%!*k! Proprietary

searcher profile

February 09, 2019

by a searcher from Harvard University - Harvard Business School in Dallas, TX, USA

I contend there are no more proprietary software deals above $5M in revenue with brokers and lower middle market banks willing to dip down to $250k-$500k sellside M&A success fees. There are 1-off searchers to Analysts/Associates at $1B+ VCPE funds calling on the same fixed pool of founders, CEOs, owners.  So I'm thinking starting an industry vertical specific software company is just about as viable as a dedicated software search unless you want to buy into a dying industry.  

Give me some feedback people.

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commentor profile
Reply by a professional
from Simon Fraser University in Toronto, ON, Canada
The Shaughnessy Group purpose is to help owners sell or divest of their lower-middle market Canadian business. Businesses and non-core divisions, acquisitions, shareholder, and management buyouts. Our focus is on supplying seller and buyer advisory services to Canadian companies in the $500 Thousand to $2 Million EBITA range. https://shaughnessy.group/

We formed our business after identifying a significant gap in the lower middle-market business category. Each year, an abundance of great companies is left with little transaction support when considering the sale of their business. These lower middle-market companies (generating EBITA greater than $500K but less than $2M) are often considered too small for larger investment banks and yet too sophisticated for the business broker/public listing sales process.

As a niche focused mergers and acquisitions firm we are the opportunity to become part of a national organization of like minded senior executives targeting the 16,000 lower middle market Canadian business that are 83% owned by principal shareholders who are 50+ years old, have the majority of their wealth tied up in their business and are seeking to transition or exit their business over the next decade.https://shaughnessy.group/careers
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Reply by an investor
from University of Pennsylvania in Washington, DC, USA
As serial software founder and executive with lots of friends in similar situations, I would agree with fact that any software company past $5M revenue with a modicum of marketing in a space (shows up at major trade-show, covered in trade magazines, has some network) is getting multiple individual searchers, bankers, PE-backed groups looking for tuck-ins all reaching out.

Still a few hidden ones out there but generally they have to be pretty inward focused (not out in market, trade shows, industry publications, networking), in off the radar locations, and often in sub-markets of industry or super regional based (big in only one state for example).

I'm a big fan of vertical software and think search fund model can apply but have to work even harder to find a deal. If I can help anyone, let me know (just message me).
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