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Successful Companies are Bought not Sold


At Tera, we spend a lot of timing trying to understand motivation.  We look to decipher the how’s, why’s and when’s of management, customers, competition, and end markets.  When we’re approached about an opportunity to invest or purchase a company, one of our first questions is Why?  Why sell?  What can Tera contribute that is special?  Why now?  Having spent our lives building software companies, we’ve come to believe that the truly great companies are bought not sold.

When we reflect upon the great investments & deals we’ve made over the last decade,  the companies that were shined, buffed and primed to be sold, were ALWAYS the deals we were happy we skipped.  However, the companies & founders that kept their heads down, focused on operating, and solving a tough problem to keep customers happy, were almost always the best investments. 

The difference comes down to motivations.  A company looking to get sold is no longer optimizing to build the best product, team, and customer outcomes.  That company is now optimizing to look good from the outside.  When this change in mindset comes, it’s the inside of the company that suffers.  Employees worry about their future, management stops investing in new products to show higher margins, and the salesforce get pushed to make incremental sales that are forced – not necessarily in the best long term interest of the customer.  The company becomes a worse version of itself and the new owner must go back in, clean up the mess and rebuild the culture.

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The company that is bought is the one who never looks to be sold.  It cares deeply about its product, employees, customers.  It never takes the focus off its end goal and mission: customer success.  If an acquirer makes an offer the owner/s aren’t happy with, they can stop negotiating and drop right back into building…and they aren’t bluffing.  In the end this sincerity creates a better outcome NOT only for them, but for the end acquirer.  Great companies get bought and acquirers always do better with a great company. 

When we reflect upon the great investments & deals we’ve made over the last decade,  the companies that were shined, buffed and primed to be sold, were ALWAYS the deals we were happy we skipped.  However, the companies & founders that kept their heads down, focused on operating, and solving a tough problem to keep customers happy, were almost always the best investments.

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The company that is bought is the one who never looks to be sold.  It cares deeply about its product, employees, customers.  It never takes the focus off its end goal and mission: customer success.  If an acquirer makes an offer the owner/s aren’t happy with, they can stop negotiating and drop right back into building…and they aren’t bluffing.  In the end this sincerity creates a better outcome NOT only for them, but for the end acquirer.  Great companies get bought and acquirers always do better with a great company.