How to tell if a buyer will hold.
Many buyers say they think long term. A few questions show whether their funding, their decisions and their record support the claim.
Contents7.1Which buyers hold software businesses?1 / 4
§ 7.1
Which buyers hold software businesses?Look at structure, not slogans.
Buyers hold for the long term when their funding has no resale date, their decisions do not depend on a future sale, and their past acquisitions are still running. Ask for evidence of all three.
- Funding: who provided the money, and do they expect it back by a date?
- Decisions: who decides, and what do they measure?
- Record: what happened to the products they bought before?
§ 7.2
Five questions to ask.And what a good answer sounds like.
- Question 1
How is this purchase funded?
A good answer is specific: own cash, long-term investors or a fund, with the terms that apply.
- Question 2
Is there a date by which you must sell?
A good answer says yes or no plainly, and explains what happens at that date.
- Question 3
What happened to your past acquisitions?
A good answer names products that still run, and admits what did not work.
- Question 4
What will you change in the first year?
A good answer names a few specific changes, with reasons.
- Question 5
Who will run the product day to day?
A good answer names a person or a role, not a future hire.
§ 7.3
Our answers.Including the one that is not strong yet.
We plan to own each business for the long term. We do not buy to resell, and our plan for a business does not depend on a future sale.
We have reviewed businesses and made offers, but none has completed, so we have no record of past acquisitions to show you. We publish our search profile, our process and the reasons we pass, so you can judge how we plan to work.
The founder of Playbook Media makes the acquisition decision and talks with you directly. We confirm that funds are available before you sign.
§ 7.4
Founder questions.Short answers.
Are software holding companies long-term buyers?
Many are, but structures differ. Ask each one about funding, resale plans and what happened to its past acquisitions.
Can I put continuity commitments in the agreement?
You can ask for them. Your lawyer can advise which commitments are realistic and enforceable.
Who will I talk to?
The founder of Playbook Media, who makes the acquisition decision. You will not be passed between teams.
- 1This guide is general information. It is not legal, tax or financial advice. Talk to your own advisers before you sign anything. ↩
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