Exit Timing - Now or Later

Priiva was contracted by a large information technology provider who was gaining market share, performing well, yet fearful of larger organizations entering the market via acquisition and with potentially disruptive technology. The strategic decision for management and the board was to continue the current path of growth and accept the execution risk associated with that path, or attempt to trigger an auction now for fear that value would be lost over that same time.

The Priiva process was used to model the overall industry structure including current competitors, potential new entrants, acquisition players, and customers. Although potential acquisitions were identified, the team was surprised to learn that no immediate consolidation would occur. They learned the current competitors and potential new entrants were fearful of initiating a cascading auction for several players in the market space. So in fact, the entry of new players was determined to be a “rising tide” full of opportunity rather than a time to exit.

Having this insight allowed the client time to build value in their market, as well as time to acquire several smaller players to prepare for the inevitable consolidation.
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