Undeterred, I wrote an entire book on the subject: “Early Exits – Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists).”
But even I was surprised to learn just how early Google wants to buy tech companies.
Charles Rim, is one of the five most senior M&A professionals at Google worldwide. He did an interview for Corum’s online “M&A Class.” I am grateful to Corum for organizing this event and for posting the archive. (If you are interested, I’ve converted an excerpt to flash and posted it here. There is also a transcript here.)
A few of the fascinating points from the interview are:
– “90% plus of our transactions are small transactions. So that would be less than 20 people, less than $20 million and that is truly the sweet spot”
– “we do prefer companies that are pre-revenue”
– “technical staff, engineering, a strong engineering team, these are the things that we think are very important to the future success of Google and important for us to use acquisitions in that manner.”
This provides some excellent insight into how a very large company like Google thinks about acquisitions. This is a good confirmation of the trend toward early exits, but it goes even further than I did in my book.
Google actually prefers companies that are pre-revenue. In other words, Google doesn’t want to buy the business, they want to buy the team. The people. The entrepreneurial ingredient that they know they need to keep their company growing and healthy.
You’ve heard it from one of the guys who really knows – you can sell a tech company today long before it’s profitable, even before it has revenue. And if it was up to Google, it would be the latter.