Mergers & Acquisitions in the Technology Sector

May 7, 2024

IBA was founded in Portland, Oregon in 1975 and expanded to the Seattle metropolitan area in 1991 based on regional demand for our business brokerage services. One year prior in 1974 to IBA’s formation under the leadership of G. William Ososke, Intel (https://youtu.be/yJrFLKUYx9E?si=bl1uO7ggXhLMYQTm) established operations in Oregon. Today, Intel’s largest corporate operation in terms of facilities and personnel, with over 22,000 employees, is found in Hillsboro, Oregon.  Microsoft moved to its present world headquarters location in Redmond, Washington in 1986, originally occupying 30 acres and six buildings (A Guide To The Microsoft Redmond Campus | Built In Seattle).  One year after IBA opened its Bellevue office, in the larger metropolitan area adjacent to Redmond, Microsoft bought the property ending its tenure as a tenant of the Teachers Insurance & Annuity Association.  Today, it is hard to believe that approximately thirty years ago Microsoft like many companies had a landlord. Wonderful example of what is possible with vision, execution, and quality products in the American economy.

The historical timelines of these three companies, Intel, Microsoft, and IBA, are shared to illustrate that over the last fifty years, we have existed side by side in the states of Oregon & Washington.  No business brokerage firm, other than IBA, has existed and served clients in this Pacific Northwest technology industry ecosystem during the complete tenure of this time period.  Companies like Microsoft, Amazon, and Intel have a positive impact on people, businesses, and communities.  They create employment opportunities, spawn entrepreneurship, generate business opportunities for product & service providers, enhance real estate values, and contribute taxes to support education and social services.

IBA’s role in this economic ecosystem is to provide exit strategy opportunities for entrepreneurs who want to sell their privately held companies and family businesses or acquisition opportunities for individuals who want to leave the corporate world and companies that seek to expand their service offerings and/or market share.  The 100’s of companies IBA has sold in the technology space are as diverse as the apps available in the Apple App Store.

Transactions have included companies that addressed the needs of large corporations, like Business Computer System Rentals (Laptop Rentals | BCSR Business Compter Rentals | United States (bcsrinc.com)), which rents computers to contractors to ensure company data is not retained and a clear line exists between employees and contractors in terms of benefits provided.

Early identifiers of entrepreneurial opportunities created like Jeffrey Heininger of Heininger Holdings (Nesha Ruther | The Story of Jeffrey Heininger of Heininger Holdings (ibainc.com)) who was one of the first independent E-commerce retailers to sell products online on Amazon.  E-Commerce companies have and remain a robust entrepreneurial venue for IBA to facilitate transactions.

Component level computer repair companies like A-1 Best Computer which had multiple locations and was owned by an electrical engineer, Mohamed Lahlou, with a reputation for, along with his team, of being able to repair computers from wine & coffee spills, power supply & cooling fan failures, and virus infestations before computers became disposable items and data was backed up on the cloud to the joy & relief of his customers.

Software companies ranging from Blue World (https://www.blueworld.com/) to Pathlogix (https://www.pathlogix.com/).

Online educational and SaaS platforms like EMath Instruction (https://www.emathinstruction.com/) which was sold in 2024 for a premium value in a competitive marketplace.

And component manufacturers for OEMs similar to Manufacturing Services (https://ibainc.com/blog/nesha-ruther/the-story-of-mike-brown-manufacturing-services/) which served a spectrum of private and public sector customers.

The successful sale of a technology company requires knowledge, experience, and skill.  The marketplace for products and services can change rapidly as portrayed in the recent excellent movie, Blackberry (https://youtu.be/cXL_HDzBQsM?si=TT0fJfzyu9VOjKwV) which told the story of a once-dominant cell phone equipment company (45% of the market at its peak) which today is nonexistent. IBA has experienced the rise & fall of technology company marketplaces in the past as professional intermediaries, like the ISP (Internet Service Provider) M&A marketplace of the 1990s and early 2000s where our firm made numerous sales at high multiple values.  Today, independent ISPs are almost nonexistent as a business model.

The new frontier in technology entrepreneurship is AI.  It is unknown who will be the winners and losers as business owners in that space, but it is a certainty that AI entrepreneurship will create millionaires, if not billionaires, for those who have vision and execute.  The following article highlighted some of the opportunities that exist for small business owners utilizing AI technology:  https://www.entrepreneur.com/starting-a-business/7-ai-based-business-ideas-that-could-make-you-rich/458479

A professionally facilitated sale of a technology company requires the following five elements:

  1. The ability to properly price a business with knowledge of market dynamics.
  2. Creation of a robust marketplace where confidentiality is maintained and the maximum number of qualified buyers are exposed to the acquisition opportunity.
  3. Negotiation of a financial deal structure that has an appropriate risk/reward allocation between the parties, so the seller gets a strong market value and the buyer an opportunity for an appropriate return on investment.
  4. Negotiation of secondary & tertiary transactional elements ranging from transition employment/consulting agreements to tax mitigation in deal structure to non competition & non solicitation agreements.
  5. Facilitation of the transaction from Letter of Intent (LOI) to closing through due diligence, legal documentation, and financing.

Stephen Hawking was quoted as saying, “The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.”

Many firms convey they can sell a technology industry company.   However, few have the team in place that exists at IBA in terms of knowledge, experience, and skill in this sector.  Members of our team, have worked in leadership positions at companies in the technology sector including Microsoft & Dell Computers, have computer science degrees, and have been successful entrepreneurs themselves in the technology space.  IBA also has physical offices with conference rooms available to facilitate confidential meetings out of the eyes of employees in seven Pacific Northwest cities including Bellevue, Portland, and Bend, the Silicon Forrest (https://www.thesiliconforest.com/city/bend) the newest emerging technology ecosystem in the region.

If you are interested in selling a privately held company, we would welcome the opportunity to learn about your business, exit strategy objectives, and provide an overview of our services.  All conversations with IBA are held in strict confidence.  100% of IBA’s compensation is tied to successful project completion.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.