David Cohen of TechStars has written a good post about this -
http://www.davidgcohen.com/2010/06/18/you-have-acquisition-i...
Ask HN: Big company looking to acquire us, I'm terrified
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Re: Ask HN: Big company looking to acquire us, I'm terrified
#22Couple of quick points, though this is a very subjective topic so these might or might not apply. 1. Know that 99% of deals fall through. This one will also, except when it won't. More importantly, the deal is only done when the cash hits the bank. Deals are known to fall through even at very late stage. Falling through is the norm, going through is the exception. 2. Be open about numbers, growth etc. Be closed(vague…
This is extremely good information, thank you. We have been careful in how to describe to them what our long terms goals are without being specific what technology we have up our sleeves. It's been great reading HN for so long, I feel like I have the basics down - be calm, expect nothing, carry on as usual. But cross fingers. >Negotiating the deal is though topic for another post. I would like to read this post :)
Thanks for your kind comments.
Im not sure if I would be able to post about negotiations any time soon. Drop me a line when you enter negotiations and if you want an outside perspective. I will be happy to help. You can reach me through the feedback form of the site in my profile.
Re: Ask HN: Big company looking to acquire us, I'm terrified
#23David Cohen of TechStars has written a good post about this - http://www.davidgcohen.com/2010/06/18/you-have-acquisition-i...
Very interesting, thank you.
Re: Ask HN: Big company looking to acquire us, I'm terrified
#24Watch this great talk by entrepreneur Hadi Partovi on this very subject: http://www.seattle20.com/tv/clip/StartupDay-2010-Exit-Strate...
Probably the most sobering, necessary talk I needed right now. Thanks!
Re: Ask HN: Big company looking to acquire us, I'm terrified
#25Here are already a lot of tips about the local/tactical situation dealing with maybe beeing acquired. But what if it falls through (like it happens way too often)? Was it just this? Can we use this situation to get an advantage, if we get a deal or not?
There is where strategy comes in! Yes, you always have to look for alternatives to use this situation for your company.
For that you need to find out WHY they want to acquire you. For example: Google wants to acquire you, because they want to be in your market (http://bits.blogs.nytimes.com/2010/12/07/google-executive-no..., can't find the HN thread for this), then you can ask googles opponents, like facebook, yahoo, microsoft, if they are interested in a deal. That will increase the money you get from anyone and also your chance of beeing acquired.
Because I have no own experience in this matter I will not lead you in the wrong direction by giving you further tips. Maybe other people here can help to give a more strategic view of the situation. How else can an aquisition attempt be leveraged?
Other resources: http://venturehacks.com/archives#closing http://venturehacks.com/articles/diligence http://venturehacks.com/archives <- Actually just reading most of it is healthy itself for a startup who knows nothing about money things.
Re: Ask HN: Big company looking to acquire us, I'm terrified
#26You don't seem to indicate what I would figure to be a major concern for you right now: Do you or do you not want to sell?
I think you should come to this conclusion within your team before doing anything else. Considering you personally sound pretty conflicted, you're going to have a tough time "winning" this challenge if each one of you has different ideas of the ideal outcome.
Once you understand that - that is, the ideal outcome - work towards that. Don't get sidelined by big companies and big money. As bluethunder says 99.9% of all deals never happen, so they aren't worth putting more than .1% of your daily effort into (figuratively speaking here, of course).
I'd say this as well: Do not for a second believe that being acquired is some sort of growth mechanism for your dreams. It is by definition the exact opposite; the death of your company. No matter what, the company you have, its plans, culture, desires and particulars will cease to exist. This will happen despite everyone's promises and best intentions.
What will exist may or may not be something you can live with, but it won't be the thing you are living right now.
Re: Ask HN: Big company looking to acquire us, I'm terrified
#27Earlier quoted context omitted.
#4 is the most important on the list. There is someone championing this. You must figure out how they are, and what their motivations are. Not only to help the deal through, but understanding their motivations will help you understand if it's right for your team. Are they buying you just to get you out of the way? Is that ok with you?
We seem to be ok with #4 so far, but we'll see. They'd be buying us for our technology and staff, we've gone really far where they want to go and I've had an intimation that they've put some R&D into it already and figured out that it's pretty complex stuff to do well. It's been an honor to have so many great responses, I'll post back here with an update (some weeks from now.. Christmas is going to be nerve-wracking…
Having gone through acquisitions myself, I've learned that BigCo tax issues are entirely different than YourCo tax issues - i.e. they're going to think about taxes (cap gains, operating taxes, etc.) with different rules than you will.
In other words, don't worry about that part. :)
Re: Ask HN: Big company looking to acquire us, I'm terrified
#28The biggest problem with getting lawyers involved early-on is that it's their purview to protect your interests above all else, including an equitable, workable deal. It has been my experience that using lawyers too early will put ridiculous clauses in contracts that don't necessarily make good commercial sense or are even in the spirit of whatever negotiations you are trying to make. Additionally, lawyers are expens…
+1 for the key message here. Lawyers aren't negotiators, and you have to remember _all the time_ that they work for you in this negotiation, not the other way around. They will give you lots of advice, and you should think of it as such, and ask questions about the real risk you might be taking, and make decisions accordingly.
I've watched friends have sales fall through because they didn't trust their own judgment when faced with their lawyer's thoughts. Apply the same confidence you have (or fake) for building your product to the redlines from your lawyers.
Re: Ask HN: Big company looking to acquire us, I'm terrified
#29Whatever you do, be willing to walk away from the deal if you don't feel comfortable with the terms. That changes you from negotiating from a weak position to negotiating from a strong position all by itself.
Remind yourself of this: The really bad deals are the ones that you do and regret, those are far worse than the ones that you don't and regret.
Do not negotiate in person during the final phase, get an experienced M&A lawyer to be your front during the negotiations, if you can't afford that then get someone you know that is very well off and has done these kind of negotiations in the past. You are very strongly emotionally tied to the deal and likely to be read like a book by the party on the other side of the table. If you are not an experienced poker player, don't sit down at the table.
Don't decide things 'on the spot' or under pressure, always think them over.
Much good luck! I hope it works out for you and that you will get out of it what you want, beware of stock deals, lock-ins, non-competes, performance clauses and a hundred other things that might come your way, see 'experienced M&A lawyer' above. Oh, and pay your own laywer!!! Never rely on legal advice by the other party.
Re: Ask HN: Big company looking to acquire us, I'm terrified
#30The biggest problem with getting lawyers involved early-on is that it's their purview to protect your interests above all else, including an equitable, workable deal. It has been my experience that using lawyers too early will put ridiculous clauses in contracts that don't necessarily make good commercial sense or are even in the spirit of whatever negotiations you are trying to make. Additionally, lawyers are expens…
+1 for the key message here. Lawyers aren't negotiators, and you have to remember _all the time_ that they work for you in this negotiation, not the other way around. They will give you lots of advice, and you should think of it as such, and ask questions about the real risk you might be taking, and make decisions accordingly. I've watched friends have sales fall through because they didn't trust their own judgment w…
One that thing that can also cause problems is that in many situations the companies lawyers are acting for the company not the individual interests of the founders - if you have investors or a situation where the founders have different equity stakes then it can get messy as a particular deal may favor some people and not others.
I'd also recommend doing a lot research into the acquiring company - particularly if you are being paid in stack rather than cash. I know from bitter experience what happens when you get acquired by a company that looked healthy during the acquisition process then whose stock plummeted during the lock in period :-|