We pulled it off flawlessly, but it all came down to one thing – my fantastic team who made it easy for me. I could list out another ten things I learned, but probably the most important point is this: as a first time CEO, I was also a first time acquirer. Despite last minute tweaks, things always work out in the end. The array of tasks that have finely coordinated timing is dizzying. You have to tee up PR, but ensure nothing leaks. You have to keep things confidential, but still give employees and customers a heads up. Legal, finance, employment agreements, wiring money, board consents - I could go on forever. Be Nimble with Timing: There are a lot of parallel tasks happening near the end of the deal, especially the last few days.We ended up closing on the date that I had initially suggested. I picked a reasonable date, and finally convinced everyone we weren't crazy to shoot for that date. So I did what I do during fundraising – I created urgency by setting a stake in the ground. Create Urgency: After a month of negotiating, due diligence and contract work, I was starting to get worried (see above point about distraction risk).Because they were so plugged in, getting the appropriate approvals and consents was a breeze. Keep Your Board Up To Date: We kept our board up to date during the entire process, and often turned to them for advice (that's their job, so put them to work!). During the last couple weeks of the deal, I probably had five calls a day with the other CEO (short calls, but effective). I learned that negotiating through contract revisions and redlines was suboptimal, so we quickly moved to phone calls. But each time, a quick call between the two CEOs resolved things immediately. Pick Up the Phone: There were a few moments when it looked like the wheels were coming off the bus.If you have a good thing going, don't ruin it by trying to squeeze out a little extra if it leaves a bad taste in everyone's mouth. Whether its legal fees, the amount of time spent on due diligence, or negotiating the term sheet, we tried to be pragmatic above all else. Don't Over-Optimize at the Margins: I used a simple rule of thumb - don't over optimize at the margins, and keep the transaction price in mind during decision-making.In our deal, we brought over every single person from the previous company, because we wanted to make sure we took care of those folks who put their heart and soul into building that company. Prioritize the People: When we first started looking at the proposed deal, I decided that our priority would be to take care of people first.A/R can also help inform you about the future health of the current business, not just monies owed. I probably spent half of my time on the financial side examining A/R and aging reports. Factoring in risk factors, discounts based on payment probabilities help to assign a real monetary value to the A/R. Accounts Receivables Matter: I learned that truly understanding the makeup of accounts receivables is a time consuming, yet extremely important step.I wouldn't recommend going down the path of an acquisition if you don't have a CFO or at least a senior controller in place. Especially when acquiring a business with real revenue and accounts receivables, it's imperative that the financial due diligence is thorough. I don't think we would have been able to execute this transaction without internal financial expertise. Have Your Financial House in Order: We are fortunate because we had a CFO in place before we made this deal.Building an amazing integration plan is the largest mitigator to distraction risk. In our case, we carved out a small due diligence team to help pre-transaction, and we also have a defined integration team with a plan to ensure we can operate our normal business smoothly while we integrate. If You Fail to Plan You Plan to Fail: Almost every single person involved in the deal from our side said “distraction” when I asked them "What are you most worried about?" Acquisitions are a huge distraction when a startup is the acquirer, both prior to the deal, and more importantly, post-transaction during integration.For early stage startups, I wouldn't recommend going out shopping - let the opportunities come to you! Given the health of the business, a stellar client list, top-notch products, a fantastic team etc, the transaction just made a lot of sense. In our case, we weren't out looking to make an acquisition, but a great opportunity presented itself to us at the right time. Don’t Go Shopping: It may sound obvious that companies either get bought or sold, but this simple idea is probably the single biggest determining factor in terms of purchase price, speed of deal, who has leverage etc.
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