M&A Advisory

PEG Acquires Division of Software Company


Client had legacy document management software division that generated high recurring revenues and free cash flow, but showed very little growth.  Client was building next generation of workflow management software, which was the future of the company.  Client management was distracted by serving two “masters”:  The legacy business and the new startup business.


Sold legacy division to PEG interested in milking the stable income and earnings, allowing management to focus on the startup by using proceeds from sale to accelerate development of new product.  Auction was run to find the highest and best terms to sell the division:

  • Positioned legacy software in the market, focusing on recurring revenue and stickiness in customer processes
  • Built marketing materials to reflect that positioning
  • Identified broad list of investors, both strategic and financial, domestic and international, to approach on behalf of client
  • Implemented competitive auction process among prospects to quickly subset to most interested and motivated buyers
  • Navigated post-LOI sales downturn, postponing but not ending the process
  • Eventual successful document and close


Client was able to divest of legacy business for 2.6x revenue plus lucrative transition consulting and real estate lease, freeing the management team to focus on the next stage of their business interests.

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