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Creative Bootstrapping To A 350 Million Dollar Exit: Nimsoft CEO Gary Read (Part 7)

Posted on Tuesday, Jun 22nd 2010

SM: Essentially you are saying that CA’s vision was the enticing factor for the sale?

GR: They had a very clear vision. The more people we met with and the more time we spent with them, the more their vision became clear. It was a very similar vision to our own. Over Christmas and through the New Year we agreed on a price for the business. From that point forward it was due diligence.

SM: What was the acquisition price?

GR: They paid $350 million for the business. We also got to keep the cash we had on the balance sheet. The enterprise value of the company was $350 million.

SM: Were there negotiation, or was that their offer?

GR: There was negotiation. It was not just about the numbers; there were many other factors as well. We both felt comfortable where we ended up.

SM: You have done some very creative entrepreneurship, and it is nice to see it pay off.

GR: I still remember that as we got started we had no money, and we had nothing. We were buying equipment off Craigslist and borrowing a WebEx account from a friend of mine. We were doing everything we could as cheaply as we could. It is one of the things that led us to run a very successful business. When you are forced to do things in a particular way because cash is not available, you become very efficient as a business.

One of the things we learned very quickly was that sending people on airplanes to visit customers was very expensive and not a good use of time. We did most of our business over the phone and over the Internet. We did that in the early days because we had to do it, and then it became part of the business model for us. Our cost of selling became much lower than that of our competition. Customers actually preferred our method because they could schedule a call with us and then get on with the rest of their day.

The financial discipline and the efficiency we built into the sales model was key. The biggest thing was that we always adapted to the changes in the market. We were never afraid to innovate our business model and pricing. We used to license the software as a perpetual license, and we changed that to subscription-based pricing. We used SaaS extensively in our own business because we did not want to invest in capital expenditures. We adapted to the market as it changed.

We recognized what a big opportunity cloud computing would be, and we adapted the company from a technology and business model perspective. We got the desired outcome. This past week, Goldman Sachs published a report of large software M&A activity, and ours was the second-largest multiple that has been paid in the past three or four years for a software company. That makes us feel good about what we have achieved.

SM: It is a great story. Congratulations on your success.

This segment is part 7 in the series : Creative Bootstrapping To A 350 Million Dollar Exit: Nimsoft CEO Gary Read
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Yes, it's a great story, Sramana. Inspiring. Thanks for publishing this interview.
The whole series was good, but I particularly liked the part where Gary says he worked in different roles to prepare for running his own company.

Congratulations, Gary.

– Vasudev

Vasudev Ram Sunday, June 27, 2010 at 8:37 PM PT