When Tim and I started Basis State, we considered carefully how to maximize the acquisition offers received by our clients. Our process was designed with the expectation that every client could find an acquirer. We now appreciate that this is not the case, particularly in the current environment.
We plan to publish our success rate once it becomes clear. There are currently too many potential deals in play to get to a reliable number. For now, post-COVID, we are estimating it is around 50%.
There is little doubt that COVID, and the resulting business environment, has had an effect on our success rate. Still, it would be delusional to think that we are immune from misses, even in the best of times. Finding buyers of sub-scale businesses has its inherent risks. Whereas significant amounts of recurring revenue almost always has some value to someone, interesting IP only has value if there’s a clear use case with some degree of priority to the acquirer. Finding that fit is never guaranteed, particularly when priorities shift from growth to survival.
So in order to solve for the unknowns as we go, and mitigate the risks to our clients, we have rearranged the workflow of our service to take place in 3 phases. The phases are Market, Validate and Transact. Each phase:
Provides new insight on the viability of the client ultimately receiving an offer
Has a go/no-go juncture prior to the start of each subsequent phase
Staggers fees so they are incurred incrementally at the start of each phase
The advantages of the phased approach are as follows:
Reduces risk of sunk costs, for both client and Basis State
Gives clients a glimpse of exit viability early in the process, without watering down the rigor of the go-to-market effort
First phase, as a standalone, is valuable to clients that are not fully committed to exiting, but want to assess it as an option
Our website has been updated to reflect the phased approach. Don’t hesitate to contact us with questions.