Company owners/founders typically don’t last long after a sale.  The time period is normally influenced by incentives the buyer puts on the owner to stay.  Often the incentives are tied to revenue or profit targets.  But the acquirer may want to have control over their acquisition.  The owner goes from being responsible for results and making decisions, to being responsible for results and having minimal decision making authority.  The degree to which the acquirer allows the owner/founder to retain decision making as well as how achievable the targets are viewed, will affect the retention period.  Small business owners do not work for big companies because they like being able to make decisions and being fully responsible for results.

Another factor is many sale agreements have an escrow or holdback that can be clawed back if the selling owner does certain actions.  While reasonable, it places a higher standard for owners to follow company policies to the letter.  While a regular employee can bend the rules to achieve desirable results, the owner can face significant financial penalties through escrow or holdback claw back.

What can an acquirer do to help retain a founder/owner (assuming this is desired).  First, look to what the owner contributed and allow them to focus on that area.  Most owners have a specific skill set, which can be sales, operations, product development.  The benefit for the acquirer is they gain a resource that is likely very good at what they do, based on the results of the company that drove the acquisition.  After selling my first company, while my contribution was sales, the acquirer wanted me to report to the CFO and manage investor relations, including producing the annual report.  I left shortly after to start my second company.

Another way to retain an owner is to continue to provide a level of decision making.  Unlike other employees, the acquirer has a level of protection that that owner’s decision making will be appropriate during the period when the escrow is outstanding.

Too often selling owners believe they will stay with the acquirer after the sale is complete.  While it happens sometimes, most times the owner will move on to form a new company because of the reasons noted above.  At the same time, the acquiring company may assume the owner will stay for a period of time due to incentives and how they view employees.  If the goal is to retain the owner for a period of time to benefit from their experience and knowledge, an acquirer needs to look at what will achieve retention from the selling owners perspective, not their own.  The upside is it can be a win/win for the acquiring company and selling owner.


Most software companies don’t think about whether they are creating an app or platform when they start out, but the decision can affect revenue growth and valuation. Deciding what you are building is a key strategic decision.

If building an app, the goal is to be a completely encompassing solution and possibly have integration API’s to enable data exchange with other complimentary solutions, such as a CRM or accounting system. If building a platform, you are providing technology for your partners to extend your core functionality. As a platform solution, the focus is building a robust tool set for partners to build on, while being mindful to not compete with your partners solutions built on your platform.

As an application software vendor, you may have partners that build integrations, but it’s likely the partner apps are not reliant on your application and they may also build integrations to your competitors. A platform has partners that have solutions that are reliant on your platform for the delivery of their solution. Salesforce, Microsoft or Facebook are platforms that software companies build solutions on.

We believe a platform is more difficult and costly to build, but will have greater revenue growth and longer term value. The solution provided to prospects and clients will be more comprehensive as partners extend functionality to address client and prospect requirements, which will ultimately expand your addressable market. It is difficult for a single vendor to build a solution that meets all prospects needs, which is why the largest most successful software vendors build platforms. Software products built on a platform will create demand for the platform as your partners sell their solutions and open new markets.

Why build an app? Software applications are less costly to build and faster to get to market. If the target market is relatively small, there may not be enough potential to attract partners to build on a platform. The app may also be more conducive to integration to other applications such as a CRM or accounting system.

CRM solutions from firms like Salesforce and Microsoft provide great capabilities to manage the B2B software sales process.  Marketing automation tools that integrate to the CRM enable marketers to target clients and prospects with messaging and measure responses.  But a CRM software product is a tool and unfortunately does not fix a broken sales process.  Dirty data, poor processes and resistance to use by the sales teams will not produce results.  Yet too often, firms will make large investments in CRM technology, sold on the idea that the spend will fix business and process problems.

Based on over 20 years experience working with companies adopting CRM’s and over 30 years running software companies, some of the key success factors for a CRM to realize the benefits management expect include:

  • Senior management’s visible commitment.  Too often companies deploy a CRM solution with little commitment or interest by senior management.  The best deployments are where senior managers are committed to the solution and communicate that to staff.  Why should staff change their behavior to adopt something that management is not committed to?
  • Great processes in place where the CRM is an enabler.  Software doesn’t fix bad processes, it only makes the processes run faster and more consistently.  Get the processes right and then use technology to make them run faster and more efficiently
  • A requirement for everyone to use.  One of our very successful clients in my former company had a rule that if the information was not in the CRM, it didn’t exist.  Sales people will not use a CRM because they love to type information into it and share details of their details with others in the firm.  They will use it because its a requirement of their job.
  • Look for ways to help sales people be successful.  To often CRM’s are seen by sales people as time wasters that make them spend time doing stuff that consumes time and takes away from them making money.  If the CRM can save sales people time and help them be more successful, adoption will follow.  Workflows are a good example that can help automate routine processes, such as the tasks required after a prospect signs a proposal.

The bottom line is if you are looking to deploy a new CRM, ask if the items above will be in place.  If your firm has made a big investment in CRM technology, but you feel it is not delivering the results expected, ask if the items above are in place.  To often at my former company, we would see a firm toss out one technology and replace with a different one, expecting it to fix their process problems.   Other than a lot of costs, in most cases the results were the same.


To often you see a sales presentation in PowerPoint and the focus is for the sales person to tell their audience how great their product is.  But the presentation doesn’t engage the buyer.  As Dale Carnegie taught, the first steps in a sale are getting the buyer’s Attention and Interest.  Presentations need to be created to engage the buyer.  Many years ago, I saw a format that still works today and is built to engage the buyer.  It goes as follows

  1. Initial Benefit Statement – how does the solution address a problem the buyer has
  2. History of Problem – what is the problem the product addresses.  Ideally the buyer connects with the problem being addressed and wants to hear about the solution
  3. Solution – a high level description of the solution we are providing
  4. Features – an opportunity to talk about product features
  5. Benefits – how do the features translate to benefits for the buyer
  6. Objections – if we know some, its a good time to address before the buyer brings up, or just thinks about
  7. Rationale – an opportunity to talk about studies and facts that back up the benefits of our solution
  8. Summary – wrapping up
  9. Action – what is the next step for the buyer.  We want to create an action from the presentation and ideally get the buyer to commit to it, or agree on an alternative action.

Above is a great format.  If the buyer can relate to the problem being addressed, you have their interest and attention for the rest of the presentation

One of the most difficult hires is selecting a successful sales person.  Typically it takes 6 months to realise if the person will work based on closed deals, after which you have invested a significant amount in training.  A bad choice is identified by dropping sales, which has a direct affect on profitability and firm value.

A great software sales person follows your firm’s process including tracking opportunities in your CRM, and they have consistent sales performance.  A poor sales person talks a big game, but won’t follow processes and hopes to sign an mega deal to keep their job alive.  Unfortunately really good sales people are hard to find.

Some things to look for is a candidate’s resume.  Have they sold products similar to yours?  If you sell $100K deals that close in 6 months, is the candidate used to selling million dollar deals that take years to close?  Is there a history of moving around a lot, possibly because of an inability to meet targets?

Your firm has some responsibilities to help your new sales person.  A good sales person sells and leverages the tools the firms provides.  This includes demand generation through marketing, collateral, awareness building, pre-sales resources (demos, videos) and sales processes that a good CRM can support with things like workflows.  If these are not in place at your firm, they should be the priority, unless the expectation is that the sales person will create these items, which will take away from their time to sell and drive revenue (this may raise the question if you are ready for a sales professional).

Finally, if the sales person you hire cannot or will not follow the firm’s processes, including tracking opportunity activity in your CRM, its a big sign of future problems and may be a reason to part ways.  Successful software sales is not magic or inherited.  Its smart people following processes and helping prospects solve their problems with your products.