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> We had a handful of meetings between with their business development team and executive teams, and their engineering team did a thorough technology review of

by chdir 12y ago

> We had a handful of meetings between with their business development team and executive teams, and their engineering team did a thorough technology review of Groove. I'm curious, why would you let them do a thorough technology review of your startup in the first place? (Edit: Because it can be dangerous)

mattzito 12y ago
Depends on what their definition of "thorough" is - it's very standard to have architectural and design discussions pre-term sheet. However, you defer any deep dive into code or structure or "secret sauce" until a term sheet is signed and you're in the due diligence process (and typically you'll have a neutral third party due any direct code reviews).
atmosx 12y ago
Because they wanted an exit? Or because the other party asked nicely!!!
melvinmt 12y ago
I suspect it was allowed to foster a potential partnership.
- chdir 12y ago
  The blog says: It’s not a company that would be a natural product partner for us.
creeble 12y ago
I'm curious about this as well. It would be good to know how groove sorted out whether the company was just kicking tires, or looking at potential competition, thinking about a partnereship, or considering an acquisition. At some key point, it must have dawned on groove (or maybe not) that they were going to receive an offer. I think the context of that happening would be educational.
- chdir 12y ago
  Here's the reply from the founder, to the comments on his blog : Q: Alex - I'm curious why the company was doing such deep due diligence on you in the first place? Was this for a potential partnership opportunity (you said it wasn't a natural fit?) Or were you simply receptive to an acquisition offer at that time, even if you weren't sure you actually had a genuine interest in selling? ... A: Thanks for the comment, Michael. The conversation steered toward a potential acquisition very quickly. I'm not opposed to exploring opportunities, so the meetings went on. It wasn't until after the offer was made that I decided to turn it down.
nthj 12y ago
This stuck out to me, too. This is exactly the scenario where you want to bring in a third-party consulting team. My team has been hired for this role several times: we receive full access to the technology stack and the target's engineering team. We then prepare a thorough report that the potential acquirer can ask us questions about, discuss any concerns, and request potential solutions to any issues and associated costs. This has at least three benefits: 1. Isolating the target from revealing their IP to the acquirer, 2. We're experts in the target's stack (say Rails), whereas the potential acquirer may be more of a Java or Django shop, and be unaware of stack-specific issues to look for, 3. Allowing us to offer an unbiased opinion: we don't have any vested or emotional interest in the sale going through or not, so we can be pretty blunt about anything that might be an ongoing issue. I won't say how much we charge for a service like this, but it's absolute flea spit compared to the $14 million on the table.
- gbrits 12y ago
  Interesting. What would you the keyword be to search for such services?
  - AznHisoka 12y ago
    not all businesses rely on SEO.
  - gbrits 12y ago
    @AznHisoka: I'm interested in knowing what term the type of services the parent's company offers generally go by. Something like "outsourced technical due diligence" perhaps?
  - nthj 12y ago
    I'm not sure, we received our gigs through referrals. I've long thought I should set up a landing page for this kind of service—this seems pretty well-received on HN so maybe I'll finally get around to it now.
- chdir 12y ago
  First time I've heard about such a service. Sounds useful. Just curious, no offense intended, but how would I go about trusting a third party company which likely has much lesser reputation than the potential acquirer.

by chdir 12y ago

mattzito 12y ago

Depends on what their definition of "thorough" is - it's very standard to have architectural and design discussions pre-term sheet. However, you defer any deep dive into code or structure or "secret sauce" until a term sheet is signed and you're in the due diligence process (and typically you'll have a neutral third party due any direct code reviews).

atmosx 12y ago

Because they wanted an exit? Or because the other party asked nicely!!!

melvinmt 12y ago

I suspect it was allowed to foster a potential partnership.

chdir 12y ago
The blog says: It’s not a company that would be a natural product partner for us.

creeble 12y ago

I'm curious about this as well. It would be good to know how groove sorted out whether the company was just kicking tires, or looking at potential competition, thinking about a partnereship, or considering an acquisition. At some key point, it must have dawned on groove (or maybe not) that they were going to receive an offer. I think the context of that happening would be educational.

chdir 12y ago
Here's the reply from the founder, to the comments on his blog : Q: Alex - I'm curious why the company was doing such deep due diligence on you in the first place? Was this for a potential partnership opportunity (you said it wasn't a natural fit?) Or were you simply receptive to an acquisition offer at that time, even if you weren't sure you actually had a genuine interest in selling? ... A: Thanks for the comment, Michael. The conversation steered toward a potential acquisition very quickly. I'm not opposed to exploring opportunities, so the meetings went on. It wasn't until after the offer was made that I decided to turn it down.

nthj 12y ago

This stuck out to me, too. This is exactly the scenario where you want to bring in a third-party consulting team. My team has been hired for this role several times: we receive full access to the technology stack and the target's engineering team. We then prepare a thorough report that the potential acquirer can ask us questions about, discuss any concerns, and request potential solutions to any issues and associated costs. This has at least three benefits: 1. Isolating the target from revealing their IP to the acquirer, 2. We're experts in the target's stack (say Rails), whereas the potential acquirer may be more of a Java or Django shop, and be unaware of stack-specific issues to look for, 3. Allowing us to offer an unbiased opinion: we don't have any vested or emotional interest in the sale going through or not, so we can be pretty blunt about anything that might be an ongoing issue. I won't say how much we charge for a service like this, but it's absolute flea spit compared to the $14 million on the table.

gbrits 12y ago
Interesting. What would you the keyword be to search for such services?
- AznHisoka 12y ago
  not all businesses rely on SEO.
- gbrits 12y ago
  @AznHisoka: I'm interested in knowing what term the type of services the parent's company offers generally go by. Something like "outsourced technical due diligence" perhaps?
- nthj 12y ago
  I'm not sure, we received our gigs through referrals. I've long thought I should set up a landing page for this kind of service—this seems pretty well-received on HN so maybe I'll finally get around to it now.
chdir 12y ago
First time I've heard about such a service. Sounds useful. Just curious, no offense intended, but how would I go about trusting a third party company which likely has much lesser reputation than the potential acquirer.