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Re: undefined

#91

Post by jacquesm » Sat, Jan 29, 2011, 4:29 AM UTC

gte910h wrote: post #62

founder001 wrote: post #27

Earlier quoted context omitted.

Just to address this, we will not receive another offer. Period. It's annoying that I can't fully explain that without blowing our cover, but you'll just have to take my word on it :)

That's fine. This offer is still crap. Throw it in the garbage.

The offer is crap but the process may not be and some elements of the offer indicate the other party is serious, welcome to hardball. Throwing the offer 'in the garbage' will end the negotiations, the trick is to gain control of the dialogue and to push back as hard as you can without breaking off the deal to see what room there is.

Re: undefined

#92

Post by yuhong » Sat, Jan 29, 2011, 4:34 AM UTC

"Sorry for the anonymity but I didn't want our ignorance to be made any more obvious than it already is to the potential purchasers :)"

Why is that a problem? I often notice this kind of questions asked anonymously, and I am trying to figured out what is the problem.

Re: undefined

#93

Post by gfodor » Sat, Jan 29, 2011, 4:39 AM UTC

staunch wrote: post #55

jacquesm wrote: post #53

Earlier quoted context omitted.

They'll need a lawyer backing them up just to make sure they don't sign something really stupid. No way should they proceed without legal backup. Agreed on the bankers, they can and do kill deals, I've seen that happen up close. Oh, and they did get paid.

Absolutely get a lawyer and/or banker involved on your side, just be there to control all their interactions with the other side.

I don't have any experience involving bankers in a M&A deal but it's important that you monitor the work your lawyer(s) are doing pretty closely. Even good lawyers will have a tendency to want to refine the contract past the point of diminishing returns or go off and do random tasks in order to pad their hourly fees.

You can potentially get them to agree to a fee cap for the deal, but unless there's other reasons for them to want to do a thorough job (like future business with your acquirer, etc.) it'll probably do more harm than good.

All that said, you'd be absolutely mad to not have good lawyers on a deal like this. All it takes is one booby trap in your contract for all your hard work to get flushed down the toilet.

Re: undefined

#94

Post by gfodor » Sat, Jan 29, 2011, 4:45 AM UTC

aditya wrote: post #23

IANAL, and you should get one (see #1) ASAP. But a few observations: 1. Get a startup attorney (you probably already have one, who incorporated you, if you don't - use one of the bigger names (wilson sonsoni, gunderson, cooley)) 2. Figure out what your perfect offer would be, and counter 3. Rule #1 of any negotiation is to be willing to walk the fuck away if you're not happy. As soon as you become a little desperate,…

Great points!

#5 is a point here I haven't seen mentioned in the rest of the thread, so take notice! This might be very good advice, depending on your situation: this offer could provide excellent leverage to raise capital at a good valuation right now. Also, I don't think it would risk poisioning the well if you were to talk to VCs the way it might if you were shopping for other buyers.

Re: undefined

#95

Post by techiferous » Sat, Jan 29, 2011, 4:53 AM UTC

"has (without saying so) implied that they make an offer and that is it - they don't go back and forth on it."

This sounds like a negotiating trick. The truth is, they are not offering to buy your company as a favor to you. They are offering to buy your company because they want it. They are also not going to offer you the maximum price that they are willing to pay right at the beginning. If you just said "no" and walked away, I would bet that they wouldn't just let you walk away. They would start to negotiate. Everyone is willing to negotiate for something that they want.

Re: undefined

#96

Post by blankenship » Sat, Jan 29, 2011, 4:59 AM UTC

joshu wrote: post #63

drop me a line. i'm well versed in this process, the current environment, etc.

Jump on that offer quick.

Re: undefined

#97

Post by ndl » Sat, Jan 29, 2011, 5:22 AM UTC

I've never sold a company, but I've dealt with a couple of pretty questionable cofounding/employment contracts lately, and making a deal seem "very much like a standard-fair offer" seems to be an old trick. I had someone tell me they'd been using an agreement for years when there was an obvious typo and font change to show me it had probably been altered at the last minute.

Re: undefined

#98

Post by dwwoelfel » Sat, Jan 29, 2011, 5:33 AM UTC

nandemo wrote: post #83

cperciva wrote: post #34

Earlier quoted context omitted.

To me that would be reason enough to make sure I negotiated the deal... Sure. By "reject the offer" I mean to reject that offer, not that the offer couldn't be revised to become acceptable. If the deal is good they might be lowballing them anyway and they're scared the other party finds out by how much. It might be a good deal, but trying to convince someone to not consult advisors indicates to me a certain lack of e…

> It might be a good deal, but trying to convince someone to not consult advisors indicates to me a certain lack of ethics. As a general rule I don't think it's good to make deals with people you don't trust. That's an, er, interesting rule. A big part of modern financial and legal infra-structure is designed so that we can make business with people we don't trust. If you do business only with you people you can trus…

If by modern financial and legal infra-structure you mean things like stocks, futures, and derivatives, then I don't think I agree. The modern infrastructure insulates two parties in any transaction with brokers and exchanges.

For example, if the "losing" party on an options trade can't pay up, the exchange pays for them. The exchanges and brokers set margin requirements to reduce the risk of non-payers.

Re: undefined

#99

Post by SkyAtWork » Sat, Jan 29, 2011, 5:57 AM UTC

I have reasonably good background in this with a number of successful exits to various publicly traded firms. Drop me a line per my contact info and let me know what your industry is, as long as it isn't directly competitive with anything I'm working on or invested in, I'll sign an NDA and we can talk - if it is in an overlap industry, then the dance becomes a little more complicated. But I'll give you an hour of time and advice for free, and if you want my help beyond that, we'll figure something out.

Re: undefined

#100

Post by SkyAtWork » Sat, Jan 29, 2011, 5:58 AM UTC

It's reasonable to have SOME amount of the purchase value vest, but 100% is not reasonable. Common enough to get half or two thirds of it down and the other as earnout milestones.