Ask HN: Big company looking to acquire us, I'm terrified

Great presentation! Thanks for sharing.

I've been in this situation before. I did it all myself - it worked out OK. In hindsight, though, I'd advise a lawyer if you can possibly afford one as it could have gone horribly wrong ;-) (Others here have given better advice on that part.)

If you decide to go it alone anyway, you must first get a good feel for their true intent. It's like dating. Don't give it all up or get heavy on the first date. Keep things cordial and don't act secretive or defensive, but spend time talking to them and feel out what they're gunning for. You'll need some time after to reflect on things they said or impressions you got from their manner. The more people on your side who share in the talks, the better.

Like someone can detect a shady date even if they don't overtly do anything nasty, you should be able to sniff out bad intentions from the buyer. If they're just digging for information or yanking your chain, unless they're really smooth manipulators, you should get a bad feeling in your gut after the first or second serious talk.

Couple 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) about strategy, execution plan etc. You need to be open about the numbers to give them confidence. You need to be closed about strategy, execution plan because a huge number of deals fall through because the acquirer decides to build the same stuff inhouse (typically prodded on by internal engineering teams)

3. Build confidence. Talk about how this marriage will be best for both the teams. Reserve the negotiations around cash towards the end of the deal. When you start negotiating about cash, the deal is already done.(Except when it isn't - see point 1). Negotiating the deal is though topic for another post.

4. Decision making in big companies is slow and hard. The decision to acquire your startup will need to be driven by someone internally in that company. Find out who your 'champion' is in that company. Maintain regular contact with him, though dont push him too much. If some time elapses without any communication, ping him and check with him.

5. Most deals that go through will go through quickly. The decision in most of the deals which go through is already made. You just need to nod your way along in such cases. In other cases there will be just one big issue that you need to build confidence upon. If the talks get extended, it is likely that the deal will not go through.

6. The Zen Rule for Deals: Assume that the deal will NOT go through and plan your startup accordingly. The person who is willing to walk away is the stronger person in any deal. Detachment will allow you to negotiate from a position of strength.

+1. On more than one occasion I've seen startups flounder around during acquisition negotitions without actually pushing forward. 6 months later they're in trouble. I've even seen big companies use these negotiations as a stalling tactic.

Don't let it happen. Keep your foot on the gas, and make them put-up or shut-up. Get a letter of intent straight away. Due diligence isn't an excuse to stall. Negotiate a schedule and stick to it. If they can't meet their end (without obvious good reasons) forget it and move on.

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 unless Big Company really just wants to get this done before the end of the tax year).