Software Pulse

Business Strategy for Software Executives

October 16, 2006

Paul V. Farr

Preparing for a Successful M&A Exit

Software companies looking to be acquired must understand todayís acquirers and what they now look for in a target company.

By Scott Munro, Pagemill Partners

Googleís $1.6 billion acquisition of YouTube sprang to life during breakfast at Dennyís just a few short weeks ago ñ or so the story goes.Ý For this and many other reasons, the YouTube deal is really the exception rather than the rule of M&A today.

There is an old saying: a product well bought is half sold. The most successful software acquisitions are those which are carefully crafted well in advance. Understanding todayís M&A landscape and the new standards involved will help emerging companies ensure a strong exit.


New at Software Finance
A one-stop destination for the latest software stock, M&A and VC data.

The new Finance section compiles the news, data and deals which drive the software industry. Debuting this month, the Sand Hill 30 stock index charts the progress of 30 companies which best represent the new world of enterprise software and services. The M&A and venture capital sections showcase software industry trends, the most recent deals and hand-picked news on the latest partnerships. We will continue to add and revise these pages in the coming months so send us your feedback.

Halfway to Reality

Erik KellerEnterprise vendors are making progress, according to Erik Keller. Many execs now seem to grasp the significant changes that will be necessary to be successful in the next era. Now vendors must make the hard decisions needed to redefine their strategies. Erik reviews the implications for software product lifecycles, service levels, quality, costs and integration in this weekís post to his Blog, The Software Critic.

Is the VC Model Broken?

Sevin Rosenís return of its most recently-raised fund had the venture community up in arms about the state of the venture capital model. Matt Miller of Walden VC explains that VC is still alive and well ñ but needs to take a closer look at its own business model by going back to its roots for new ideas. Read Mattís analysis in this weekís post to his Blog, The Picky VC.

An In-Depth Look at Software Consolidation

Software consolidation shows no sign of slowing. Steve Koenig of Jefferies & Company provides research, analysis and a summary of consolidation trends in a new white paper, ìConsolidation in Enterprise Software.î Read the summary and download the report in this weekís post to the Blog on software M&A.

Publish Your Perspectives!

The Blog wants your opinions. Send your thoughts on the enterprise software industry to and weíll publish them in our blog.

Lightning Strikes Twice

A split decision on the benefits of technology venture investing, YouTubeís second-time winner, what ìopenî means to Microsoft, what ìdigital nativesî are and what Carlyís book doesnít say. Read these stories and more software news of the week in the news summary.

Making Better Exit Decisions

Many companies put off the decision to exit a failing business for too long largely because of psychological reasons. Learn how to recognize these biases and how to create mechanisms that push tough decisions forward in this article from The McKinsey Quarterly.

Poll: One More Week -ìThe Next Big Thingî?

At Enterprise 2006, five contenders to be ìThe Next Big Thingî will present their companies to an audience of fellow executives and investors. Which vendor would you pick as The Next Big Thing?
Take our Pulse Poll >>

More at

Enterprise 2.0 moves beyond the office.
Read the most important enterprise software industry news of the week >>

Revcube receives $14 million.
Monitor the latest software venture capital deals >>

ADP buys VirtualEdge.
Size up last week's software M&A deals >>

SolarWinds names Michael Bennett as president and CEO.
See who's made it to the top in our list of recent software executive appointments >>

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Parting Thought

ìIn times of rapid change, experience could be your worst enemy.î
ñJ.P. Getty

Courtesy of Malcolm Kusher, The Kushner Group