No IPO ? No Trade Sale ? Private Equity Your Technology
Very strange 24 hours (mainly vgood), characterised by Sydney like January rain. But Burnham's Beat 7 Steps for Private Equity Software plays did make me smirk. (esp interesting in the way they look for tech firms with enterprise maintenance revenue : Versus consumer web plays that look for viral eyeballs growth)
I've gotta bet this comes to Australia in 2008 once all the infrastructure and retail/brand turnarounds are done here. (ala Qantas sell your soul, lease your planes, then allocate your 1% management incentive to charity... ok whatever)
By then, there should also be a group of once were 1.0 net entrepreneurs now private equity harboured (that are about to start their blog arent they :) that will be able to give us mere operational mortals blow by blow insights of how private equity will attack the Australian technology market : Will it be second half CY 2007 or Q1 2008 ?
While Australian technology businesses that are local can list on ASX or even setup and go onto the British small cap tech market...private equity exits may be another channel for founders, owners and management that dont run/own sexy 2.0 businesses that are in "the (Time Magazine) pocket" as they say on Idol, but have nice economics that the retirement funds will bankroll to their Private Equity fellas. ("Just need another $200M for a technology rollup fund. No I don't need another $1b to pay down hedging debts from that airline we bought in Kazikstan.")
There are only so many old Aussie brands PE can buy ala Myer, Qantas or media JV's with Kerry and Juniors, and lets face it how many Megan Gale (lucky Andy Lee) and Jennifer Hawkins brand campaigns can we really handle away. Where is Wayne Bos and Steve Outtrim when u need them ? Fo comedy folk that's all. Fo comedy. Steve was doing an energy startup in Byron yeh ? I smell a sausage sizzle... Cant believe how many old faces are appearing these days. Fo some, frontline is home.
Burnham's 7 Steps to PE in Software
1. Buy software company
2. Do dividend recap in which you simultaneously lever up the balance sheet and dividend out all the cash you just borrowed plus most of the existing cash on the balance sheet.
3. Raise new fund off of massive IRR created by dividend recap.
4. Do lots of acquisitions to make organic growth impossible to discern
5. Raise prices, slash R&D, increase sales and marketing.
6. Take company public/sell it at same PE you bought it for to investor/large company apparently unfamiliar with the concept of enterprise value.
7. Repeat.
I've gotta bet this comes to Australia in 2008 once all the infrastructure and retail/brand turnarounds are done here. (ala Qantas sell your soul, lease your planes, then allocate your 1% management incentive to charity... ok whatever)
By then, there should also be a group of once were 1.0 net entrepreneurs now private equity harboured (that are about to start their blog arent they :) that will be able to give us mere operational mortals blow by blow insights of how private equity will attack the Australian technology market : Will it be second half CY 2007 or Q1 2008 ?
While Australian technology businesses that are local can list on ASX or even setup and go onto the British small cap tech market...private equity exits may be another channel for founders, owners and management that dont run/own sexy 2.0 businesses that are in "the (Time Magazine) pocket" as they say on Idol, but have nice economics that the retirement funds will bankroll to their Private Equity fellas. ("Just need another $200M for a technology rollup fund. No I don't need another $1b to pay down hedging debts from that airline we bought in Kazikstan.")
There are only so many old Aussie brands PE can buy ala Myer, Qantas or media JV's with Kerry and Juniors, and lets face it how many Megan Gale (lucky Andy Lee) and Jennifer Hawkins brand campaigns can we really handle away. Where is Wayne Bos and Steve Outtrim when u need them ? Fo comedy folk that's all. Fo comedy. Steve was doing an energy startup in Byron yeh ? I smell a sausage sizzle... Cant believe how many old faces are appearing these days. Fo some, frontline is home.
1.0 was an original time, everything is derivative now :D
Burnham's 7 Steps to PE in Software
1. Buy software company
2. Do dividend recap in which you simultaneously lever up the balance sheet and dividend out all the cash you just borrowed plus most of the existing cash on the balance sheet.
3. Raise new fund off of massive IRR created by dividend recap.
4. Do lots of acquisitions to make organic growth impossible to discern
5. Raise prices, slash R&D, increase sales and marketing.
6. Take company public/sell it at same PE you bought it for to investor/large company apparently unfamiliar with the concept of enterprise value.
7. Repeat.
posted by redbarren at 6:07 PM
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