What’s the best way to sell your company?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Retrade – AVC

My view on retrades is that they are part of the way the investment and M&A business gets done. You should not get emotional about them. You should not walk away over them unless you have a better option. You should simply accept them as part of the way the game is played and deal with them as best you can. You can often negotiate a retrade. You won’t get back to where you were before the retrade but you can often do better than what is being sug… (read more)

What’s the best way to sell your company?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Retrade – AVC

The thing about retrades is it is a signal about the person or institution you are doing business with. Sometimes retrades happen for legitimate reasons. A typical one is the due diligence shines a bright light on a problem that was unkown at the time of the signing of the term sheet or LOI. That is the most common explanation for retrades. But sometimes it is legitimate and sometimes it is not. Understanding all of this and how it reflects on th… (read more)

What’s the best way to sell your company?

Paul Graham (Co-Founder & Partner at Y Combinator)
Don’t Talk to Corp Dev

[Just] wait till you’ve agreed on a price and think you have a done deal, and then they come back and say their boss has vetoed the deal and won’t do it for more than half the agreed upon price.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Retrade – AVC

My view on retrades is that they are part of the way the investment and M&A business gets done. You should not get emotional about them. You should not walk away over them unless you have a better option. You should simply accept them as part of the way the game is played and deal with them as best you can. You can often negotiate a retrade. You won’t get back to where you were before the retrade but you can often do better than what is being sug… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Retrade – AVC

The thing about retrades is it is a signal about the person or institution you are doing business with. Sometimes retrades happen for legitimate reasons. A typical one is the due diligence shines a bright light on a problem that was unkown at the time of the signing of the term sheet or LOI. That is the most common explanation for retrades. But sometimes it is legitimate and sometimes it is not. Understanding all of this and how it reflects on th… (read more)

David Jackson (Founder, Seeking Alpha)
If you sell your company, use an investment banker | A Founder’s Notebook

If you sell your company, use an investment banker

David Jackson (Founder, Seeking Alpha)
Amazon and the “insurance policy” acquisition | A Founder’s Notebook

If you’re happy to sell only for the money, fine. If you want your company to survive and thrive, perhaps “insurance policy acquisitions” aren’t great.

Ev Williams (CEO of Medium, Co-founder of Twitter)
When to Sell Your Company — Medium

[reasons to sell] 1. The offer captures the upside. Finances are only one perspective, but if you have many shareholders, it’s one you are obligated to take seriously. 2. Imminent threat. 3. Personal choice. Sometimes the founders or other key people may just be done. This is actually quite common and drives a lot of small acquisitions. It doesn’t apply as much as companies get larger, because everyone is (eventually) replaceable—especially if th… (read more)

Jason Lemkin (Managing Director at Storm Ventures, SaaStr.com)
Bad reasons to sell your startup | A Founder’s Notebook

Do not sell if you are at scale and have a committed team. Do not sell because of the competition, unless they are truly decelerating you and you can’t stop them. Do not sell because you are tired.

Paul Graham (Co-Founder & Partner at Y Combinator)
Don’t Talk to Corp Dev

Before agreeing to meet with someone from corp dev, ask yourselves, “Do we want to sell the company right now?” And if the answer is no, tell them “Sorry, but we’re focusing on growing the company. ” They won’t be offended.

Paul Graham (Co-Founder & Partner at Y Combinator)
Don’t Talk to Corp Dev

Distractions are the thing you can least afford in a startup. One of the tricks to surviving a grueling process is not to stop and think how tired you are. Instead you get into a sort of flow. Imagine what it would do to you if at mile 20 of a marathon, someone ran up beside you and said “You must feel really tired. Would you like to stop and take a rest?” Conversations with corp dev are like that but worse, because the suggestion of stopping get… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
Don’t Talk to Corp Dev

Corp dev people’s whole job is to buy companies, and they don’t even get to choose which. The only way their performance is measured is by how cheaply they can buy you, and the more ambitious ones will stop at nothing to achieve that. For example, they’ll almost always start with a lowball offer, just to see if you’ll take it. Even if you don’t, a low initial offer will demoralize you and make you easier to manipulate.

Ben Horowitz (Co-Founder & Partner @ Andreessen Horowitz)
When to sell your company — Ben Horowitz | A Founder’s Notebook

When analyzing whether you should sell your company, a good basis rule of thumb is if (a) you are very early on in a very large market, and (b) you have a good chance of being number one in that market, then you should remain stand-alone.

Ben Horowitz (Co-Founder & Partner @ Andreessen Horowitz)
When to sell your company — Ben Horowitz | A Founder’s Notebook

The judgment that you have to make is (a) is this market really much bigger (more than an order of magnitude) than has been exploited to date? and (b) are we going to be number one? If the answer to either (a) or (b) is no, then you should consider selling. If the answer to both are yes, then selling would mean selling yourself and your employees short.

Justin Kan (Partner at Y Combinator)
The Founder’s Guide To Selling Your Company

Similar to raising money, the best time to sell your startup is when you don’t need to or want to. Paradoxically, you are probably thinking about selling your startup as you are experiencing a lack of traction, tough competition, or difficult time fundraising. However, this is a bad time to sell your startup: you will have few bidders and be more likely to acquiesce to the demands of anyone who does show up.

Justin Kan (Partner at Y Combinator)
The Founder’s Guide To Selling Your Company

Negotiating an acquisition is the most distracting thing you can do in a startup: going through M&A is an order of magnitude more distracting than raising money. All of your ability to run the day-to-day operations of your company will grind to a halt. You should only enter an acquisition process if 1) you are certain you want to sell the company and 2) you are likely to get a price you will accept. Don’t talk to potential acquirers “just to see … (read more)

Justin Kan (Partner at Y Combinator)
The Founder’s Guide To Selling Your Company

Remember that companies are bought, not sold

Justin Kan (Partner at Y Combinator)
The Founder’s Guide To Selling Your Company

Entering the acquisition process is one of the most dangerous things an early stage startup can do, because the process is distracting, demoralizing, and usually involves giving your competition most of your proprietary business data. Founders who have been through the process have said it is ten times as distracting as fundraising. It often cripples your ability to oversee the business operations. Do not enter into an acquisition process lightly… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Make Wealth

For most people, the most powerful motivator is not the hope of gain, but the fear of loss. For potential acquirers, the most powerful motivator is the prospect that one of their competitors will buy you. This, as we found, causes CEOs to take red-eyes. The second biggest is the worry that, if they don’t buy you now, you’ll continue to grow rapidly and will cost more to acquire later, or even become a competitor.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

However, if a company likes your team enough, they’ll make an offer. It’s totally dependent on how badly they need you. The key thing here is to understand which companies will pay and which companies won’t pay

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

One of our advisors, Jason Shellen, has had a few of his companies acquired, most recently by Pinterest. The first thing he advised us to do was create a one-pager: highlights on the team as a whole and a paragraph bio on each person.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

Get high quality intros to the most senior people you’re connected to in each company
. The people you’re talking to matter tremendously; if they don’t have “buck stops here” decision making power, move on.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

“Ask for money, you get advice; ask for advice, you get money”

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

Get to in-person interviews as quickly as possible. The interviews would typically consist of a phone screen, a take-home project (usually taking 2–3 hours), and a full day of in-person meetings. On the acquirer side, we found it made the most sense to bring our whole team in for a 3–5 hour block and do all interviews at once. It made things easy for us to schedule and the team could spend time before/after evaluating the company.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

Every offer we received had one theme in common: acquiring our team would accelerate the acquiring company’s hiring process by 6+ months. This is something companies are willing to pay for, either in cash, stock, or a mix.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

If you can make a company grow faster — i.e. make them more money or make it easier for them to raise more money—then there’s a clear path to an offer. If you can’t, an offer probably doesn’t make sense.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

We should have had all legal docs in place before accepting; we lost all negotiating leverage the moment we accepted the offer.

Sam Purtill (Co-founder, CEO @ ClassOwl)
How We Sold Our Startup in 30 Days — Medium

It took an additional 30 days from the day we accepted Branch’s offer to the day we signed the final paperwork. Make sure you have enough cash in the bank to hold everyone over during this period.