I just attended a breakfast hosted by Next Step, The Brenner Group and K&L Gates on how to position your startup for acquisition. There’s a lot of common sense that goes into it. I picked two halves of a pb&j because I think that’s what best represents a merger or acquisition – when the additive results tastes great and keeps the customers coming back to buy more. Here are a few meaningful points I took away:
- Position your self for an acquisition, such as partnerships with potential acquirers. Think about this in your product strategy.
- Think of your competition from your acquirer’s perspective. You may not necessarily compete for the same customers, but maybe there’s similar technology/services out there that you would be similar to from an acquirer’s perspective.
- Be mindful of your intrinsic low value customers vs. your high value and strategic customers. Low value may be online sales customers, ad revenue customers, etc. High Value and Strategic customers will usually be of the highest interest from a potential buyer
- Accounting / GAAP / Tax compliance – make sure this is all legit. I repeat, make sure you are fully compliance here. 1, it can really delay due diligence not to have all your paperwork or be out of compliance. 2, it can slow down the due diligence and you may not have the resources to sit through it. 3, it could be used against you during negotiations as the price can lower with increased risk. 4, if a public company is acquiring you, they will have to do a full audit with the SEC w/in 75 days of purchase. Finally, as you are positioning yourself for acquisition, you may want to have your company audited – your company will look stronger for it, and you’ll also avoid any delays during due diligence.
- Make sure all your other ducks are in order, cap table, previous employees, founders that left, board seats, etc. You (and your acquirer) don’t want any puppies coming out of the closet during or after acquisition.
- Global acquirers? They’ve seen a lot of global investment, and think the market might be opening up to more global acquisitions with companies looking for a presence here in the valley.