One of the most well-kept secrets in silicon valley is the number of failed acquisition efforts for startup companies. Given that neither the buyer, the seller nor the intermediary advisors are willing to candidly discuss “what went wrong”, there is little information available on what a startup goes through in the acquisition transaction.
From my own perspective, the most common reason for a failed transaction is encountering new information during the due diligence period that is material to the expectations of the buyer or seller.
Most due diligence efforts do find issues, and many times those issues can be addressed by lowering the valuation or revising the deal terms.
With this perspective in mind, the best strategy for any private company wishing to be acquired is to get your house (company) in order, execute on the company’s leadership strategy and be ready for the due diligence effort. The question is: What does effort this entail?
This podcast is Part 2 of Companies are Bought not Sold engages Ken Burke, Founder of MarketLive and Mark Addison, Xrocket advisor in a transparent conversation about:
- Defining the scope of the leadership strategy
- How to prepare the company to be ready for due diligence
- Why Ken turned over operations to the executive team
- How the investment banker was selected
- How the transaction was negotiated
- Mark’s approach to finding value or “hidden gems” in a company
- Ken’s perspective on resisting dilution in successive funding rounds
Join us for Part 2 of Companies are Bought, Not Sold.