This post may seem a bit controversial if you're an entrepreneur who built your business organically, from the ground up, but when I think about value creation in VMSCo’s, a well known quote from Jim Collin’s book “Good to Great” comes to mind.
“When you turn over rocks and look down at the squiggly things underneath, you can either put the rock down, or you can say, ‘My job is to look at the squiggly things,’ even if what you see can scare the hell out of you.” - Fred Purdu
1. Don’t over pay.
The single most important factor in driving returns in VMSCo investing is seemingly obvious; it’s purchase price. However, it’s amazing how few investors have the discipline to wait for and execute a transaction at a purchase price that gives them a chance at favourable returns. Since VMSCo’s rarely grow rapidly due to the dynamics of their respective vertical market, it’s even more important to minimize the cash outlay (and risk) up front. Good VMSCo’s ar
Suppose you’re looking to invest in or outright acquire a Vertical Market Software Company (VMSCo), where do you begin? How does one go about finding VMSCo investment opportunities? Sourcing VMSCo investments is a relatively little known topic compared to more traditional private equity investment deal sourcing. A quick Google search reveals hundreds of articles on the best practices of private equity funds for originating investments however, almost all of these articles are