Question: What is one thing young entrepreneurs should be aware of when considering an acquisition offer?
Question: What is one thing young entrepreneurs should be aware of when considering an acquisition offer?
Question: What is one thing young entrepreneurs should be aware of when considering an acquisition offer?
Non-Competes
"We have helped with dozens of acquisitions and one of the biggest issues is whether the entrepreneur will be prohibited from participating in a competing venture. Entrepreneurs should pay particular attention not only to the duration and geographic scope of the non-compete restrictions, but also to the definition of a "competing venture," particularly if they already have one in mind."
@DougBend
Comfort Level
"You are going to be stuck working with the acquirer for at least a while. You want to do a gut check and make sure you are committed to work with them and that you are comfortable with them treating your employees fairly through the process. Don't move too fast and sell to the wrong party."
@andrewangus
Due Diligence
"When being acquired, you want to make due diligence easy for the acquiring company, but it's also important to make your own due diligence a priority. Make sure your employees are in good hands with the acquiring company -- check their P&L statements, get client feedback, get past employee feedback and definitely have your lawyer thoroughly vet them."
@topinfographics
Control
"A lot of people start their own business because they can't function any other way. They like to be in control of their own destiny. When your company is acquired, you will now have to answer to somebody else that's not yourself. It's important to ask yourself, "Will I be able to handle going back to not being my own boss?""
@cassiepetrey
Cultural Fit
"When getting acquired, you want to assess the company that wants to acquire you. What type of culture do they have? Do they have a working environment that you and your team are excited to work in? This is very important as it can impact your team morale and the success of the acquisition."
@RandyRayess
Value of Time
"Young people tend to discount the value of time. When you're young, cash means a lot because you can make a return in other investments. It's fine to take cash as long as you make good use of it. But remember that keeping a small piece of a company can turn into something huge over time. Don't be afraid to do a deal and take some cash, but fight to keep some kind of upside in the future."
@milesj
Closing Costs
"Just like in a real estate deal, be aware of “closing costs.” These might include hefty attorney fees, separation agreements, stock triggers, taxes, etc. Determine your real “take-home” payout before agreeing to a deal. I’ve seen many transactions that appeared attractive in the beginning end up netting a minute sum."
@gideonkimbrell
M&A Advisors
"Having been on the buy and sell side of mergers and acquisitions multiple times, I can tell you the single most strategic thing you can do if you are going to sell your company is hire an M&A advisor. Many M&A advisors will work on a performance fee (4-6 percent of a transaction) and will help you get a higher exit price and will also help you with all the details of negotiating and closing the deal."
@krisjonescom
