This week’s episode of Exit Stories—the season finale!—is a juicy one. Host Kevin Mosley welcomes Jesse Davis, the former VP of Progress Software, for Jesse to regale future (potential) Exit Stories guests with “Tales from the Other Side” about how strategic corporate buyers approach the acquisition process.
Davis, a longtime software executive in the Triangle, led multiple acquisitions for Progress Software over the course of 15 years. Those deals included helping companies like D-Zone exit to a private equity firm (shoutout to former Exit Stories guest Matt Schmidt!). Listen to the episode to get tips on how companies like his are thinking—and maybe someday you’ll have an exit story (or an Exit Story) of your own.
As always, thank you to our season sponsor, Dualboot Partners!
Here are some of the episode’s highlights:
- The top three things a strategic buyer looks at when deciding a company’s value is their technology, people, and customers. A buyer might ultimately decide on a target company because its technology augments theirs, or the target company’s employees are particularly outstanding and there’s a “network effect” to capitalize on, or the target company has access to previously unattainable customers. “It’s this complicated dance of trying to figure out what a company is actually worth,” Davis said. [20:40]
- For “monster buys”—borderline mergers rather than small, strategic buys—Davis said companies first need to pinpoint what they want to achieve in the long-term, and then find a company with the perfect trifecta of valuable technology, people and customers that aligns with their goals. For example, Progress Software acquired the software company Telerik in 2014 for $300 million because not only were the people at Telerik phenomenal, but Telerik “seemed to fit well with our vision that anyone can code,” Davis said. [31:20]
- Davis’ biggest piece of advice is to have a neutral third-party mediate the negotiation conversations, because “there’s a lot of emotion in this kind of thing,” he said. Davis said he saw a deal evaporate because CEOs on both sides were too fixated on the price instead of the bigger picture of what the acquisition would accomplish in a few years’ time. “Something I really want to drive home is that money is one thing, but the people and the relationships you will ultimately build are the most important,” Davis said. [39:20]
Listen to the full Exit Stories episode here:
Or watch the video here: