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Selling Your e-Commerce Company in 2011

BY Stanley P Jaskiewicz
November 29, 2010

There can be no clearer sign that the dot-com era is over than the results of the 2010 elections. The resounding defeats of tech icons Meg Whitman (of eBay) and Carly Fiorina (of HP) ' despite spending (Whitman spent more than $141 million of her own money on her campaign) ' showed that our society no longer believes (if it ever did) that the stars of Silicon Valley, self-styled modern-day “masters of the universe,” could solve all our problems (at least until the next revolution, because they come so predictably in the tech world).

Another sign of how times have changed for tech entrepreneurs hit much closer to home with the release of the 2010 SRS M&A Deal Terms Study by Shareholder Representative Services, “an analysis of deal terms in private target M&A transactions” from 2007 to 2010. (SRS assists firms in managing such post-closing processes.)

The study revealed that entrepreneurs once able to cash out on their own terms, to eager buyers unwilling to risk negotiating lest a competitor get the deal, now must accept markedly less favorable terms. (A 12-page summary of the 101-page report is available at www.shareholderrep.com/files/summary.pdf. The full report is also available.) This real-world data on the negotiated terms of sales of privately held companies was not limited to tech firms, but the sample, in fact, had a very high percentage of them. (An American Bar Association (“ABA”) committee has issued similar “Deal Points” studies for many years, but those reports are available only to members of that committee, at www.abanet.org/dch/committee.cfm?com=CL560003. For those unable to access the ABA studies, the SRS study includes selected comparative data.)

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