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I can't think off the top of my head of any B2B software investment that went to 0. It seems that this subsector is pretty much resilient to anything. Don't get me wrong you can definitely overpay for these assets and make shit returns, but does anyone have an example of something going to 0?
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Based on the WSO discussions, while it's rare for B2B software investments to completely fail to the point of being valued at $0, it's not entirely impossible. The resilience of the B2B software sector often stems from recurring revenue models and essential services provided to businesses. However, overvaluation and mismanagement can lead to poor returns.
For a B2B software company to potentially go bust, several factors might contribute: 1. Severe Mismanagement: Poor strategic decisions, inadequate financial controls, or failure to adapt to market changes can lead to a downfall. 2. Technological Obsolescence: In a rapidly evolving tech landscape, failure to innovate or keep up with technological advancements can render a product obsolete. 3. Intense Competition: Entry of a superior competitor with better solutions or more aggressive market strategies could significantly reduce a company's market share. 4. Legal and Regulatory Issues: Significant legal challenges or changes in regulatory frameworks affecting the business model could also lead to severe financial distress.
While these scenarios might lead to substantial devaluation, complete wipeouts are less common due to the inherent value in customer relationships and potential for turnaround or acquisition by other players in the industry.
Sources: What is the value of a business with zero income?, How is it possible to have a negative EV?, Millionaire by 30, DCF Modeling Course ~ Pre-training text.pdf, Promote from $500k to literally $0 - what do those who have been through a RE downturn recommend?
A couple that come to mind: Avaya, Aspect Software, Allen Systems etc..
Olive AI just like a year ago. It happens a ton - just most are small names so you don’t hear about it.
7ParkData, former Vista Equity PortCo
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