my business does not have enough 'gravitas'

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been in business for 6 years, developing specialised intranet web applications
I've developed my product entirely on my own, and there's only me in the company - my current turnover is about 100k
so far my work has been small-fry and I'm happy to admit that

the industry is changing however, and my product has become the focus of a number of (much) larger companies, and I've been made take-over offers - essentially they want my IPR, and at least 2-3 years of my time to lead development to take the product to the next level - my remuneration will be contingent on an earn-out contract

problem is, I'm not ready to sell out. I want continue developing my product, and ideally recruit staff into my company, expand, and keep my IPR
unfortunately, I'm told, my company doesn't have the gravitas to pull something like this off - this may well be correct...

one practical example is the idea of managing corporate risk. if the product fails, eg servers crash, a bug in the system means they make a mistake etc etc and they blame my system, there is the potential for litigation
a small company therefore would seem unable to handle this sort of risk...
having said that, I believe you can get bespoke insurance that underwrites this sort of risk...

so, overclockers - can you give me any suggestions as to how I can increase the 'gravitas' of my company - or do you think selling-out is the better option

PS: i know i've not given you much in the way of detail, so please ask away!
 
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We're kind of in the same boat with regards to litigation, with hundreds of customers relying on our applications and the potential for being sued, best suggestion is some decent indemnity insurance.
 

RDM

RDM

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A lot of it would depend on what the buy out package looks like and the rather more personal question of why do you work?

If your purpose in working is to provide a comfortable life for you and your family and the buy out package was enough to do this then it would seem sensible to do it. However if you work for the challange and feeling of sucess then it may not be as attractive a propostion.
 
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A lot of it would depend on what the buy out package looks like and the rather more personal question of why do you work?

If your purpose in working is to provide a comfortable life for you and your family and the buy out package was enough to do this then it would seem sensible to do it. However if you work for the challange and feeling of sucess then it may not be as attractive a propostion.

very much the challenge - financial reward ranks pretty low for me, but i'm fanatical about my product and I constantly work to improve it in any way that I can - my ambition is to see my product being used nationally

in that regard, selling out now is not particularly attractive - I have reached a plateau though, and I'd have to expand to progress further - but even if employ 10 people I'm still tiny compared to my competitors who have hundreds of staff, and 200M+ turnover!
 
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very much the challenge - financial reward ranks pretty low for me, but i'm fanatical about my product and I constantly work to improve it in any way that I can - my ambition is to see my product being used nationally

in that regard, selling out now is not particularly attractive - I have reached a plateau though, and I'd have to expand to progress further - but even if employ 10 people I'm still tiny compared to my competitors who have hundreds of staff, and 200M+ turnover!

Indemnity insurance and slow and steady expansion.

Personally if the financial package was right I'd sell but I only work to survive!
 
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Was it the potential buyers who told you that you lack gravitas? Because they may be a bit biased...

it's complicated because the two organisations that want to buy me out are one my clients and a competitor
understandably, part of their argument is to highlight that my position is vulnerable - which I don't dispute, and which I want to address by expanding and offering an underwritten product

I don't object going into partnership with a larger company as long as I have full partner status in the articles of incorporation
 
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Instead of selling the company, license the rights to the product? You might want to speak to a business lawyer.
 
Soldato
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Instead of selling the company, license the rights to the product? You might want to speak to a business lawyer.

on a serious note. do this then earn money supporting and improving the product....
 
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Instead of selling the company, license the rights to the product? You might want to speak to a business lawyer.

I already have a solicitor who specialises on commercial law - plus accountants, they can offer opinions on specific legal or tax issues, but not broader business policy or advice on what to 'do next'

a re-seller arrangement is actually a good idea, I'm slightly cautious about divulging too much of the system code and know-how in case they rip me off
of course you can specify in the re-sale contract that they can't copy the system, and also use encryption / obfuscation techniques for the core parts of the system - but it's still a worry
 
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Just don't be bullied into selling. You can build 'gravitas' eventually by doing progressively larger jobs. This all wreeks of BS anyway, if you can do the job you're big enough to do the job. Public and products liability insurance is par for the course, I don't see their point.
 
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Soldato
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Go on Dragons Den.

To be fair this sounds like a fairly stupid comment I'd imagine...

But to add to it, if you found a decent investor, who you were perhaps willing to give partial share of the company too, but was willing to give you the experience, and answer the questions you needed answering it might be useful?


kd
 
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Associate
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Just don't be bullied into selling. You can build 'gravitas' eventually by doing progressively larger jobs. This all wreeks of BS anyway, if you can do the job you're big enough to do the job. Public and products liability insurance is par for the course, I don't see their point.

I would definitely prefer to stay in control, get bigger and become more established
To complicate things even more, the competitor who wants my product is, themselves, getting bought out by an even larger company...
they divulged that their own buy-out arrangement is subject to hitting an 8 figure sales target in 4 years
 
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Hang on in there if that's what you want to do. Look to protect your IP at all costs. Indemnity insurance may well cover your corporate risk, but I would spend time in the lab ensuring your product is stable for all eventualities.

Don't forget, smaller software house companies normally rake in the fees based around maintenance / support contracts rather than the licence of the product itself.

The reason you want to hang on and not get drawn in to any "packages" of earn-out contracts is simple. A friend of mine had a bespoke conferencing company. He sold it a few years ago for a couple of million £. He's 50, has 3 kids, and no job. He's pretty much unemployable as all he knows is his own company, which he no long owns. After a house purchase and putting his kids through uni and enjoying life, he now really needs a job.
 
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