FOR IMMEDIATE RELEASE

Entrepreneurs David Carter, CEO of S5, and Brad Walters, President of EarlyRun, LLC, Address Utah Executives at Utah Technology Council (UTC) Event

SALT LAKE CITY , UTAH – September 7, 2007 – What are the earmarks of a good Merger/Acquisition? There are a number of facets to a strong exit, according to Utah Entrepreneurs David Carter, CEO of S5, and Brad Walters, former CEO of MaxStream and current CEO of EarlyRun, LLC. Carter and Walters shared their insights with Utah executives at the Utah Technology Council’s breakfast event this week.

There are many good times and good reasons to sell a company, Carter maintains. Competitive issues and market timing are some of the factors indicating a good time to sell.

Carter recommends that companies strongly protect their employee and shareholder interests, particularly when it comes to the vesting schedules that will allow them to benefit from a new deal. “Remember, these are the people you’ll be working with in the future,” he advised.

Carter also pointed out that in several of his own buy-out discussions, suitors have threatened that if he didn’t sell, they would put him out of business by competing with him through somebody else. He cautions entrepreneurs to be careful in this setting when a company is disclosing proprietary information to a potential future competitive foe.

Other red flags he noted are a caution against earn-outs, buy now pay later, sales to private companies that have a hard time getting liquid, and he points out that deals are more risky when the payment is stock.

Brad Walters, who successfully sold MaxStream to Digi International in July, 2006, noted that he wished he had heard Carter’s recommendations prior to his successful 2006 sale. Walters gave additional points of insight including the advice to use an experienced attorney, to never personally indemnify a deal, to cap company indemnification, and to have employees sign off on all representations to ensure that all material facets of the disclosure to the new buyer are agreed upon in advance.

“Proceed with one hand perpetually placed on the ‘plug’,” Walters noted. “Assume the deal will not work as you look at it, and examine all facets from that perspective.”

Both Carter and Walters advised entrepreneurs to disclose everything, to be bluntly and brutally honest in the transaction, and to make sure the company who acquires you fully understands all the risks.

Both executives noted the high risk of failure and the high prevalence of litigation after the majority of mergers and acquisitions—they noted that four out of five Merger/Acquisition deals ultimately do fail. However, they noted bright prospects for sellers when they have disclosed fully, used expert professional services, and have looked out for their employees and stakeholders in the course of completing their sales.

For more information about UTC or about upcoming events, readers can visit www.utahtechcouncil.org.

About UTC
As the premier professional organization for Utah's 4,300-plus technology companies, the Utah Technology Council exists to form closer relationships with industry and community leaders, develop superior management talent, sharpen professional skills and help gain access to capital. For more information on UTC, please visit www.utahtechcouncil.org.

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