Software Development Tools Company Finds the Right Roles for its Founders and Achieves Value for a Successful Sale
A software development tools company founded and run by a married couple team had experienced good growth in a healthy market over its 10-year history with a product known for its ease of use and reliability, but the company had outgrown the ability of the founders to reach the next stage of growth and profitability. One of them was a very talented software developer, but as CEO for a company at its current stage could not make effective management decisions, delegate responsibility, and lead teams. The other, who ran finance and operations, also presented obstacles to growth and profitability. Both of the founders wanted to grow and then sell the company but had hit a ceiling in the company’s performance and were unsure how to break through it and realize value.
A NextLevel team member was brought in as consultant, and later as interim CEO, to help the founders achieve their objectives, which included unlocking value in the company by breaking through its growth constraints. The first thing he did was to put in place good management structures with delegation authority, clear responsibilities, and accountability. He also brought in outside talent including a new VP of development who, with his team, could take some of the engineering load off the founder, who had become a bottleneck by feeling the need to perform all technical duties personally. This provided more capacity to complete product updates and new product development. The NextLevel interim CEO also installed improved reporting systems, such as in the areas of marketing and sales, to make it easier to establish and achieve key success targets.
In addition to installing these system improvements, which were instrumental in achieving the next level of growth, the interim CEO was able to lead the two founders to a realization of their best personal roles and the company’s best position in the marketplace in order to optimize value. With the aid of M&A consultants, a review of the market players and role of this company led to an understanding that, given the specialized nature of the products, the company could be a rather simple add-on to a larger company with a wider range of products. The interim CEO, with his ability to be objective, helped the founders see this as the best course as well as their highest and best roles as individual contributors.
The company was soon sold, products incorporated into the purchasing company, and the founder/owners achieved an attractive price from this market positioning of the company. One of the founders was able to become an outstanding primary developer for the acquiring company and the other founder was able to achieve personal goals related to their growing family.