Don’t Accidentally Kill Your Future Acquisition Exit

Too many startups discover they’ve got an acquisition-blocking or acquisition-inhibiting issue after a price tag has already been agreed with the acquirer.  It comes out during due diligence and the best outcome could be a reduced acquisition price, significantly increased escrow amount or something else not as palatable.  The worst outcome could be a busted deal.

Trying to “set the stage” late in the game is usually very difficult and sometimes impossible.  So why not think about it now and set some processes in place to keep things clean from an acquisition readiness standpoint?  Here are a few things to consider:

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Are You Selling Your Company or is Someone Buying It?

If you find yourself in the position of considering a sale of the company, the significance of the distinction between selling your company and someone buying your company is HUGE.  Sometimes the situation is clear.  If you’re struggling financially and hired a banker to seek a sale for the company, there’s almost no way to pretend otherwise.  Similarly, if a powerhouse player  in your industry (called a “strategic” in M&A parlance) pays you a visit to talk about acquisition, then it’s pretty clear they have interest in buying the company.  But there are various situations that you might find yourself in that should cause you to remind yourself of this significant distinction.  Let’s explore further.

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