Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: My startup got an an acquisition offer. Please share your advice!

news.ycombinator.com

Post reply on HN
Print view View original

11–20 of 36 posts

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#12

Post by jacquesm »

This is not something I'm going to be able to even begin to answer in a comment on a website, that's a couple of hours just to document the whole process and make it understandable if you have no experience.

First step: get a corporate legal eagle on your side, one that has done this multiple times and has a good track record. Find someone near you that has sold a business and ask for a referral, that should help you.

You will be doing technical, legal and financial due diligence (financial only if they buy your company, not if they only buy the product).

You will need to investigate the difference between an asset sale and selling your equity, in a deal like this that can make a huge difference tax wise!

You need to find an entrepreneur close to you that has gone through this to be your 'second opinion' on anything you do.

Try to move from 'telephone conferences' to more email based communications and keep the emails. Do not negotiate for yourself, place another party in between during the negotiations (for instance your lawyer).

Set yourself a target price and be prepared to walk away if it looks like you're not going to make your target.

Set that price now, not when you're negotiating.

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#13

Post by nlavezzo »

You didn't really ask this, but here goes... Do you really want to sell your company before it's out of private beta? If your product (and yourself as an employee) are worth six figures now, what is the likelihood that will decrease after general availability? That is an actual question though, not rhetorical.

If you're not confident in continuing to increase the value, you may want to cash out now... But you're only alive and productive for so many years, and developing a product people are interested in isn't something you can just turn around and do again automatically. I think if it were me, I'd probably hold out and keep rolling the dice if I felt they were loaded in my favor :)

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#15

Post by [deleted] »

michael_dorfman wrote: post #5

Lawyer up. Acquisitions can be hairy. My first startup was acquired in a semi-hostile takeover; I'm not able to discuss the details, but I can say that a lawyer (and a trusted advisor-- not necessarily the same person) would be a good thing for you right about now. Beyond that, I'd think about the bullet points of what it is you are after. 6 digits cash up front is nice, but what else are you looking for? In the abse…

[deleted]

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#16

Post by _delirium »

jon_dahl wrote: post #2

Not that I'm an expert on this sort of thing, but I'll bite. * Get a good lawyer if you don't have one already. If they're a Silicon Valley company, consider getting a lawyer at a top SV firm (Orrick, Gunderson, Wilson-Sonsini, etc.) and asking them to defer fees until the acquisition goes through. That way, you're not out anything if things fall through. (Ask for a referral to an attorney on HN and I'm sure you'll g…

Are top SV law firms' fees in the price range where they'd make sense for low-six-figures acquisition? Not a rhetorical question; I have no idea if you can expect to pay closer to $10k or closer to $100k for their services.

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#17

Post by ryanjmo »

1) The very first thing you need to do is keep working like the aquisition is not going to happen because these things more often fall apart than go through and it can really screw up your start-up if you start planning for it going through.

2) Next, you need to decide if you want to stop working on your own thing and start working for someone else and figure out the minimum price you would do that for. If you would accept one dollar less that is not a minimum price.

3) Next, you need to find out if this company will meet that price.

4) If they will meet that price, only then should you get a lawyer.

Getting a lawyer as a first step is terrible advice that will cost you a lot of money and a lot of time on something that 1) you many not be interested in 2) may not actually happen.

We were in a similar situation a month ago and this was basically the advice we compiled from angels, people at YC and pervious YC companies that were bought.

We ended up mostly ignoring the acquisition talks because we weren't that interested in being acquired and (as people told us would likely be the case) they did not go through. It would have been a huge waste of time and money if we got a lawyer like some people on HN suggested, before actually figuring out steps 1-3.

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#18

Post by throwaway_123 »

gojomo wrote: post #9

Did you know of the company before they contacted you? Do you know of their reputation or have common-contacts with which to check it? Do you know them well enough to know you'd want to work with them? Those would be the foremost questions for me.

They are quite established and offer an exciting environment.

Re: Ask HN: My startup got an an acquisition offer. Please share your advice!

#19

Post by gyardley »

_delirium wrote: post #16
jon_dahl wrote: post #2

Not that I'm an expert on this sort of thing, but I'll bite. * Get a good lawyer if you don't have one already. If they're a Silicon Valley company, consider getting a lawyer at a top SV firm (Orrick, Gunderson, Wilson-Sonsini, etc.) and asking them to defer fees until the acquisition goes through. That way, you're not out anything if things fall through. (Ask for a referral to an attorney on HN and I'm sure you'll g…

Are top SV law firms' fees in the price range where they'd make sense for low-six-figures acquisition? Not a rhetorical question; I have no idea if you can expect to pay closer to $10k or closer to $100k for their services.

They bill by the hour. Rates are hundreds of dollars an hour depending on the lawyer - the paralegal is cheaper than a partner. In my opinion, for low six figures, the deal would have to be ridiculously simple for the fees to make sense for both you and them.
Post reply on HN