In The Trenches

Lessons and Reflections From my Experience Acquiring, Operating, and Selling a Small to Medium Sized Business

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BUYING A BUSINESS

Venture Capital “Orphans”: Exploring an Emerging Search Fund Investment Thesis

Listen to this Blog Post Since their inception in 1984, Search Funds have largely targeted a very particular profile of company: Targets tend to be mature, enduringly profitable businesses with recurring revenue profiles, low capital requirements, and straight-forward operations. These businesses are often still run by their founders, and…

The Merits, Risks, and Possible Unintended Consequences of Earn-Outs

Listen to this Blog Post When acquiring small to medium sized businesses, buyers often utilize a tool called an “earn-out”, which is a form of contingent consideration that sellers may receive at some point in the future in addition to the cash that they stand to receive at closing.…

Evaluating 5 Very Different Approaches to Acquiring a Software Company

Listen to This Blog Post Enterprise software is considered to be among the world’s best business models, and for good reason: Revenue tends to be highly recurring. Switching costs, pricing power and customer retention rates are often high. And businesses have the ability to scale in a non-linear fashion…

Busting the Biggest Myth About Purchasing and Operating Small Companies

Listen to This Blog Post In this second edition of our “Myth Busters” series (the first one can be found here), I attempt to debunk a common misconception among prospective acquirors, particularly those looking to purchase a business for the first time. This myth states that the smaller the…

Lessons Learned in Capitalizing an Acquisition

Listen to This Blog Post Among the myriad variables that must be carefully considered when acquiring a business is the question of how the acquisition is going to be financed. My intent in the material that follows is not to cover the countless options available to acquirors stemming from…

Considerations Unique to Acquiring a Software Company (Product)

Listen to this Blog Post: In a previous blog post, I discussed several financial considerations unique to acquiring software companies, specifically those of the small-to-medium-sized variety . In this week’s post, I present several non-financial considerations for the prospective acquiror to consider. Much of what I discuss below is…

Considerations Unique to Acquiring a Software Company (Financial)

Listen to This Blog Post When contemplating the acquisition of a software company (or any company, for that matter), the number of variables that potential purchasers must consider is overwhelming, and as a result it would be impractical to discuss all such variables in a single blog post of…

Lessons From my First Month as the CEO of a Newly Acquired Company

Listen to This Blog Post “Trying to drink from a firehose” is a common expression that is often used to describe a situation in which one has a difficult time processing an overwhelming amount of information within a given period of time. This certainly described my own experience, when…

MANAGING YOURSELF

My Experience With Anxiety

Listen to this Blog Post I have debated whether to write this blog post for quite some time now, and my hesitation in doing so has been largely attributable to two things: First, as some of you may know, I create content quite regularly, and didn’t want a blog post…

100 Things That I Think Are True

Listen to this Blog Post Like many of you, I’m a sucker for a good quote. The best quotes often distill a lifetime of wisdom into only a few words, which is likely why some of them continue to resonate for decades (and in some instances, even centuries) after first…

Evaluating the Correlation Between Hours Worked and Success Achieved

Listen to this Post Though there are countless books, blogs, podcasts, and social media accounts that serve as thoughtful and informative resources for current and prospective entrepreneurs, unfortunately there appears to be an equal number of resources that demonstrate seemingly no limit to the fundamentally bad advice that they’re willing…

Tools in Managing My Own Psychology

Listen to This Blog Post In a previous blog post, Lessons in Managing My Own Psychology, I presented the five most meaningful lessons that I had learned during my tenure as a CEO related to better managing my own emotions. In today’s post I get much more tactical, and discuss…

How to Know When it’s Time to Stop

Listen to This Blog Post Paradox (par·​a·​dox | per-ə-ˌdäks): A seemingly self-contradictory statement or proposition that, when investigated or explained further, may prove to be well founded or true One needn’t look terribly deep within entrepreneurial folklore to be regaled with stories about the importance of persistence to the entrepreneurial journey, including…

Should You Become an Entrepreneur?

Listen to This Blog Post Within your first-degree network alone, I suspect you know a large number of people who, at one time or another, have expressed a desire to pursue an entrepreneurial career path. Yet I also suspect that, of those people, only a small percentage of them have…

The Entrepreneur and the Spousal Relationship

Listen to This Blog Post It’s no secret that meaningful and fulfilling relationships require deliberate work, often require trade-offs to be made between partners, and possess more than their fair share of peaks and valleys. Though these realities are true of substantially all long-term relationships, they seem to be especially…

Lessons in Managing My Own Psychology

Listen to This Blog Post: Ben Horowitz, the world-renowned Venture Capitalist and co-founder of Andreesen Horowitz, said it best when he said: “By far the most difficult skill for me to learn as CEO was the ability to manage my own psychology . . .  very few people talk about…

The Entrepreneur and Mental Health (Part 1): My Journey

Listen to this Blog Post: Generally speaking, the average person is not fully aware of the emotional toll that entrepreneurship (or any other type of leadership, for that matter) can take. This could be due to the fact that most leaders tend to be uncomfortable with the idea of vulnerability,…

The Entrepreneur and Mental Health (Part 2): My Advice to You

Listen to This Blog Post: This post is the second in a two-part blog post on leadership and mental health. Before proceeding forward, I suggest that you read Part 1 here. In the now-famous Netflix Documentary “The Last Dance”, which documented Michael Jordan and the dominant Chicago Bulls of the…

MANAGING YOUR BUSINESS

Constructing, Managing, and Working with a Board of Directors

Listen to This Blog Post Though most people have experience reporting directly into a boss or manager of some sort, very few people can say that the “boss” into whom they report is represented by the company’s Board of Directors. Indeed, in most companies, only a single person (namely, the…

The CEO as Chief Capital Allocator

Listen to This Blog Post In his book, The Outsiders, William Thorndike makes a comprehensive and compelling case that effective capital allocation is one of the most important skills that any CEO can possess in their pursuit of value creation. Some very influential people seem to agree, with both Warren…

Knowing Who, When, and How to Fire

I will never forget the first time that I had to fire somebody. In the days, hours and minutes leading up to the meeting that morning, sleep was elusive, my heart was racing, my mind was completely incapable of focusing on anything else, and the sense of existential dread growing…

A Leader’s Most Important Skill

Listen to This Blog Post Though effective leaders tend to possess a multitude of different skills and abilities, my experience as a CEO taught me that the most important skill for any leader to possess is that of clear and effective communication. Indeed, a CEO’s strategy is only as good…

Implementing a Formal Operating System Like EOS or the Rockefeller Habits

Listen to this Blog Post Throughout recent history, there has been substantial growth in the number of companies who have decided to implement formal “operating systems” to govern certain strategic and operational decisions within their businesses. Though there are many operating systems in existence today, two of the most widely…

Why So Many Companies Rarely Achieve Their Annual Goals

Listen to This Blog Post: Few things are as energizing as the annual goal-setting process, where the management team decides on the company’s major priorities for the coming year, usually generating a sense of enthusiasm, optimism, and confidence. Conversely, few things are as deflating as the annual review, where the…

Hiring Your Senior Leadership Team

Listen to This Blog Post: There is no single recipe for building a great company, nor is there a definitive formula for becoming a truly effective leader. Anything that you hear or read that suggests otherwise should be treated with a high level of skepticism. Even among the world’s most…

MANAGING YOUR BUSINESS (SOFTWARE-SPECIFIC)

The 2023 SaaS CEO Survey

Listen to this Blog Post The Data Set The year in which each target company was acquired is detailed in the chart to the right. As can be seen, we were able to achieve reasonably good diversity by vintage year, with 18 of the 41 transactions taking place in 2019…

Are You Selling to the Wrong Customers?

Listen to this Blog Post In my experience, among the countless strategic decisions that software CEOs must make, the decision of which end markets to serve doesn’t seem to command the time, attention, and level of thoughtfulness that it probably should. Leaders who run mature and established companies often take…

The Biggest Temptation of a Software CEO

Listen to This Blog Post In his book, The Five Temptations of a CEO, author Patrick Lencioni discusses five areas in which CEOs tend to inadvertently prioritize the wrong things. These “temptations”, as he calls them, can lead to poor decision making at best, and can risk the very survival…

Migrating Your Company from On-Premise to SaaS: Part 2

This is the second post in a two-part series on navigating the transition from on-premise to SaaS. You can read Part 1 here. Listen to This Blog Post: In Part 1 of this blog, we evaluated some of the more common challenges that companies face when attempting to migrate both…

Migrating Your Software Company from On-Premise to SaaS: Part 1

Listen to This Blog Post: The overwhelming majority of software companies founded over the past fifteen years or so have never known anything other than a cloud-based, single-server-multi-tenant architecture coupled with a subscription revenue model. If you’re running a software business that fits this description, then you’ll (thankfully) never need…

Pricing Power: How Small Changes Can Have Big Impacts

Listen to This Blog Post: Inertia is defined as something that remains at rest or in uniform motion unless acted upon by some external force. Though software companies can fall prey to inertia in a multitude of ways, one of the most common ways in which inertia manifests is with…

SELLING YOUR BUSINESS

Strategic Considerations When Evaluating a Letter of Intent to Sell Your Business

Listen to This Blog Post For many business owners (particularly those actively looking to sell their companies), few things are as exciting as receiving a Letter of Intent (“LOI”) from a prospective purchaser. Beyond the sense of personal validation stemming from the fact that a sophisticated counterparty sees an asset…

The Working Capital Adjustment

Listen to This Blog Post In a previous blog post, Busting the Biggest Myth About Selling Your Business, we reviewed a number of fundamental facts related to the sale of any company that warrant being repeated here: The single biggest myth about selling a company is that the seller bears…

Busting the Biggest Myth About Selling Your Business

Listen to This Blog Post The entrepreneurial journey is full of innumerable risks: Your largest customers can leave at any time, and for any reason. The market may change faster than your company’s ability to adapt. Your largest supplier may decide to cut you out of the value chain and…

Considerations in Selecting Your M&A Advisor

Listen to This Blog Post: Many entrepreneurs cite the exit process as being one of the most difficult, time consuming, and emotionally trying experiences of their lives. The reality of selling a company stands in stark contrast to the manner in which it’s often portrayed in the media, where the…

What I Learned During my First (Failed) Attempt to Sell my Business

Listen to This Blog Post: “You think running a business is hard? Try selling one”. That’s what one of my mentors said to me when I approached him in 2017 with the idea of selling my business the following year. His goal wasn’t to dissuade me from pursuing an exit,…