Best Practices for a Successful Exit
The former CEO of SurfControl explains growth and leadership techniques that lead to successful exit strategies for software firms.
By Pat Sueltz, LogLogic
Aug. 11, 2008
It has been said that success is not a destination to be reached; rather, it is a journey to be taken one day at a time. Every company, regardless of its size, needs to have an end strategy for its success.
Companies need to realize that unanticipated events may occur along the journey and cause the end strategy to change. A company might not be successful, or it could become very attractive for another company to buy.
To prepare for the unexpected, software companies need to be cognizant of what could happen and what they would do in such scenarios.
The Acquisition of SurfControl
That is what happened at SurfControl, which was acquired by Websense in 2007. In 2002, the company was ranked fifth in its market and had 22 percent of the market share. By 2005, revenue was still growing, based on maintenance and earlier work, but the company had experienced two years of flat to declining bookings; and the board was looking to find creative ways to grow the business.
After I joined SurfControl as CEO in 2005, we added on-demand and security offerings and soon had good financials to report. We grew bookings for eight of the next nine quarters. But the strategies we put in place to enable our growth were the same things that made another company want to acquire us. At the time, we were so focused on growth that we hadn't fully considered the probability of acquisition until it practically landed in our lap.
Guiding my contributions in companies I have joined, I think in terms of Plan A and Plan B - first a vision for growth as an independent company and, second, understanding that there could be a possibility of acquisition. (There is no such thing as a merger. One company is always stronger and, in reality, is the acquirer.) Any company under $100 million can certainly be acquired.
Although SurfControl's end strategy was to remain independent, it received an unsolicited offer, so we went to Plan B. But in the end, it was a $400 million win for the shareholders; so our end strategy for growth brought success.
Five Critical Best Practices Enabling Growth
What techniques or best practices do companies need to follow in their growth strategies to keep company expansion aligned with the Plan A or B end strategy? My experience has been that there are five critical business practices that enable growth and success, some starting on day one.
1. Focusing on winning or getting technologies out the door does not set the stage for success. Business growth strategies start to work to your advantage only when they are founded on a context of core company values, such as integrity as to how the company will conduct business.
If you examine some of the companies that failed or were caught for defrauding their shareholders and customers in the late 1990s and in this millennium, you will find that a lot of those companies lacked those values or suspended them at some point.
These core-value decisions made from day one will have a huge impact on business success later on. Business practices and technologies change all the time, and so do people. But there are some things that should be immutable - a company should have core values that are lasting.
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Companies need to realize that unanticipated events may occur along the journey and cause the end strategy to change. A company might not be successful, or it could become very attractive for another company to buy.
To prepare for the unexpected, software companies need to be cognizant of what could happen and what they would do in such scenarios.
The Acquisition of SurfControl
That is what happened at SurfControl, which was acquired by Websense in 2007. In 2002, the company was ranked fifth in its market and had 22 percent of the market share. By 2005, revenue was still growing, based on maintenance and earlier work, but the company had experienced two years of flat to declining bookings; and the board was looking to find creative ways to grow the business.
After I joined SurfControl as CEO in 2005, we added on-demand and security offerings and soon had good financials to report. We grew bookings for eight of the next nine quarters. But the strategies we put in place to enable our growth were the same things that made another company want to acquire us. At the time, we were so focused on growth that we hadn't fully considered the probability of acquisition until it practically landed in our lap.
Guiding my contributions in companies I have joined, I think in terms of Plan A and Plan B - first a vision for growth as an independent company and, second, understanding that there could be a possibility of acquisition. (There is no such thing as a merger. One company is always stronger and, in reality, is the acquirer.) Any company under $100 million can certainly be acquired.
Although SurfControl's end strategy was to remain independent, it received an unsolicited offer, so we went to Plan B. But in the end, it was a $400 million win for the shareholders; so our end strategy for growth brought success.
Five Critical Best Practices Enabling Growth
What techniques or best practices do companies need to follow in their growth strategies to keep company expansion aligned with the Plan A or B end strategy? My experience has been that there are five critical business practices that enable growth and success, some starting on day one.
1. Focusing on winning or getting technologies out the door does not set the stage for success. Business growth strategies start to work to your advantage only when they are founded on a context of core company values, such as integrity as to how the company will conduct business.
If you examine some of the companies that failed or were caught for defrauding their shareholders and customers in the late 1990s and in this millennium, you will find that a lot of those companies lacked those values or suspended them at some point.
These core-value decisions made from day one will have a huge impact on business success later on. Business practices and technologies change all the time, and so do people. But there are some things that should be immutable - a company should have core values that are lasting.
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