I work for a company that has developed some software for an interesting vertical market. However, we are still founder run and our interesting vertical is a niche that has us at in low millions without much organic growth. The company has promise, but the founders and other long-time employees are interested in finding out how their stock holdings can see the light of day. To get there I think we either need to be sold or get more investment in the company.
Can I get some help on avenues we can go down in order to get money out of the company for its current shareholders. Any suggestions are appreciated.
Getting money out of a company
Answers
Secondary transactions are becoming more and more common. There are a number of investment funds that have been raised to focus exclusively on secondary transactions. Markets like sharespost.com are bringing some transparency to this market. Unfortunately for you, most of the secondary transactions are happening in companies that are much larger.
Given that the founder is interested in getting some cash, there are more options. All are going to require quite a bit of effort that may distract from operating the company. The new investors would want to understand the plan for growth & they'd probably want to see some traction in the growth.
The best place to start would talk to some bankers who have worked with larger players in your space - they might know investors or potential acquirers who could be interested.
Do you have any competitors? The closer the better b/c they might want to buy your customer base if they do something similar. Likewise, if any large companies are in or near your space, try them. Although they often do better when approached via an investment banker. Speaking of which, I-bankers, although they are expensive, do this sort of thing for a living. Finding one with appetite will be your challenge given the size of the company (if your "low millions" means low single digit millions, you're in trouble b/c most bankers won't touch a deal that small, if it's low double-digit millions, you've got much more hope).
Another tack would be to sell a part of the company to a new series investor if the prospects are there. For smaller entities it is not unheard of to be bought out in pieces over time by someone who wants your cash flow or customer base but can't afford to swallow you whole.
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