A HoldCo leader with founder experience has an 'unfair advantage' in sourcing proprietary deals. Direct outreach from one founder to another builds a level of trust and rapport that purely financial buyers or junior associates cannot easily replicate.
The surge in Australian VC funding in 2020-21 created 500-900 software companies that are now under pressure to find an exit. This cohort of 'venture orphans' represents a significant, time-sensitive acquisition opportunity for HoldCos and other buyers.
A powerful filter for any potential acquisition is asking: 'If this were the last business we could ever buy, would we still want to own it?' This simple question forces a long-term, operational mindset and helps avoid deals that rely on future exits or financial engineering.
The HoldCo model provides a formal 'language' and structure for entrepreneurs who are more interested in the broader business of technology—investing, scaling, and marketing—than in solving one specific problem, offering an alternative to the dominant VC narrative.
Unlike pure SaaS investors, a HoldCo can view technology services revenue not as a low-multiple distraction but as a strategic advantage that provides deep customer intimacy, market intelligence, and a pathway to developing higher-margin IP.
In markets like Australia where tech M&A is less mature, a HoldCo's primary job during sourcing is often educational. They must patiently reset founder valuation expectations, moving them away from inflated media headlines and towards fundamentals like profitability and comps.
To ensure true alignment and 'skin in the game,' offer proven managers the opportunity to buy into the HoldCo's equity rather than giving them stock grants. People value what they pay for, creating a stronger sense of ownership and long-term commitment.
Unlike traditional funds that face pressure to deploy capital within a set timeframe, a HoldCo's greatest strategic advantage is patience. Value is created by waiting for the right opportunity at the right price, not by rushing to do deals.
Leverage the cash flow, operational playbooks, and market insights from a technology services business to fund and execute a software acquisition strategy, as demonstrated by Terum Capital's origins.