Selling a company is often cause for celebration, but the work doesn’t stop there. Adam Zimmer knows this well, having built a company from zero to exit. Now, he is actively acquiring companies through the Perseus operating group of Constellation Software. Sharing his experiences with TechExit.io, Adam shared four tips for founders going through an exit.
Key takeaways:
- Before seriously starting a selling process, it’s crucial for founders to not only know what they want out of an exit, but also to feel emotionally ready to let go of their business.
- Paperwork may be tedious at times, but it’s crucial and should be respected; it can make or break the deal.
- One of the best things you can do in an exit is seek company-acquirer fit, meaning the people buying your business are aligned to your vision and goals.
A lot of founders talk about the lifecycle of a company—building from zero to exit. But the work doesn’t always end there; entrepreneurs often become investors or acquirers.
Entrepreneurs like Adam Zimmer have experienced this firsthand. After selling the company he founded, Arius Software, to Doxim in 2012, he ultimately joined Constellation Software’s Perseus operating group and now actively acquires other businesses.
After sharing his story with TechExit.io, we’re putting together four of Adam’s tips for founders going through an exit of their own.
I’ll raise you an exit
Adam started Arius Software in 1999 to help investors digitize the tedious and error-prone task of filling out paperwork to open brokerage accounts. After surviving the dot-com bubble and growing to over 30 employees throughout the 2000s, Adam realized he’d hit an “inflection point.”
“We had raised some funds from angel investors and had a number of high-profile clients,” said Adam. “However, to continue to grow the company we would need to scale up. This would have required us to raise additional capital or find a strategic partner.”
Ultimately, Adam and the team chose to sell to Doxim, with Adam joining in a couple senior roles before leaving to join the Perseus operating group of Constellation Software in 2019.
Don’t hate the paperwork (and other tips for selling your company)
Reviewing his own experience through the lens of now being an acquirer, Adam shared four tips for founders who are going through an exit.
1. Don’t sell until you’re ready
Selling before you’re ready could be a recipe for disaster, Adam cautioned. In particular, it’s about the founder making the often emotional decision that they can let go of the company—and do the extra due diligence required to make it happen. Similarly, this was also the case with Safe Software, when one co-founder decided it was his time to move on, leaving his partner of over 30 years to run the business.
“As an acquirer, in most cases I don’t think that we can really accelerate the sales process until the point an owner is ready to sell,” said Adam. “… Until that point we just provide information that can help sellers make an informed decision.”
2. Embrace the paperwork
During Adam’s acquisition, he hated all the paperwork required. Looking back, he realizes he should have respected it a bit more.
In particular, he realized paperwork is not just about filing ownership changes or getting paid, but enabling the whole transaction. For Arius’ sale, for instance, Adam recounted having to chase down every investor on the cap table in order to approve the sale—a difficult thing to do when the whole process was largely under wraps at the time.
“If I were to do it again, I would have more appreciation for the paperwork involved,” said Adam. “It was a big lift and required a lot of work.”
3. It’s ok to ask for a little R E S P E C T
Adam said that part of Arius’ success was the trust and respect built into customer relationships. This, he said “is transferable to almost any business context,” and an exit is no different.
Looking for a partner who respects you and your vision is crucial; even if your entire reason for starting the company is an exit, you should seek a partner who respects you. Luckily, your board can also play a role here, being an advocate and playing the “bad guy” when necessary to protect you.
4. Know what you want
It’s one thing to know you’re ready to exit; it’s another to know what you want out of an exit. Adam highly recommends having both pieces of self-knowledge, since that can drastically change not just how you build your company but also how you approach an exit process.
“Sellers need to understand what they are looking for [and] consider a huge variety of factors including employees, customers as well as their own goals,” said Adam. “Once they have a view as to what they are looking for they can make the decision on what acquirer would be the best fit.”
Sending the elevator back down
Depending on your goals and experience, selling to a founder-turned-acquirer might be the best next step for you and your company. On one hand, you get the exit you want (hopefully!) and you can also breathe a sigh of relief that another operator is taking over the reins.
This is all part of finding acquirer-company fit, something Adam actively searches for when he acquires companies through Perseus. The company is always looking to add to its portfolio, particularly looking for “mission critical software” with limited single-customer dependence and a recurring revenue model.
While this type of search can change the dynamics of an exit process, Adam thinks about his own journey to sum up its importance: “It was not an easy decision and throughout the process we debated back and forth the merits of each potential acquirer. In the end selling to a partner who valued the product and the work we had put in was a key deciding factor.”
