Acquire me? Shouldn't you take me to dinner first?
February 3, 2007 11:01 AM   Subscribe

What happens when a big company is interested in acquiring a little online venture?

I currently have a small online media project that flies under the radar most of the time. It's been building an audience steadily and has gotten some niche press attention. A high profile firm has contacted us to talk about acquisition possibilities and I have no experience in this area. I run this web thing out of my bedroom. I imagine I should lawyer up although I have no idea where to find a lawyer.

What can I expect from beginning the process? What will they ask me? What will they want to see? Anything I should watch out for?

It's a Web 2.0 thing that a few companies have expressed interest in. Other people have told me that I might be targeted for acquisition but I was a bit skeptical. I should have parked my skepticism earlier and have done more research, I guess. I'm still not expecting much. I just want to enter into this with my eyes wide open.

I can take more questions at if I haven't provided enough info. Thanks MeFites.
posted by anonymous to Work & Money (8 answers total) 4 users marked this as a favorite
You should expect to have a lot of dinners with them.

First step is for the two parties to get to know each other, and establish that they do, in fact, want to do business together.

Next step is due diligence. Both parties have officially expressed an interest in moving forward, and now are officially asking questions about each other. This is where the acquiring party tries to figure out how low they can make their offer, and where you try to figure out how much you can get.

Last step is the buyer making an offer.

Lawyers are good, but I would look for either a lawyer with deep venture and M&A experience, or a venture capitalist that has completed several deals like this in the past. Either will need to be paid, but if you bring a VC along, they are more likely to invest in your future ideas.
posted by b1tr0t at 11:27 AM on February 3, 2007

You need a lawyer for due dilligence and the like. They can also help you understand what negotiating issues - and strengths - you have. If you want advice on chosing one, or recommendations, email's in the profile.
posted by dpx.mfx at 11:42 AM on February 3, 2007

my background: i sold to yahoo almost two years ago.

my two pieces of advice would be to at least have a ballpark idea of what you want up front, and know that you are going to get a vastly better deal (and probably better outcome overall) if you are willing to join the company doing the buying.

for what it is worth, the scale of the deal was such that i did not get a lawyer involved. because i was the only person on my side of the deal, it was very straightforward. i talked with the folks at yahoo on the phone a few times, emailed them answers to questions they asked (statistics, etc), and met up with them when i was in their neighborhood on other business.

feel free to email me if you have any questions.
posted by jimw at 12:34 PM on February 3, 2007 [2 favorites]

Yeah, get a lawyer, quick. If you live in a techie city, there are probably entrepreneur networks you can start tapping into. And start tapping into your own network, anyone you know, anyone you don't necessarily know, but admire and respect who has been through anything like this might be able to give you a name and recommendation.

Congratulations and Good Luck!
posted by Good Brain at 12:34 PM on February 3, 2007

If you think they are serious you don't need an attorney you need a good CPA to get your books in order. This person is going to put your business in its best suit and make it shine. The CPA will also be able to tell you what the market valuation is for your business based on the type of industry. They will also have contacts with attorneys whose only real job, in this situation, is to reveiw the documentation of the sale contract to make sure everything is on the up and up- AND that you understand what you are agreeing to. They will also watch you sign your name 100+ times on every contractual type of paper known to man.
posted by bkeene12 at 1:53 PM on February 3, 2007

Last step is the buyer making an offer.

That is, unless the last step is you working for this company for 1-2 years to carry through and integrate. That's a condition you should already be noodling on.
posted by scarabic at 2:49 PM on February 3, 2007

Be careful, and don't make a move without the advice of a properly experienced lawyer. Financial advisers can come in a bit lawyer.

Key reason: the downside risk. Any prospective acquirer will need to get completely under the hood of your business, seeing all the logs, all the finances, and all the source code. If you don't get a deal done -- or, worse, if they were never serious about a deal -- you've given them a roadmap to compete against you.
posted by MattD at 2:57 PM on February 3, 2007

Also, the right lawyer or firm could shop you around, and potentially find competing offers from other companies.

Good luck!
posted by Freen at 4:08 PM on February 3, 2007

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