Flip through any technology magazine and you’ll find headlines touting teenage sensations who built businesses from their bedrooms, only to sell them X months later for Y million dollars. These types of stories will make you think that selling is the ultimate goal of any startup entrepreneur, but there are multiple realities when it comes to acquisition agreements.
Acquisitions are everywhere. While the big name players make the news, largely due to eye-watering numbers in their transactions, there are plenty of smaller acquisitions taking place under the radar. Startups will look to buy out others in an effort to gain immediate user traction or add niche technology to increase their reach.
Any startup entrepreneur worth their weight in bitcoins know who the major players are and would undoubtedly experience that first-date knot in the stomach were their number to appear on the caller ID. This anxiety and excitement would be for good reason. If a startup has come up on the radar of the likes of Google or Twitter, they’ve already ‘made it,’ to some degree.
But regardless of what the fantasy of being acquired would have you believe, it isn’t all paydays and early retirements. The devil is in the details, and if you’re not prepared, the deal may not match the cover story you imagine.
Here are some things to keep in mind before signing your name on the dotted line:
1. Take a breath and look beyond the number
When an acquisition company comes knocking, it’s always prudent to maintain a healthy dose of cynicism. Acquisition propositions are undoubtedly flattering; for a startup, it’s complete validation of the business model they set out with. But knowing why a particular company is approaching you is key. Generally, their interests go beyond simply wanting to merge your technology with theirs.
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