Steve Blank

MARCH 16, 2016

Liquidity. While you might be interested in building a company that changes the world, regardless of how long it takes, your investors are interested in funding a company that changes the world so they can have a liquidity event within the life of their fund ~7-10 years. (A A liquidity event means that the equity (the stock) you sold your investor can now be converted into cash.) Currently M&A is the most likely path for a startup to achieve liquidity.

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Liquidity Event Founder Liquidation Preference Acquisition 156

Berkonomics

SEPTEMBER 13, 2018

The liquidity event and beyondThis is one of my favorite insights, since I lived this one in a positive exit from my computer business. Types of business buyers expanded. Most people will tell you that there are two kinds of eventual buyers for your business: financial and strategic.

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Liquidity Event Intellectual Property Investment Bankers Forecast 312

Berkonomics

NOVEMBER 1, 2018

Here’s a thought for you to recall later when and if the event happens. Some companies, especially those financed by angel or VC investors, have good, formal stock option plans with properly priced options set to reward all employees and managers in the event of a corporate sale.

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Liquidity Event Stock Options Stock Employee 249

Berkonomics

SEPTEMBER 10, 2020

But the closing was such a non-event that you wonder why people even call it a “closing.”. General The liquidity event and beyondNow you have worked for months to get this deal to the closing, anticipating the wire transfers to the shareholders that will come any minute.

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Founder Investment Bankers Liquidity Event New York 62

Berkonomics

AUGUST 27, 2020

The liquidity event and beyondFirst, what’s a “deal book?”. Maybe you have not heard the term, “deal book.” That’s a comprehensive piece on a company for use by a buyer in determining fit.

Due Diligence 62

Due Diligence Intellectual Property Liquidity Event IPO 62

Berkonomics

AUGUST 20, 2020

Paying commissions to undisclosed third parties in order to obtain deals, hiding or entering misleading financial data, associating with anyone with a past SEC suspension, and many more “gotcha” events, qualify as strong deterrents to a good closing. What about events you can’t control?

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Due Diligence Intellectual Property SEC Liquidity Event 68

Berkonomics

SEPTEMBER 3, 2020

The liquidity event and beyondMany CEOs have asked me if I felt an investment banker adds value if the buyer has already been identified. How investment bankers behave.

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Investment Bankers Liquidity Event Salary Lean 62

Berkonomics

JULY 5, 2018

The liquidity event and beyondEver think about growing your business with the plan to sell it someday, cashing in on your hard-earned work over the years? Or if you’re an employee with stock options, are you aware of the increases in value you can make with your efforts?

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Liquidity Event Intellectual Property Management Stock Options 99

Berkonomics

JULY 23, 2020

Sometimes the end game or sale of the company is not a happy event. Is there a liquidation preference in place where the preferred investors can take a multiple of their investment, (twice or three times the amount) from a sale before the common shares receive anything? The Trados Decision (Delaware Court of Chancery) protects the common and early stage investors even if the late stage investors can claim all from a sale with their liquidation preferences.

Delaware 48

Delaware Liquidation Preference Dividend Stock 48

Berkonomics

NOVEMBER 15, 2018

And yet, as I recall the greatest thrills, the memorable events, the best of memories, almost none are about the money. The liquidity event and beyondAllow me to reminisce. This is the final post of this cycle.

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Liquidity Event Early Stage Government Leadership 62

Berkonomics

FEBRUARY 23, 2017

If you own a significant piece of the business, is this a time to consider planning an eventual exit or liquidity event? The liquidity event and beyondHave you figured out what you want to have, or to be, when you reach the end of your personal run in this business life? It is a fair question. Most of us work in our businesses, either as managers or owners, and rarely step outside to think about how this will end in a perfect world.

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Liquidity Event Valuation Management Email 84

Berkonomics

SEPTEMBER 20, 2018

Most entrepreneurs and certainly all investors would like to see “a positive liquidity event” (a good sale of the business) someday. Then I guide the group to focus upon column three, ignoring the obvious gain our company would make in liquidity (cash) to shareholders.

Intellectual Property 62

Intellectual Property Liquidity Event Acquisition Naming 62

Berkonomics

OCTOBER 4, 2018

The liquidity event and beyondFirst, there are at least three types of exits. I’ve been involved with well over twenty successful exits and four initial public offerings over the years, some of them with monstrous gains, some more modest.

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Sales Investment Bankers Liquidity Event Initial Public Offering 68

Berkonomics

NOVEMBER 8, 2018

The liquidity event and beyondI am sure you heard of Maslow’s Hierarchy of Needs that motivate our behavior, in which Abraham Maslow laid out a human’s needs – from the physiological, to safety, then love and belonging, on to esteem and finally self-actualization.

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Liquidity Event Community Email Sales 62

Berkonomics

FEBRUARY 9, 2017

Protecting the business The liquidity event and beyondWhen do you sell your company? Obviously we all want to sell at the top. And there is the problem. How do you know when you are at or near that right point to sell for maximum value? Those of us in the business of calculating (guessing) this mythical peak in value often make the same mistake as our entrepreneurs.

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Dilution Liquidity Event Valuation Early Stage 84

Berkonomics

OCTOBER 25, 2018

And once a month, while watching TV, I spend part of an evening writing personal messages to each birthday employee, recalling an event or complimenting a behavior or success. Depending upon others The liquidity event and beyondBe honest now.

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Liquidity Event Employee Stock Email 62

Berkonomics

SEPTEMBER 6, 2018

The liquidity event and beyondEach decision you make to commit resources – your money or your use of corporate or personal time – affects the future value of your business.

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Acquisition Liquidity Event Distribution Channel 62

Berkonomics

SEPTEMBER 17, 2015

Pilot-authors tell their stories in the first person, and all of us readers slow down to think while reading of these events, wondering “what if” or whether this could happen to me. General The liquidity event and beyondIn my life as an early stage investor, I’ve been closely involved with so many businesses, there were bound to be numerous stories of failures, hopefully from which to learn lessons for all of us as we go forward.

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Bankruptcy Liquidity Event Early Stage Hiring 83

Berkonomics

SEPTEMBER 24, 2015

For high growth ventures being groomed for a lucrative liquidity event, this is usually a wise choice, presuming additional growth capital can be successfully raised on agreeable terms. The liquidity event and beyondDave’s note: Our guest author this week is John Huston, founder of the 300+ member Ohio TechAngel Funds and a past Chairman of both the Angel Capital Association and the Angel Resource Institute. . By John Huston.

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Ohio Liquidity Event Acquisition Revenue 79

Berkonomics

JANUARY 3, 2019

Email readers, continue here…] As we move down the chain of experienced buyers, the problems of underestimation of capital, customers who drifted away from the acquired company, key employees who found the new enterprise a culture too different to endure and left, and other difficult-to-plan-for events overwhelm the majority of acquired companies, resulting in less revenue, less profit, and far less growth than forecast during the buyer’s due diligence.

Acquisition 48

Acquisition Due Diligence Forecast Liquidity Event 48

Berkonomics

JANUARY 3, 2019

Email readers, continue here…] As we move down the chain of experienced buyers, the problems of underestimation of capital, customers who drifted away from the acquired company, key employees who found the new enterprise a culture too different to endure and left, and other difficult-to-plan-for events overwhelm the majority of acquired companies, resulting in less revenue, less profit, and far less growth than forecast during the buyer’s due diligence.

Acquisition 48

Acquisition Due Diligence Forecast Liquidity Event 48

Berkonomics

SEPTEMBER 3, 2015

His Strategic Exits Corporation provides M&A advisory services, and he is much in demand as a speaker at angel and entrepreneur events worldwide. – Dave. This is, in part, because the market for entire companies is much less ‘efficient’ and therefore more susceptible to changes in sentiment and liquidity. The liquidity event and beyondWe are pleased to host Basil Peters, perhaps the best known name in the world of early stage company exits.

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Liquidity Event Stock Angel Groups Early Stage 80

Berkonomics

JANUARY 31, 2019

Depending upon others Protecting the business The liquidity event and beyondLast week we introduced the subject of non-compete agreements. Let’s dive a little deeper and present some “gray area” scenarios to consider. Then we’ll address the success or failure of the buyer with your product… First the obvious case in point. What if you are the seller of a previous business or shares amounting to more than an insignificant percentage of a previous business?

Non-Compete 48

Non-Compete Bankruptcy Liquidity Event Sales 48

Berkonomics

JANUARY 31, 2019

Depending upon others Protecting the business The liquidity event and beyondLast week we introduced the subject of non-compete agreements. Let’s dive a little deeper and present some “gray area” scenarios to consider. Then we’ll address the success or failure of the buyer with your product… First the obvious case in point. What if you are the seller of a previous business or shares amounting to more than an insignificant percentage of a previous business?

Non-Compete 48

Non-Compete Bankruptcy Liquidity Event Sales 48

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation. Further, preferred stock holders can be recipient of accrued dividends in a sale or liquidation. The liquidity event and beyond

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Dividend Liquidity Event IRR Preferred Stock 86

Berkonomics

AUGUST 20, 2015

The inciting incident in a movie is the event at the beginning of the story that causes the hero’s life to be completely transformed and irrevocably changed, and makes the whole story unfold. I thought of this in a recent liquidity event in one of my portfolio companies. The liquidity event and beyondDave’s note: Guest author, David Steakley returns to explain his theory of exit valuations.

Private Equity 69

Private Equity Liquidity Event Valuation Equity 69

Berkonomics

AUGUST 13, 2015

The liquidity event and beyondDave’s note: John Huston is founder and past manager of the 300+ member Ohio TechAngel Funds and a past Chairman of both the Angel Capital Association and the Angel Resource Institute. . By John Huston. While you are busy building your high growth venture, you may have occasionally thought about which large companies might be the ultimate buyer of your company – a buyer that could optimize your idea, customer base, and team.

Ohio 82

Ohio Liquidity Event Forecast Acquisition 82

Berkonomics

SEPTEMBER 10, 2015

The liquidity event and beyondDave’s note: For the second time, we invite Basil Peters, author of “Early Exits,” back as our guest – to provide more of his insight into the “when” to exit by selling your business. In future weeks, we’ll add the voices of other well-known professionals in the field of exits to my own, and try to give you a compendium of useful advice in the process. . By Basil Peters.

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Liquidity Event Vertical Valuation Finance 78

Berkonomics

OCTOBER 8, 2015

The liquidity event and beyondWe come to the end of this cycle of insights with a thought about how you might view your successful exit from the company you have spent so much effort to build. You’ve worked hard for years to reach the payoff, and the money sure looks good as you contemplate the wire transfer to come, and then watch your bank account fill to a level you only dreamed of during those rough cash flow years.

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Liquidity Event Dilution .Net Entrepreneur 81

Berkonomics

AUGUST 27, 2015

Betting on the traditional public stock market speculator’s “greater fool theory” has been just plain wonderful for the owners of the Flippers, as aggressive acquirer’s value determinations are based on future events, rather than achieved profitability and present balance sheet values. The liquidity event and beyond

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Liquidity Event Intellectual Property Balance Sheet Valuation 78

Berkonomics

SEPTEMBER 12, 2013

But most of us dream of selling the business someday for lots of money and building our wealth upon that event. It will help you to explain the value of your business to potential investors and certainly help focus your efforts as you advance toward that goal of a liquidity event in your future. The liquidity event and beyond

Intellectual Property 67

Intellectual Property IPO Liquidity Event Equity 67

Berkonomics

OCTOBER 24, 2013

Next week, we begin again with new insights from startup through liquidity event, including guest postings by some of the nation’s best known angel investors and entrepreneurs. The liquidity event and beyond This is the final posting in this cycle. Purchase two years of these insights in a single book, ADVANCED BERKONOMICS, for yourself or as a gift.

Stock Options 63

Stock Options Liquidity Event Angel Investor Stock 63

Berkonomics

SEPTEMBER 19, 2013

The liquidity event and beyond Not all companies are successful. The end game can be a failure of the business. In fact, many angel investors or venture capitalists look for and respect the lessons learned by entrepreneurs that have survived a failed business. The key question is how did the entrepreneur fail? And then: What lessons were learned from the failure?

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Liquidity Event Angel Investor Entrepreneur Email 70

Berkonomics

SEPTEMBER 26, 2013

Paying commissions to undisclosed third parties in order to obtain deals, hiding or entering misleading financial data, associating with anyone with a past SEC suspension, and many more “gotcha” events, qualify as strong deterrents to a good closing. Events that you cannot control such as changes in the buyer’s circumstance, a drop in the market price of the buyer’s stock, a bad quarter at the buyer’s shop, all can contribute to abandonment of a good deal.

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Due Diligence Intellectual Property Liquidity Event SEC 73

Berkonomics

OCTOBER 10, 2013

The liquidity event and beyond Many CEOs have asked me if I felt an investment banker adds value if the buyer has already been identified. Investment bankers sometimes slow the process by requiring a “deal book” to be prepared containing considerable information about a company to help a buyer. Deal books are expensive to create.

Investment Bankers 71

Investment Bankers Liquidity Event Salary Lean 71

Berkonomics

SEPTEMBER 5, 2013

The liquidity event and beyond When we are young and early in our business lives, we feel infallible to the degree that we do not think of what might happen if we die while in office or decide to leave the company for any reason.

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Liquidity Event Employee Conversion Management 65

Berkonomics

OCTOBER 3, 2013

The liquidity event and beyond Maybe you have not heard the term, “deal book.” That’s a comprehensive piece on a company for use by a buyer in determining fit. A “deal room” is an electronic or physical space dedicated to storing the massive amounts of data to be used in due diligence by a buyer, lender or by an investor. Deal rooms contain access to or copies of all significant contracts with suppliers, customers, consultants, and others.

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Due Diligence Intellectual Property Liquidity Event IPO 67

Berkonomics

NOVEMBER 12, 2011

And yet, as I recall the greatest thrills, the memorable events, the best of memories, almost none are about the money. You’ll quickly be drawn into the governance of the organization and introduced into the process of discovery, coaching, leading deals, herding investors, serving on boards and helping entrepreneurs toward liquidity events. The liquidity event and beyond

Liquidity Event 73

Liquidity Event Early Stage Government Security 73

Berkonomics

OCTOBER 17, 2013

But the closing was such a non-event that you wonder why people even call it a “closing.”. For those of you who ever experience the muted thrill of today’s electronic closing, you can give a nod to those days when the smoke-filled rooms were real and the tension palatable, when a closing was a face to face event. The liquidity event and beyond

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Investment Bankers Liquidity Event New York Email 68

Berkonomics

JUNE 17, 2011

Positioning The liquidity event and beyondYou may be an architect or doctor or other professional managing your business, knowing that the end game value of your client or patient list is small and not easily transferred to any buyer without attrition.

Equity 71

Equity Intellectual Property Liquidity Event Revenue 71

Berkonomics

AUGUST 29, 2013

Sometimes the end game or sale of the company is not a happy event. Is there a liquidation preference in place where the preferred investors can take a multiple of their investment, (twice or three times the amount) from a sale before the common shares receive anything? The Trados Decision (Delaware Court of Chancery) protects the common and early stage investors even if the late stage investors can claim all from a sale with their liquidation preferences.

Delaware 60

Delaware Liquidation Preference Liquidity Event Dividend 60

Berkonomics

SEPTEMBER 13, 2011

Next, have the group focus upon column three, ignoring the obvious gain our company would make in liquidity to shareholders. Email readers continue here.] The magic of this exercise is not only in the organization of group focus upon the liquidity event and possible buyers. Positioning The liquidity event and beyond

Intellectual Property 60

Intellectual Property Liquidity Event Acquisition Distribution 60

Berkonomics

AUGUST 27, 2011

The liquidity event and beyond Each decision you make to commit resources affects the future value of the business to some degree. Minor decisions, such as replacing employees who have left the company or equipment needing updating, are usually considered operational in nature, and unless the business is changing direction, not relevant to this analysis.

Acquisition 65

Acquisition Liquidity Event Distribution Channel 65