1. CONFIDENTIAL PRESENTATION | PAGE 1
A Founder’s Guide to M&A
Chip Hazard
chip@flybridge.com

2. CONFIDENTIAL PRESENTATION | PAGE 2
MOST VC-BACKED COMPANIES WILL BE ACQUIRED,
ESPECIALLY IN TECH
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014
Venture-Backed Exits: 2010 – 2014
(All Sectors)
IPO M&A
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014
Venture-Backed Exits: 2010 – 2014
(Tech Only)
IPO M&A
What are the important considerations for a Founder
thinking about selling their company?Source: NVCA

3. CONFIDENTIAL PRESENTATION | PAGE 3
KNOW WHERE YOU ARE ON THE JOURNEY

4. CONFIDENTIAL PRESENTATION | PAGE 4
KNOW WHERE YOU ARE ON THE JOURNEY:
DIMENSIONS THAT MATTER
• How well defined is business
model
• Evidence of operating leverage
• LTV/CAC, or equivalent, calculus
• Concentration risks
• Profitability
• Depth of team
Company Maturity
• Market Potential
• Fit with important industry trends
• How disruptive to incumbents
• How strongly fit into acquirers go-
to-market channels
• Drag-along revenues created for
acquirer
Strategic Importance
• Hyper growth (>100% Y/Y) versus
strong growth (20-100% Y/Y) versus
limited growth (<20% Y/Y)
Growth Rate

5. CONFIDENTIAL PRESENTATION | PAGE 5
KNOW WHERE YOU ARE ON THE JOURNEY:
DIMENSIONS THAT MATTER
Company Maturity
StrategicImportance*GrowthRate
Hyper Potential Options Abound
Figuring it Out Steady as She Goes
Immature Mature
HighLow

6. CONFIDENTIAL PRESENTATION | PAGE 6
WE KNOW WHERE WE ARE, NOW WHAT?

7. CONFIDENTIAL PRESENTATION | PAGE 7
FIGURING IT OUT
• How much runway do we have to get
growth going?
• What is the likelihood we can raise
more capital on reasonable terms?
• Are impediments to growth structural to
the market or more related to our
company?
• Are impediments to success solved by
being part of a larger company?
• If we figure things out, does our
company have attractive business
model characteristics?
• Team motivations
• Risk of departures
• Desire to stick together
• Interest in working at a bigger company
M&A ConsiderationsCritical Questions
Buyer Universe
• Broad. Large to small cap public
companies, other private companies
Process
• Company led, relationship driven
• Product vision and cultural fit most
important
• Small bank or consultant could help with
introductions
Valuation
• All over the map, from modest “kick-
saves” to acqui-hires to decent multiples
on limited revenue
Valuation drivers
• Strength of team, willingness to stay
• Product fills critical gap or creates drag-
along revenue opportunities for acquirer

8. CONFIDENTIAL PRESENTATION | PAGE 8
HYPER POTENTIAL
• How realistic is it that we can move the
company up the maturity scale on our
own on all dimensions?
• Is the capital to drive growth readily
available on attractive terms? What do
we own now versus later? How far far
forward in time is the company being
valued?
• How large is my likely buyer universe
relative to my competitive sphere? Is it a
game of musical chairs?
• What is the likelihood the acquirer
screws things up?
• Team motivations
• Desire to make money versus desire to
have a massive impact. Risk tolerance
• As we scale on our own, do we lose
control? Do we care?
M&A ConsiderationsCritical Questions
Buyer Universe
• Narrow. Only the largest cap
companies can acquire at super high
multiples
Process
• Company led, relationship driven
• All about vision and growth
• A banker more likely to interfere than
add value
Valuation
• Super high to infinite revenue multiples
Valuation drivers
• Willingness to walk away
• Fill CEO level priority strategic gaps for
acquirer
• Multiple bidders that view company as
critical can drive value up by 2x or more

9. CONFIDENTIAL PRESENTATION | PAGE 9
STEADY AS SHE GOES
• Does the broader market environment
make now the right time to sell?
• Does our business have significant risks
that are largely outside of our control?
• What opportunities exist to bend the
growth rate upward? Should we be
buyers instead of sellers?
• How patient are my investors?
• Team motivations
• Is the team still motivated or getting
tired?
• What opportunities exist for us at the
acquirer?
M&A ConsiderationsCritical Questions
Buyer Universe
• Broad. Large to small cap public
companies plus PE firms and roll-ups
Process
• Broad outreach
• Banker can add value with
introductions, positioning and process
Valuation
• Likely to be driven by traditional metrics
and comparable multiples
Valuation drivers
• Willingness to walk away
• Significant and agreed to synergies with
buyer
• Well run process, auction dynamics to
keep buyers honest

10. CONFIDENTIAL PRESENTATION | PAGE 10
OPTIONS ABOUND
• Do we want to go public or sell? Now
versus later?
• Gut check on the business on all
dimensions:
• Is the market potential still largely
unbounded?
• Do we have strong revenue visibility?
• Is the business getting easier or harder
as we scale? Metrics improving or
showing signs if deterioration?
• Does our business have significant risks
that are largely outside of our control?
• Are the opportunities we can access if
we are public that we can’t privately?
• Team motivations
• Do we want to be public with all that
entails, both good and bad?
• Risk tolerance?
M&A ConsiderationsCritical Questions
Buyer Universe
• Medium. Large to mid-cap public
companies plus larger PE firms
Process
• Targeted outreach
• Potential to dual track, or shop the S-1
• Banker can add value and credibility to
IPO threat
Valuation
• Likely to be driven by revenue multiples
for similar high-growth public
comparable companies
Valuation drivers
• Willingness to go public or wait
• Open up strategically important new
markets for buyer
• Significant and agreed to synergies
• Well run process

11. CONFIDENTIAL PRESENTATION | PAGE 11
DON’T FORGET: KEEP CLIMBING AND BUILDING
ALONG THE WAY!

12. CONFIDENTIAL PRESENTATION | PAGE 12
ABOUT ME
General Partner, Flybridge Capital Partners
• Focus on enterprise technology, with a
particular emphasis on developer-driven
companies and cloud infrastructure
• On the Board of companies such as
MongoDB, Digital Lumens, nasuni and
FirstBest Systems
Involved with four M&A transactions in 2014
Contact information
• Blog: http://www.hazardlights.net
• http://www.linkedin.com/in/chiphazard
• Email: chip@flybridge.com
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