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Summary:

Founders are notorious for falling in love with their visions. How else could we survive 18-hour workdays or a multitude of setbacks with our optimism still intact? The problem with this is that it’s impossible to predict what the future holds. So, to be successful, you’ll […]

Founders are notorious for falling in love with their visions. How else could we survive 18-hour workdays or a multitude of setbacks with our optimism still intact? The problem with this is that it’s impossible to predict what the future holds. So, to be successful, you’ll have to grow comfortable with transforming that vision you’ve fallen so deeply in love with into something you may never have considered.

Becoming part of a Fortune 1000 company was never part of our vision for PartnerUp, so when Deluxe Corp. first approached us in March, we were skeptical. Deluxe’s primary business is check printing for financial institutions and small businesses. It was difficult at first to make a clear connection to PartnerUp, a four-year-old social network for entrepreneurs. But we eventually came to see that our goals were more than compatible; they amplified each other. Our acquisition was completed in July.

Knowing that you’ve built a business that another company finds enticing is an amazing feeling, and being a part of a growth strategy beyond what you originally envisioned is a privilege few entrepreneurs get to experience. While no two transactions are the same, I’ve learned some things that might make it easier for your startup to embrace an M&A deal — even if one isn’t part of your current vision.

Tips for M&A ‘Re-Visioning’:

1. Questions not answers.
When you meet with a potential acquirer, you’ll have tons of questions. Don’t expect tons of answers. When Deluxe came to us, we didn’t know what they wanted or how we would work together. It wasn’t until four months into the process that they gave us any clear answers. Instead of sitting in limbo, however, we decided to spend those months researching Deluxe’s products and services and deciding for ourselves if we were a good fit. Eventually the wheels began to turn, and we started to see the different ways our companies could benefit from each other.

2. Divulge with discretion.
They’re going to ask you for everything from revenue projections to what you paid for paper clips last year. This may make you uneasy, but information exchange is a necessary part of the process. It wasn’t until we met with Deluxe to map out the business case that we saw exactly how we fit within their strategy. The trick to information exchange, though, is being smart about it. So lawyer up. A lawyer can counsel you on what should be exchanged and what shouldn’t. If you’ve been through this before and feel you can handle the upfront work (compiling due diligence information, negotiating purchase price, etc.), then wait to engage a lawyer. Negotiating the terms and conditions of the final contract must be done by a professional thoug

4. Start with the end in mind. Decide on the post-acquisition future of your company before the deal closes. Establishing the structure and strategy ahead of time is important. As I sat in meetings with Lee Schram, CEO of Deluxe, and his management team, I saw that this group recognized where it wanted to be, had a strong sense of urgency and was willing to commit the resources necessary to get there. They understood PartnerUp, and they knew where they saw us years down the road. Knowing that they had a definitive end result in mind gave us peace of mind that we were in good hands. Also, if you know where you’re going, you’ll have a better idea of how to get there. So make sure that your company will move in a direction you’re comfortable with while those decisions are still in your hands.

Just remind yourself that, in the end, having the ability to be flexible with your vision can bring success you never even dreamed of. So if an interesting opportunity comes your way, don’t be afraid to feel it out and potentially go for it.

Steve Nielsen is founder and CEO of PartnerUp, where entrepreneurs find co-founders, partners and other business resources. Read more from Steve here or on his StartUp Blog.

By Steve Nielsen

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  1. Firstly, congrats on the acquisition.

    Secondly, very good post.

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  2. I’ll add a couple more tips based on my own recent experience:

    #1 After you’ve sold, if you stay involved, don’t delude yourself into thinking you still call the shots. Even if someone tells you that you do, you really don’t. Over time, your control will slip more and more.

    #2 Fight for your people at the outset– it may be your only chance to get what you want. You’ll have a lot of room to negotiate issues like bonuses, vesting, raises, vacation time, promotions/titles, etc before you close. Typically you are dealing with the most powerful people in the company, and if they sign off on your employees’ packages, it’s the law.

    Once the deal closes, you’ll be dealing with HR and “policy”. So think hard about the things you need for your people to feel like the acquisition was a win for them.

    If you need your team to help you hit your post-acquisition goals, remember that your ability to recruit is going to be a lot different post-acquisition (and not in a good way).

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  3. “Negotiating the terms and conditions of the final contract must be done by a professional thoug.” I love the ambiguity of this sentence. Is there one letter too few (add an h at the end)? Or one too many (remove the o)?

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  4. [...] LinksPositioning a startup for acquisitionSome pointers on what’s important in acquisition.Tips on startup acquisition processSome tips on what to do when going through the acquisition [...]

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