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Here is some more general advice: assume acquisitions are not going to happen, and that this whole conversation is probably a waste of time for you. Even if yo

by pg 13y ago

Here is some more general advice: assume acquisitions are not going to happen, and that this whole conversation is probably a waste of time for you. Even if you tell them everything they want to know, they either won't make an offer or will lowball you. And meanwhile it will have been a huge and uniquely damaging distraction. This model of the world doesn't imply any specific strategy you should follow, but you'll find that adopting it will change the way you think about the situation. You'll stop bending over backwards (why bother, since nothing is going to happen?) which will in turn make them take on the burden of figuring out how to make the deal happen, which they'll do if they're serious.

rexreed 13y ago
Good advice! But how do you respond to indications of interest? Just ignore them and say you are not interested until they are literally waving cash in front of you, begging to aquire you, or require that they follow specific steps to indicate real interest, such as a Contingent Offer with a due diligence deposit, breakup fee, and strict NDA? How is this done with the lots of sub $10M acquisitions that happen? Clearly deals are being done here, so I'm sure it doesn't pay to ignore bona fide offers, but obviously there's a lot of time wasters out there too. What do you advise your YC portfolio companies to do here? Just ignore all offers or refer them to their lawyers or investors?
- pg 13y ago
  Our first advice is not even to talk to acquirers unless you want to sell the company now. It's remarkable how often founders who don't actively want to sell will talk to acquirers anyway, just to see if they'll make some offer too good to refuse. But acquirers never do that. When their offers are surprising, they are always surprisingly low. And the conversation is far from zero cost. Very far. That's the other big mistake.
  - the_watcher 13y ago
    My assumption would be if an acquirer is willing to make you an offer too good to refuse and you aren't actively looking to sell, then not talking to them would be the best way to actually spur that offer.
3pt14159 13y ago
And take it from me, even if it does happen, you will probably regret it while you're vesting.
ChuckMcM 13y ago
A thousand times yes! This is exactly how you respond. If someone says "Would you be open to an acquisition?" You can say "Would depend on the particulars of the deal." And if they want more info you politely decline and say "If you're interested in making an offer for the company, make it, otherwise let's move on to other business." This advice is especially true of "big" companies trying to blind you with what you think of as "huge" potential only to try to see who your top employees are and whether or not they can poach them. People who are serious about a potential acquisition will tell you, without any other information, how they would price such a deal. Don't start due diligence and the distraction it entails until you have both a signed memorandum of understanding, and the potential acquired has to pay you if they back out of the deal.

by pg 13y ago

rexreed 13y ago

Good advice! But how do you respond to indications of interest? Just ignore them and say you are not interested until they are literally waving cash in front of you, begging to aquire you, or require that they follow specific steps to indicate real interest, such as a Contingent Offer with a due diligence deposit, breakup fee, and strict NDA? How is this done with the lots of sub $10M acquisitions that happen? Clearly deals are being done here, so I'm sure it doesn't pay to ignore bona fide offers, but obviously there's a lot of time wasters out there too. What do you advise your YC portfolio companies to do here? Just ignore all offers or refer them to their lawyers or investors?

pg 13y ago
Our first advice is not even to talk to acquirers unless you want to sell the company now. It's remarkable how often founders who don't actively want to sell will talk to acquirers anyway, just to see if they'll make some offer too good to refuse. But acquirers never do that. When their offers are surprising, they are always surprisingly low. And the conversation is far from zero cost. Very far. That's the other big mistake.
- the_watcher 13y ago
  My assumption would be if an acquirer is willing to make you an offer too good to refuse and you aren't actively looking to sell, then not talking to them would be the best way to actually spur that offer.

3pt14159 13y ago

And take it from me, even if it does happen, you will probably regret it while you're vesting.

ChuckMcM 13y ago

A thousand times yes! This is exactly how you respond. If someone says "Would you be open to an acquisition?" You can say "Would depend on the particulars of the deal." And if they want more info you politely decline and say "If you're interested in making an offer for the company, make it, otherwise let's move on to other business." This advice is especially true of "big" companies trying to blind you with what you think of as "huge" potential only to try to see who your top employees are and whether or not they can poach them. People who are serious about a potential acquisition will tell you, without any other information, how they would price such a deal. Don't start due diligence and the distraction it entails until you have both a signed memorandum of understanding, and the potential acquired has to pay you if they back out of the deal.