

Ask HN: Contacted by a potential acquirer. How much data do I share with them? - duediligence

(I've been on HN for a long time, but wanted to post this anonymously, for obvious reasons.)<p>I developed a profitable bootstrapped web app a few years ago ... we have a strong subscriber base and show good growth, despite competing against some others in our space who've gotten a lot of media attention and funding.<p>I was contacted yesterday by a large web company wanting to discuss a possible acquisition. I wasn't expecting (or looking for) an acquisition ... I figured we'd run a 37s-style "Italian restaurant" for the life of the business. ... My question at the moment: When we have an initial phone call with the potential acquirers, what figures are we expected to provide? What data should we keep private?<p>For example: Userbase size? Monthly revenues? Growth rate? I imagine each of these could factor in (positively or negatively) to the size of the offer they make. What data would they expect us to make available before they've even made a formal declaration of intent? (And, if we get an LOI, what info would we then give them?)<p>I'd love any other advice / thoughts / article links / etc., but my main question at the moment deals with the issues of what to share / what to keep from them in these initial conversations.
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ActVen
Congratulations on the call. We just sold our business last year for 8 figures
to a company that contacted us out of the blue. We weren't on the market or
really thinking about selling at the time. Here are a few thoughts that might
be useful to you:

-Keep these two factors in mind: You are in control and this is a sales transaction(although a bit more complicated). Like any sales transaction, the first thing that is important is to learn as much as you can about the buyers needs. You should let them speak first about what their business is and why they might be interested in an acquisition. Go ahead and start off the conversation with questions about this if they don't start with talking about their interests. Feel free to probe further during their initial description if they aren't providing enough detail. During the first part of the call you want them to be doing most of the talking. This will allow you to describe your business in a way that is relevant to their goals and needs. Remembering you are in control is important because it is critical to display confidence and not look too eager at this point.

-What you share depends on the buyer's potential for being a competitor and the existence of an NDA. During the first call we spoke in very broad terms about the upward trend in revenues, but we didn't get into too many specifics. We waited until we learned more about the buyer, had an NDA, and considered our interest in selling. Because it is a sales transaction(see above), you will need to share enough to make them want more information and continue the discussions. Even if you get an NDA, they can still use the information if they buy a competitor or start something on their own. So, try and keep the "secret recipe" of your unique success a secret until after the transaction progresses a little further.

Let me know if you have any other questions. I have only gone through this
once, but I would be happy to share my experience with you.

~~~
guynamedloren
If you don't mind, I'm interested to know why you sold your company. I did a
bit of quick Googling and discovered the details of the sale, but I would love
to hear a firsthand account, especially since it was out of the blue and you
weren't even thinking about selling. Only share if you feel comfortable -
thanks! :)

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keiferski
Can't help you with the specifics, but I have some notes from an INC article
on negotiation. Might be useful (sorry for the horrible formatting, not much I
can do:

\--

INC Magazine Topic: Negotiations

1\. Before you get to the table

a. Know your alternatives

 _i. BATNA – best alternative to a negotiated agreement

ii. Be comfortable with walking away_

b. Know your counterpart

 _i. Research other company_

c. Know the standards

 _i. Frame your proposal within the other’s standards_

2\. Opening Gambits

a. Make an aggressive first offer

 _i. Make a reasonable and defendable

ii. Risky if your offer is too high or too low_

b. Present multiple, equivalent, simultaneous offers

 _i. Offer counterpart multiple (equal) offers to see what they prefer_

3\. Responding to the Offer

a. Make an aggressive counteroffer

 _i. Stick to your own target price_

b. Consider showing your hand

 _i. If counterpart is underestimating you, consider disclosing your BATNA_

c. Counter – no matter what

 _i. Always have a counter offer, even if their first offer is ideal_

d. Take when you give

 _i. When you do have to make a concession, diplomatically ask for a
reciprocal concession_

e. Avoid consistency traps

4\. Table Manners

a. Talk face to face

b. Sit at the corner of a table/side by side, not across a table

c. Only talk to ask questions

d. Mimic your opponent

e. Act like little things are a big deal, so that you can easily drop them
later

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ewams
How do you know I am not the one calling and just trying to get information
about your business since you are one of my main competitors?

~~~
guynamedloren
Exactly why he's made this post - trying to figure out what information to
keep private and what information to expose before formal negotiations begin.

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staunch
Don't say anything you wouldn't want your direct competitors and the world to
know until you have an NDA.

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luckystrike
This link has some good advice -
<http://jacquesmattheij.com/How+To+Sell+Your+Company>

