Saturday, Jan 22, 2022

What if there are no natural acquirers (for your company)?

A little while had coffee with a very successful VC and we chatted about our views of what’s happening in SaaS.  The things we are both interested in ..

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A little while had coffee with a very successful VC and we chatted about our views of what’s happening in SaaS.  The things we are both interested in are very similar, our thoughts on risks and markets were well aligned.  At the end, he noted how the key final thing he looks for in SaaS start-ups is potential acquirers.  Would Salesforce buy this company?  Would Google?

I totally get it.  Indeed, I’ve lived it and practiced it.  Of the 4 start-ups I’ve been a part of, 2 as a co-founder and 2 as an executive — 3 out of 4 were acquired by a Logical Acquirer than was predicted at Day Zero or close enough.  The fourth had an IPO, eventually.

And as the number of SaaS companies continues to grow and explode, and as SaaS changes and penetrates more and more market segments … it seems like there are more and more exciting SaaS companies without a natural acquirer.  At least that I can see, or believe.

And if it’s IPO-or-bust … for many entrepreneurs at least, that’s pretty intimidating.

So I guess the key higher-level questions are two:

  • If I’m thinking of starting a SaaS company that I really believe in, in a good market — but I see no logical acquirers — should I still do it?  IPO again seems so far when you are at $0, especially if you don’t even have a Beta yet.
  • If I’m running a SaaS company that’s post-Traction, and it’s getting tough and I can’t see an IPO — should I still really go for it there are no logical acquirers?  Maybe, check out a little?

Personally, my answer to the first question when I was co-founding both my companies was No – I Wouldn’t Do It without a Logical Acquirer or Three.  My answer to the second question was … I Just Don’t Know … I don’t know what I’d do if it turned out there were truly No Logical Acquirers once I was into it and didn’t feel an IPO was in the cards.  I do know I would have felt boxed in.

Today, I have at least the privilege of a certain amount of objectivity.  And I see so many SaaS markets just exploding.

So Today.  Today, I think I would go for it even without any Natural Acquirers.  Why?  I believe there are enough great opportunities to just kill it in SaaS, get to seven figures and then eight figures in ARR.  The markets and market pull are bigger.  And once you get to $10-$20m in ARR … it’s just really fun.  Having Scale.  It’s worth it, if you have a great team.  I didn’t really know this before, in SaaS at least.

And also, as long as you are in Tech … priorities can change.  At Adobe Sign / EchoSign, we had a number of potential M&A conversations over time.  All but one were with Logical Acquirers.  But there was one I would never have predicted on Day 1, or even Day 365.  It came about over time, as the markets changed, and as the markets grew.  And as we grew.

I think today in SaaS, if you have a great market and market pull … it will work out.  I wouldn’t worry — as much — about Lack of Natural Acquirers.  It wouldn’t stop me.  Not anymore.

How many of those would you have guessed?

SaaS Companies Acquired in 2021

  1. A Cloud Guru to Pluralsight
  2. Advicent Solutions acquired by InvestCloud
  3. Agari acquired by HelpSystems
  4. Altus Technology acquired by Momentum Telecom
  5. Ascent Business Technology Inc acquired by TraqIQ
  6. Bazaarvoice acquired by Thomas H. Lee Partners
  7. Blue Yonder acquired by Panasonic
  8. Bold360 acquired by Genesys
  9. Boomi acquired by Francisco Partners
  10. Boomi acquired by TPG
  11. Cedato acquired by EX.CO
  12. Changepoint acquired by Planview
  13. Chargeback acquired by Sift
  14. Chorus.ai acquired by ZoomInfo
  15. Clarizen acquired by Planview
  16. Clause acquired by Docusign
  17. Cloudvirga acquired by Stewart
  18. CoConstruct acquired by Buildertrend
  19. ContractRoom acquired by Mitratech
  20. DialogTech acquired by Invoca
  21. Divvy acquired by Bill.com
  22. Docsend acquired by Dropbox
  23. Ekata acquired by Mastercard
  24. Exponea (acquired by Bloomreach) acquired by Bloomreach
  25. Gigster acquired by Ionic Partners
  26. Greenhouse Software acquired by TPG
  27. JAGGAER acquired by PwC France
  28. Kenna Security acquired by Cisco
  29. Kount acquired by Equifax
  30. Lingotek acquired by Straker Translations
  31. MindTouch acquired by NICE Systems
  32. Mobile Solutions acquired by Brightfin
  33. Mya Systems acquired by StepStone
  34. Nuxeo acquired by Hyland Software
  35. PactSafe acquired by Ironclad
  36. Qualtrics acquired by Silver Lake
  37. QuanticMind acquired by Centro
  38. Reflektive acquired by Peoplefluent
  39. Reward Gateway acquired by ABRY Partners
  40. RSG Media acquired by Naviga
  41. Scalyr acquired by SentinelOne
  42. Second Street acquired by Upland Software
  43. ShowingTime acquired by Zillow Group
  44. Sparkcentral acquired by Hootsuite
  45. Sqreen acquired by Datadog
  46. SupplyFrame acquired by Siemens
  47. SyncHR acquired by PrimePay
  48. Talentcube acquired by Phenom
  49. Targetprocess acquired by Apptio
  50. Terafina acquired by NCR
  51. The Marlin Company acquired by Appspace, Inc.
  52. thinktank.net acquired by Accenture
  53. TradingScreen acquired by Francisco Partners
  54. Utilant acquired by Majesco
  55. Wrike acquired by Citrix Systems
  56. Zaius acquired by Optimizely
  57. Zipwhip acquired by Twilio

(note: an updated SaaStr Classic post)

The post What If There Are No Natural Acquirers (For Your Company)? appeared first on SaaStr.

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By: Jason Lemkin
Title: What If There Are No Natural Acquirers (For Your Company)?
Sourced From: www.saastr.com/what-if-there-are-no-natural-acquirers-for-your-company/
Published Date: Thu, 13 Jan 2022 13:20:09 +0000

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