of Futuregrowth, the business is equally as important as the current situation. And so I’m really happy to be able to say this to end covid talk, which has had so many negative effects on so many people on somewhat of a positive note here for our attendees here today to say something, primarily a technology conference, we have seen really very little to no valuation degradation in terms of M&A valuation multiples for software technology companies. And that’s because you folks don’t have to deal with what other business owners have to have, brick and mortar shops. We used to have a division that work with restaurants and retail and brick and mortar. And I can tell you folks firsthand, they are suffering really, really bad right now. And so if you’re one of the lucky ones, I think it’s most work. Most of us that are involved in technology are where you have either a fully virtual you can work remote without too much disruption. You have to keep that in mind because the horror stories you’re hearing about the economy, the business marketplace and valuation degradation could be skewed by hearing from those folks as well. Whereas with software and technology companies, we are actually still pretty strong in valuation range. So it’s not about trying to exit the mayor’s capital that is still being deployed to this very day.

Steve Little [00:40:28] That was capital ultimately. Yeah, that’s true.

Julien Meyer [00:40:31] Exactly. And so sorry. Go ahead Angelica.

Angelica Carr [00:40:35] No, I echo that completely.

Julien Meyer [00:40:37] Wonderful, wonderful. And so as we go ahead and talk here, I know we’re at the very tail end of our conversation here. So I’m sure some folks will be jumping off that. Before you do, I’m going to put our contact information up here. We’ll tell you briefly one more time about our firm’s a little bit about who we are and some parting words of wisdom. Once again, my name is Julie Meyer. I was a mediator and panelist here. I am a part of North Venture Partners on managing director of M&A. Over there, we primarily sell five to fifty million dollars, our software technology companies. We’re always looking for new opportunities and happy to engage with anybody that was here in this conference today on any kind of free consultation. We don’t just sticking with a bill immediately like lawyers do. I think investment bankers get compared to lawyers too much. What should you have any further questions? Want to connect with us? My personal email is there as well as our firm’s website. Angelica, if you could get a quick one, two minute overview and then Steve, and then we will close out the session right now.

Angelica Carr [00:41:32] So I’m Angelica Corrigan from a business coaching. I help companies prepare for M&A and especially taking rare situations like Koed into into the whole picture. I do talks. I do. I prepare the three different groups in a merger. So I don’t just specialize on the leadership, but I also train the integration management team and the employees, which is quite rare in the M&A world that you look at the merger acquisitions from the different three angles. And I think that’s key to to increasing the odds of M&A success.

Julien Meyer [00:42:24] Wonderful. Thank you Angelica. Steve?

Steve Little [00:42:25] . So the Little Zero Ventures, we are a valuation growth M&A firm working with firms between three million and fifteen to. And primarily in revenue, annualized revenue. We have a specialized process that we’ve developed, which includes a valuation of 24 key value drivers and generates a valuation growth strategy that we then use to accelerate the value of the business at acquisition. And today, I prepared three gifts for folks. There’s one the twenty four keys to Accelerated Valuation Growth webinar, the M&A multiplier playbook and an opportunity to connect with me directly. And all three of those are accessible. That zero limited ventures. Dot com which street? Pretty simple.

Julien Meyer [00:43:15] Wonderful. Well, thank you for that Steve.

Steve Little [00:43:17] Email directly as well. That’s fine.

Julien Meyer [00:43:19] Wonderful. What a great way to end a session with some free gifts there. So I want to thank our panelists, Angelika and Steve, for being here with us today. I want to thank all the attendees. We wish you a successful conference. Hopefully, the next time we see, we can meet in person. Shake your hand to get to know you. But in the meantime, we’re all happy to connect with you virtually and wish you a great rest your conference. Thank you.

Steve Little [00:43:39] Thank you.

Angelica Carr [00:43:40] Thank you very much. Thank you.

Julien Meyer [00:43:46] Well, I think that should do it, I think we just hit the mark there. Troy, are you still with us?

Troy [00:43:53] Yep, that was great.

Angelica Carr [00:43:55] Hello Troy.

Steve Little [00:43:56] Troy had to drop off the whole last question.

Troy [00:43:59] I know I was looking at the clock and I was like, I know what.

Steve Little [00:44:02] I saw today. So there’s no way we’re going to get to it.

Troy [00:44:04] You know how people are with conferences. It’s you know, if the schedule says from 12 to 12, 14, it’s like forty five. That’s the talent, Max.

Steve Little [00:44:14] I think we could.

Angelica Carr [00:44:14] Only regret was that I hadn’t I hadn’t I missed the last bit. So I didn’t have that sales pitch at then. But I’m sure we’ll meet them through other means.

Steve Little [00:44:26] They’ll find you.

Angelica Carr [00:44:27] Yeah.

Steve Little [00:44:28] Julian, thank you for for doing such a.

Angelica Carr [00:44:30] Thank you so much. Thank you.

Julien Meyer [00:44:33] It was a ton of fun and love to connect with you both on another call. I think we had a nice little dynamic going there and I’d love to expand on our conversations.

Steve Little [00:44:41] Yeah, that’s great. I’d love to. I’ll reach out. We’ll get connected to both of you.

Angelica Carr [00:44:45] Let’s do that. Thank you both.

Steve Little [00:44:47] Don’t say anything else right.

Troy [00:44:50] Now, that’s all. Thanks, guys. I really appreciate it. Nice job, guys.

Steve Little [00:44:53] Thank you.

Angelica Carr [00:44:54] Thank you.

Julien Meyer [00:44:55] Thank you all so much. Have a great rest.

Angelica Carr [00:44:56] You have to have a good evening. Bye bye.

Julien Meyer [00:44:59] Bye.


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