When I co-founded Harvard Design & Mapping Company (HDM) in 1988 with Kija Kim, I was focused on making money incrementally through software and service sales, but also on potentially selling the company someday. We figured out how to build the company with lots of hard work, but had no idea how to prepare the company for sale.
We sold HDM in 2006 to The First American Corporation, then a FORTUNE 300 company that has since split into two separate public companies. The First American division that bought HDM is now part of CoreLogic, the largest source of business information in the world. The path from our start-up to final sale was a long one (18 years), and it is very likely that we could have sold the company a lot sooner if we had known a few key things about how to prepare for an exit.
HDM was a pioneer in the GIS business. Back in 1988, there was little available data - we often ended up digitizing data as part of contracts with utilities and government agencies to create entire GIS systems out of hard copy data. Our early customers, including Boston Edison Company and the Federal Emergency Management Agency, were on the leading edge of automated mapping and geospatial intelligence.
We decided to sell the company about four years before the date of the sale, especially after we had several unsolicited offers. We wanted to take control of the situation and not be swayed by what we considered undervalued bids for our company. We knew that we had a lot of learning and work ahead of us. We embarked on a mission to talk with friends who had already gone through the process of selling their companies, and received excellent advice on what to do and what to avoid. Their advice was invaluable to our successful transaction.
We already had as corporate counsel an excellent attorney and law firm that specialized in technology and in exits. In addition, our accounting firm was very familiar with exits. These key advisors were invaluable as we went through the process. When we decided to sell, we added the most important adviser of all - an investment banker. We never considered trying to sell the company on our own.
The actual sales process was time consuming, especially gathering all of the contracts, files, documents, data, IP and other information into due diligence binders, which were crucial to educating potential buyers about our company. Our investment banker, accountant and attorney helped us through this process, but even then it wasn't easy. But, because we had a great team behind us, we were able to grow revenues and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization ) significantly, even during the hectic sale process.
Looking back, we were fortunate that we had talked with knowledgeable people and had great professionals on our team. We were smart at key points in the process, especially deciding early on not to try to sell the company ourselves. We could have accelerated the process if we had an "exit coach" - someone who could guide us through the maze of selling a company, help us through the tough times and give us key pointers when we were searching for answers. That's why I've decided to help other Geotech companies as an exit coach - to help companies realize their full exit potential.
Directions Media is hosting a 90-minute webinar next Wednesday (1/12) during which Jim Aylward and his associate Scott Waxler will give an overview on some of the key features of company transactions. If you think you may be involved in the sale of a company someday, it will be well worth your time to attend.