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UtterAccess Forums _ General Chat _ Business Successor

Posted by: RCollard Oct 22 2019, 03:13 PM

I have a successful and profitable business whose sole product is an Access-based application. For 25 years I have developed, marketed and supported the product which has a good installed base and recurring revenue via subscriptions and maintenance. Iím now considering my exit strategy and wonder if anyone here has previously sold a software business or found a successor.

I know software businesses can be sold through a broker. But Iím sure there are young entrepreneurial developers out there looking to move from hourly consulting to predictable revenue and product-focused work. Any ideas where to look?

Posted by: DanielPineault Oct 22 2019, 03:58 PM

Here and other specialized boards would be my guess.

Which product is it?

Posted by: RCollard Oct 22 2019, 04:14 PM

I don't want to alarm existing or prospective customers so I'd rather not list the product name here where a google search would find this thread. Send me a private message.

Posted by: RCollard Oct 23 2019, 10:01 AM

I've added our web site to my profile so anyone can read more about our business and product.

I am curious how others have successfully transitioned their businesses. For those who develop custom systems, how long do you support those systems? Do you eventually turn over development and maintenance to the customer or another developer? We often gain a new customer because they have lost support for their homegrown or custom system. I'm sure many here have seen similar scenarios where the developer moves on after some time and the customer is left with an unsupported custom system.

Posted by: DanielPineault Oct 23 2019, 10:12 AM

From what I've seen either they simply walk away or use the services of a broker.

Posted by: GroverParkGeorge Oct 23 2019, 10:44 AM

This is partly a spurious side story, but I once asked a variation of that question of a rather well known person in our business.

His response was along these lines.

"I don't worry about what happens to my business if I die prematurely; that'll be my wife's Second Husband's problem."

A humorous (IMO) way of stating that in a sense, we can't really know the future, so let's not worry so much. He did go on to describe some concrete steps he had taken that would ensure continuity for his CURRENT clients to the extent possible.

Another person at that same session offered the hope that one of his children would decide they want to take over the family business. Again, no current transition plan.

A third said he'd start looking for a successor to take over when the time came, and that's closest to where you are now, I guess. His fall-back position, he said, was that the business would end when he no longer felt the need or desire to run it.

So, at the point where you are ACTIVELY starting the wind down process, I'm afraid that there are probably few active developers who can offer their advice. Those people who could are probably already on a beach somewhere watching the sun go down, or come up.

In MY case, what I did was contact various developers I knew from here at UA and from other associations. I set up interviews between them and existing clients and let them mutually decide who wanted who. So far it seems to have worked out. (No one calls me to complain, anyway.)

I'll tell you what, though, if I were a few years younger I'd be interested. I grew up in Star Valley and have always wanted to move back home. It's not in the cards for me, though. And the thought of winters there is daunting. I know it could be run from anywhere, as most software based companies are, but then, it IS home.

On a more concrete level, I think that word of mouth is going to do the job for you. I think we have several entrepreneurs among us and one or more will reach out to you. Of course, you'll want to do your due diligence on any such contacts.

Have you considered the "family transition" option? Anyone in your family who'd be willing to come in as an owner in training?

Posted by: projecttoday Oct 23 2019, 10:49 AM

Well, this website's posters mostly work as developers or run companies that offer development. I'm sure there are some who run a company which offers a software application. But not too many, I think. There are definitely some software consultants posting here, as we've seen! I'm not sure how much experience with handing over / taking over a piece of software and how much of an investment they're willing to make or have made for that you'll find here. Let's hope someone who's done that chimes in.

Posted by: RCollard Oct 23 2019, 11:55 AM

One relative has expressed interest in the business. But my wife and I are not fond of that idea.

I started this thread because I think UA is one place where a successor might appear. I am in no rush because the recurring revenue from subscriptions and maintenance is a nice annuity and I no longer need to work 40 hour weeks. I am sure there are a few enterprising developers out there that would like to move from hourly development to a product-focused business. That's where I was 25 years ago when I developed a custom application that became version 1.0 of our product. Back then I was doing contract programming, billing hourly, and I knew the amount I earned was limited by the clock and calendar. Of course, I could have raised my rates with the risk of pricing myself out of the market. I really wanted a product I could sell to many customers and I got lucky.

Many of the users of our software are chemists and microbiologists. Early on I was at a disadvantage because I couldn't speak their language. I also recall an informal survey suggesting it was easier to teach a chemist programming than a programmer chemistry. So for some time I though a successor should have a background in the lab but I now believe he/she should be a developer. We've all had to learn the domain of our end users to be successful developers. So, a good successor for my business should be proficient in Access, Excel, VBA, and SQL Server and, if they are a good listener, they can learn how an analytical lab does business.

Posted by: DanielPineault Oct 23 2019, 11:59 AM

Just be ready though. Anyone seriously looking into this will want full access to your corporate financial (4-10 years worth) to be able to determine it's profit margins, fluctuations in revenus, ... and will want to see a client listing.

Posted by: jleach Oct 23 2019, 01:29 PM

Typically that stuff is done under NDA and general ethics should prevent a potential buyer from running to any existing clients with information.

Usually by then the seller would have a good idea of why the potential buyer is interested in the sale and some other general background info, and can make a somewhat informed decision whether to move forward with that portion of things (and whether to do so with legal counsel).

I guess there's quite a few ways to handle it, depending on the type of product, assets, clients, etc.

Posted by: DanielPineault Oct 23 2019, 01:32 PM

Typically that stuff is done under NDA

Very true.

Posted by: jleach Oct 23 2019, 01:35 PM

We have a saying in aviation: "Rules and regulations are made of paper, and paper does a poor job of shielding metal from crashing into rock"

That is, NDAs themselves don't offer too much, but its better than nothing.

Posted by: FrankRuperto Oct 23 2019, 04:05 PM

Why give up your business when you can hire someone else to maintain it and continue to draw income from it?
How can you or someone else put a dollar value on your business?
Perhaps after a while, the developer you hired becomes more acquainted with your app, customer base, operations, etc, then you can offer him/her the option to buy and you continue to receive a percentage?

hth, Frank

Posted by: DanielPineault Oct 23 2019, 04:15 PM

How can you or someone else put a dollar value on your business?

This is done all the time. There are people, business brokers, that specialized in this type of thing by reviewing a company's financial they can easily come up with a number.

That all said, you idea of hiring someone to maintain and provide support while retaining ownership, is a good one in my opinion. That said, if you want to retire and not worry about anything relating to business, selling it is the only way to go. So it's a personal choice.

Posted by: FrankRuperto Oct 23 2019, 04:29 PM

If I were a potential investor, I would first want to learn all there is to learn about the business before making a decision. Working as a hired contractor is a good way of achieving that goal, and it also provides the owner better protection when disclosing proprietary information.

Posted by: jleach Oct 23 2019, 04:34 PM

Personally I'd be far more concerned about general contractors and proprietary information than I would be a (serious) potential buyer.

There's a fairly standard process for getting a business valuation. Also, it's not just about a person being able to work with the codebase (in fact, that's a small portion of it: the owner of the product doesn't necessarily need to be a developer, as long as they have enough acumen to find a good one (which is asking a lot, I realize)).

It's as much to do with marketing, support, business economics, relationship building, etc., and most serious ventures will take all of this into account.

If you go to the bank for help funding something like this, they'll be absolutely sure you have a full-on 5-year business plan, covering ever corner of this stuff.

Posted by: RCollard Oct 23 2019, 05:35 PM

Why give up your business when you can hire someone else to maintain it and continue to draw income from it?

Perhaps I was a poor judge of character back then but my two past attempts to bring someone on board did not work out, were costly and an enormous distraction. I'd rather find someone committed from the start via a purchase. I would expect to have to work closely with a new owner and developer for a significant but fixed period of time during the transition. I have provided pre- and post-sales technical support M-F, 52 weeks a year for the past 20+ years. So my exit strategy should include removing all such responsibility.

As others have noted, there are lots of ways to value a business and I will employ an NDA with any prospects.