Building to Be Bought? Invest in R&D

"I often get asked by start-ups planning for a future sale if it is better to invest in the business' infrastructure or should they just put all money back into R&D?

In just about every case I err on the side of R&D; however, I do promote infrastructure spending around people (and processes) in three areas: (i) your CFO (finance & accounting); (ii) your HR manager (people & culture); and (iii) your CTO (IP development & management). You should plow everything else aggressively into R&D.

Now many are probably wondering what about sales & marketing, facilities, integration or customer support? Those are important, but I wouldn't invest heavily in them and certainly outsource them if possible. My thesis is this: don't make long-term infrastructure investments in assets that an acquirer already has, instead invest in assets they don't have and need your product, IP, customers and market share..."

Read more in this Confessions of a Corporate Dealmaker post.

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