Although M&A buyers (buy-side) and Startups (sell-side) are on opposite sides of the table in negotiations, in truth both are vying for the same goal: to create future value from the combined entity. To make 2 + 2 = 7 become a reality.
Recently, Jim Connor from Game Changers TV podcast put me (a die-hard champion for the sell-side entrepreneur) in a room with Gary Guseinov (an experienced M&A buyer of cybersecurity software companies), to debate the nuances on both sides of the deal. The result was a 2-part podcast:
Part 1:
Corporations have designated internal and external teams with the goal of finding startup companies that can fill gaps in their product line or simply to grow through acquisition.
This podcast features a conversation with an advisor to startup sellers (Me) and a corporate buyer (Gary) about how to position your startup for being identified as a potential acquisition and closing the deal.
In this Part 1 podcast, we discussed:
- Defining the unique value in a startup for the potential acquirer
- The acquisition strategy of Real Defense Holdings
- Knowing metrics important for the buyer
- Drivers of startup value, including the hidden assets
- The acquirer’s playbook
- The importance and value of the talent in a startup
- Valuation assigned to the customer base
Part 2:
The final part of this conversation involved a discussion of the value and role of investment bankers. Once a prospective buyer has qualified your startup as a potential candidate for acquisition, now the real work begins: defining how the assets of your startup will fit the needs of the acquiring company and the value placed on those assets.
In this podcast, we discussed:
- What can go wrong in a startup acquisition
- Post-sale integration with the acquired company
- Knowing which assets matter to the corporate acquirer
- Valuation metrics and how valuations are derived
- Why the cyber security sector is hot for startup acquisitions
- How to contact potential corporate acquirers
- The role of the investment banker
Drop me a note if you would like to add to the conversations.