

Mechanics of a Small Acquisition - jhchen
http://quotidianventures.com/post/28411675934/mechanics-of-a-small-acquisition

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therealarmen
_Believing that the finish line is just yards away and finding that it is
actually miles is not going to be good for your company’s morale._

I've learned this lesson the hard way. It's easy to get caught up in
acquisition discussions, so be careful not to get ahead of youself. The cost
for the acquirer to engage is much less. They are larger and sometimes have
full-time staff devoted to M&A, while your startup's bandwidth is very
limited.

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wangarific
It's also difficult to avoid getting so excited and consumed by the process
that you lose focus on what your business is actually doing. The acquirer is
sending their deal team but you won't have one working for you (even if you
get a banker/broker, it still takes up a lot of the founders' time), so
someone still needs to mind the store.

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sovande
Interesting read, but for my part, I'm much more interested to learn _how_ to
start the process. That is, tips on how to position your company to make it a
candidate for acquisition. (Apart from a great product and name of course -
got that). Ways to flag potential suitors? And ways to make it clear that you
are looking for buyers? etc. Any pointers or text to look at would be much
appreciated.

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king_magic
Ditto. I'd like to know if it is a process that really only starts once
someone has noticed you, or if it is something an owner can push for. If so,
what is the best way to do this?

Right now, my strategy is to pursue integration and use it as an avenue to
acquisition. Not sure if it's the most viable method, though.

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ScottBurson
It's as with any negotiation: whoever needs the deal the worst is in the
weaker position. There is such a thing as shopping a company around looking
for an acquirer, but you're unlikely to get as good a deal as if they come to
you.

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ActVen
This is very reflective of the acquisition process my company went through
when it was acquired(Priced at $13 million). However, one area that can't be
emphasized enough is the distraction, time, and mental capital that this
process entails. If you are not careful, it can hurt your business and its
trajectory. Luckily, we had good people running the business for the founders
while we concentrated on the acquisition process. One area not addressed very
closely in this article is the difficulty of not sharing the possible
acquisition with employees as you go through the process of gathering all of
the due diligence data and having all of the meetings. Of course, keeping the
acquisition process a secret from your employees isn't always required...but
in our case it was. That added to the stress of the due diligence process for
us.

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maxpalm
There's little public information about small acquisitions and how they happen
-- thanks for sharing. Everyone would be better off if there more information
and transparency around these processes.

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wangarific
I went through a small acquisition (single digit millions) and we're building
a membership site that would help people understand this process (from the
seller's perspective) and the potential pitfalls, what sorts of things do you
think must be addressed? Or perhaps need greater attention?

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maxpalm
What are the things that drive price? What does the diligence process look
like? Managing telling employees vs secrecy?

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camz
I've written an ebook about the due diligence process and I could write a post
that explains it if enough ppl are interested

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ringoboo
Yes please

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basilpeters
Me too. Thanks.

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danielweber
I knew of one company that was, despite wanting to be acquired, made it as
hard as possible. Someone showed up with the "accept no other offers for 90
days" and the company freaked out that they were being pressured. All
discussion ground to a halt after that.

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pronoiac
Has anyone collected advice for after the acquisition? I'm thinking things
like:

* Give yourself six months or so after joining before finalizing plans to sunset your original systems. It gives you time to work out the lay of the land re: political and software integration.

* If you expect more manpower in development or maintenance, get it down in writing.

Thoughts?

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orangethirty
Off-topic:

I love the design of their page. The logo is just very attractive to me. It
has a sort of mechanical-organic look to it. Great visuals.

