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5 Types of Folks Trying to Buy Your Business (Contributed)

In gov tech, growth and recognition tends to mean interest from many different people. Here, one entrepreneur offers a guide on how to sift through different types of requests and proposals.

Congrats — you’ve made it onto the GovTech 100 list!  

What will happen next is as predictable as that initial flood of junk mail you received after you registered your business: a deluge of unsolicited offers to buy your company.

This will take many forms: outright offers to purchase your business, investments to support growth and lots of vague references to “partnering.”

So who are all these people? And how do you navigate this maze?

As a serial entrepreneur (founder of GovLoop, chief marketing officer of GovDelivery/Granicus, president of Callyo) and investor in gov tech companies, I’ve been in your shoes. I have sold my own business and been involved in numerous transactions (on both sides) with venture capital, private equity and strategic acquirers. 

Selling my business was an incredibly important decision for me and I remember how difficult it was to separate the signal from the noise.

As such, here’s my quick guide to understanding the outreach from these five key groups:

1. Venture capital investors: Venture capitalists (VCs) look to invest in high-growth companies that are growing 40 percent-plus per year in large markets, with a path towards $100 million-plus annual recurring revenue (ARR), and an opportunity to earn a 10-100X return on their investment. Examples include 8VC, OpenView and Govtech Fund.  

Key considerations: The business model of venture capitalists is generally to “swing for the fences.” They expect a majority of their investments to do poorly, with a small handful of their investments delivering large, outsized returns. Does this match your expectations for your business? Especially with longer-cycle businesses with government customers, growing steadily at 12 percent per year may be your definition of success, but make sure this matches the expectations of your venture capital investors.

Key questions to ask: What is their average company profile? Have they invested in the government sector before? What does success look like for their investments? How do they add value to their gov tech investments?

2. Private equity investors: Private equity (PE) firms look to invest in strong, stable companies where their investment can help “institutionalize” a business and drive the next stage of growth. There are many different types, strategies and cultures, so it’s critical to understand the specifics of any PE suitor. Examples include Serent Capital, Vista Equity Partners, Polaris Partners and Frontier Growth.

Key considerations: Private equity buyers will generally use more debt (“leverage”) to purchase all or part of your business. Are you comfortable with this amount of debt on your business? PE buyers also typically intend to hold an investment for five to seven years; does this align with your time horizon? Picking a private equity partner is a long-term commitment — make sure you are aligned on culture and strategy before you go down this path. 

Key questions to ask: What size — ARR or earnings before interest, tax, depreciation and amortization (EBITDA) — companies do they invest in and what growth rates are they are looking for? How much debt will they use? Do they generally invest as a minority shareholder or as control investors? What is their proposed strategy for the business? 

3. Strategic acquirers: These are the large, blue-chip companies in the gov tech space that many entrepreneurs think of when they first think of selling their business. They include companies like Tyler Technologies, LexisNexis and Verizon.  

Key considerations: What is the strategic direction of the business and how does your company fit in? What business unit will you fit in, who will your boss be and how will the team report?  

Key questions to ask: Who is the business unit leader driving the interest in the acquisition and what is their strategy for the business? What’s their timeline to solve their strategic need and how high is it on their strategic priorities? 

4. Private equity-backed strategics or platforms: A hybrid of numbers two and three, but increasingly prevalent as private equity investment in gov tech has increased, there are now a number of private equity-backed “platform” companies in gov tech. These companies’ “PE-backed strategics” or “platforms” often look to buy smaller gov tech businesses and integrate them into their platform. Examples include Granicus, Kofile, ArchiveSocial, GovQA and many more.

Key considerations and questions to ask: The same as in types two and three, plus: When was the original platform investment? How long into the typical five- to seven-year hold period are they? What are the key strategic priorities they are focused on? What has been the experience of other gov tech businesses purchased by the platform?

5. Bankers: You’ll also likely receive emails from various financial intermediaries like investment bankers, brokers and M&A advisers. Their role is to help sell businesses or raise capital and they can be good sources of intelligence on the government market. Examples of prominent gov tech-focused bankers are Shea & Co., Spurrier Capital Partners, GLC Advisors, Vaquero Capital and MergerTech.

Key considerations: Don’t forget, advisers are incentivized to sell your business, full stop. It’s important to be clear in communicating your own values and priorities — is it to maximize sale price regardless of buyer? To preserve the company’s culture? Also, insist on speaking with other recent gov tech owners who have sold their businesses with that intermediary. 

Key questions to ask: What key trends are they seeing in the market? What gov tech companies have they represented before? What size companies are they focused on representing? Have they had any “failed” sale processes in the last two years? If so, what happened? 

*Bonus: Ever get an email where an individual is looking to buy one business and preserve your legacy? That’s a growing sub-set of buyers known as search funds where younger entrepreneurs, typically recent MBAs from top schools, are interested in acquiring one business and stepping into the CEO role. Also known as “entrepreneurship through acquisition,” this can be an interesting model to pass your business on to the next generation, but be sure to check on the entrepreneur’s investor base and experience with gov tech.

In the gov tech entrepreneurship journey, this is just one of the most common questions I get when talking to gov tech CEOs. Other questions that often come up are items like: How do I build a go-to-market team? What are the best marketing channels? Do channel partners work? How should I think about raising capital?

This is the first in a series of articles where I hope to explore these and many other topics. 

Having sold my own business and been on both sides of M&A transactions, I am always happy to share war stories and answer any questions that gov tech owners have about the process. If you have any questions on selling your business, raising capital, or any other topic ideas or practical suggestions for this column, please send me a note at

Steve Ressler is a serial gov tech entrepreneur and investor.

Steve Ressler is a serial gov tech entrepreneur and investor. He has held leadership roles at companies including Callyo, GovDelivery/Granicus and GovLoop.