On Day 1 of DLA Piper's Global Technology Summit, Louis Lehot, co-managing partner of DLA Piper's Silicon Valley office and co-chair of the firm's Emerging Growth and Venture Capital practice, gave a shout-out to the "super heroes of tech" while leading a discussion on the "Rule of 40," what to anticipate in an exit and the role of talent in an acquisition, among other hot topics. 


  • Nicolas Macquaire, CEO of Kloop
  • Kevin Iudicello, Managing Director of Pagemill Partners
  • Jon Sakoda, Founder and Managing Partner of Cisco Ventures
  • Nick Washburn, Managing Director and COO of Intel Capital
  • Adam Dolinko, CFO of NextJuris

Louis' individual insights on the M&A landscape can be found here.

Q&A highlights

Lehot: What can you tell this room about valuation and the Rule of 40?

Iudicello: The idea of 40 percent growth as a tipping point is weird: that you're addressing a market opportunity that you don't have the resources to address. If you're organically achieving 40 percent growth, and your product is growing faster than you can expand and operationally address, that means there's demand in the market. I can tell you that when acquirers look at deals, they think, "what can we push down channels without adding people?" They're looking for high-gross margin, meaning there's a huge opportunity to push it down existing channels where it's productized and developed, but the target just doesn't have enough resources to execute in the market, and there's a viral demand for it.

Valuation-wise, gross margin is often overlooked and truly an example of the leverage an acquirer can bring to the business to realize value. If you take SaaS companies, a high gross margin there means that the SaaS business is truly multi-tenet; the company can offer the product to different customers and to different verticals without customizing it each time. For buyers looking at you, that's super profitable revenue growth and they will pay for it, and that's when you have a lot of leverage.

Lehot: Do you think about exit at the outset?

Dolinko: You focus on building a great company, which will give you more flexibility if you have an M&A opportunity, because what drives the behavior of the large organization that's acquiring you is competitive tension. Given the dynamics of a particular deal, you may not want to do a multi-party process. But if you are considering the option of continuing to run your company and grow it and be independent, the concern for the company that's looking at you is: "they don't have to sell to us, and if we don't acquire them, they may end up in the hands of our competitor" – and that's always there even though you never have to say it.

The other thing is maintaining the focus on running the business while you're in the midst of that process. One of the biggest problems I see at any size organization, buy-side or sell, is that they lose their focus on actually running the business. It's important to convey to the larger company that you're thinking about how you're going to optimize integration and execution beyond the closing of the transaction, because that's what really energizes a large company – how do you move the dial for them going forward, and how are you going to integrate smoothly? Spend time on integration planning, and not just cost-saving synergies, but concerns like revenue, and how the post-acquisition company is going to be operated culturally. There are many layers deeper than the sale price.

Lehot: If you're focused on investing, what are the biggest opportunities that you're focused on?

Washburn: For me, it's about pushing compute to the edge. A finite example is a mobile phone. There is still a lot of infrastructure that needs to happen, with the coming of 5G, to address latency problems, and there's going to be very heavy compute loads going at the end of the network.

Lehot: What are the hottest areas in terms of sub-verticals of tech?

Sakoda: I've been focusing on B2B companies and enterprise, and in spite of the fact that AI is viewed as overhyped, underlying all AI is a set of principles I really believe in, and that is ultimately using software and data to automate what humans do at work. I actually think there's no greater opportunity in enterprise software than to automate and augment and assist and in some cases replace what people are doing at work. I can't think of a bigger investment opportunity than that.

Lehot: How do you motivate employees to deliver – ahead of a sale – especially the key ones?

Macquaire: I didn't tell them they were key employees! It's too dangerous because they could block the deal easily. I always try to motivate my employees by sharing the same vision with employees, and also sharing the shares of the company stock of the company. I think everyone is looking in the same direction when everyone is on board and looking  for the same story. Everybody is very motivated by the acquisition and completely understanding of difficulties. It requires them to work more and give me good news for the acquirer, but my goal has always been to build that trust to ensure a solid long-term relationship.