Nearly all private companies ultimately change ownership, either through an ultimate sale of the business to a strategic or financial buyer or through an IPO. Leveraging the experience of CEO roles at ten technology companies and nearly 100 exit transactions, our senior team has specialized in helping companies prepare for and optimize around liquidity events. Realization has developed a set of processes that we offer to apply at our portfolio companies.

It has often been said that companies are bought, not sold. However, we recognize that companies have to make themselves visible to be acquired in transactions that are ultimately beneficial for a company and its shareholders. With a given set of financials, a company will do much better in an acquisition process to the extent it is well-known and has deep relationships with a number of potential acquirers.

In traditional economic theory, an objective or intrinsic value can be assigned to any company, as derived from calculating the present value of its discounted future cash flows. In the real-world, companies sometimes trade for intrinsic value and other times trade at a strategic premium to intrinsic value. Premiums can range from single digit percentage improvements upon intrinsic value to multiples of intrinsic value resulting in a broad range of potential outcomes for any given company.

Our methodology involves working with our portfolio companies to first identify all of the potential acquirers, then rank those companies as most likely to recognize and pay for value, and finally to develop a partnering plan around each of the target acquirers. The general premise of this strategy is that building partnerships with possible acquirers greatly increases visibility to the value created by the company's products and the probability that a company will achieve a strategic premium when the time does come for a change of shareholders. This longer-term value is of course on top of the commercial benefit these partnerships may bring to the business in the short term.

In terms of time horizon, we believe the right time to start thinking about liquidity planning is two or three years before a potential transaction, so we prepare to work with our portfolio companies for a lengthy period of time in this regard. Our experience has been that, aside from achieving attractive financial performance (revenue growth, profitability, etc.), this process is the single-most impactful driver of value for a company.

Our liquidity planning skillset is unique and we bring our experience, process, and commitment of time at no cost to our portfolio companies and their shareholders as part of our investment.