Building the Acquisition Dream Team
I’ve been on all sides of mergers and acquisitions – as the acquirer, as the acquiree, and even as the minority investor. We built and grew Bold Software with a thought that someday we might want to say yes to an acquisition. In order to be attractive, we made several decisions so that when our acquirer came calling, we were ready (or so we thought).
Outsource Everything That Isn’t Core
We were rabid about this. Payroll, legal, HR, accounting/tax, hosting, and even first level support all went outside. We knew in an acquisition these folks would be the first to be considered redundant and we hated saying goodbye. While outsourcing might seem to be the opposite of “Don’t Go it Alone”, it turns out to be great to be able to leverage your law firm, your accounting firm, etc, rather than just the one person on your staff.
Cultivate Relationships with VCs, Investment Banks and Private Equity
It’s fairly easy to get on the radar of smart individuals looking to understand how to invest in your business. We were boot-strapped and intended to stay that way until the right combination came along. That said, we gathered and kept track of everyone who was interested in us – even if it wasn’t until we were bigger someday. Thus, when the call came, we simply started calling people we’d had many conversations with to see if they were interested in coming alongside us. Three were and we selected one of them.
Pick a Negotiator (Who Isn’t Your Attorney)
I liked our product and liked the acquirer – we felt very simpatico. I’d been taught the value of externalizing the negotiating. If there is any chance you will stay with the acquiring firm, let someone else do the negotiating. You don’t want to make a serious misstep with your future employer. And although attorneys are wonderful people, often they aren’t good negotiators. Bite the bullet and hire a banker – preferably a sell-side banker. Check their references for the uplift they were able to generate.
Get a Cracker Jack Assistant
When the requests start to pour in for the electronic data room, your team needs a sharp person who can take all those files and documents and get them catalogued, scanned, and uploaded. My time needed to be spent managing the existing business, the outsourced team, and banker, and specialty counsel. Many times our assistant bailed us out and we gave her a nice check after the deal was done.
Ask for Help in Due Diligence
We thought we were ready. Banker, attorney, accounting firm, cracker-jack assistant. Our acquirer had more questions than we had time (or actually needed) to answer. Your banker has an incentive to get the deal done and will have a bunch of smart people around them who can help with due diligence. Don’t hesitate to ask.