6 Steps to Preparing Your Startup for Acquisition

The following is adapted from Getting‌ ‌Acquired‌ by Andrew Gazdecki.

Finally, someone has offered to buy your startup.

You’ve been waiting years for this moment. You feel euphoric about the possibilities, as dreams of your post-acquisition life begin flashing through your mind.

But then the nerves kick in…

How do you prepare your startup for an acquisition?

Looks like the hard work isn’t over yet. If you fail to prepare or do so poorly, you could deter the buyer, hurt your valuation, and net less money.

Then there’s your team. Are they aligned with this new company? What can you do to make the transition easier for them?

As a serial entrepreneur who has successfully navigated this process twice and bore witness to it several other times, I’d like to share what I’ve learned in six simple steps. Hopefully, the lessons I’ve learned will help to give you a smooth ride to the finish line.

Step 1: Don’t Stop Growing

Acquisition offers are not set in stone until the last moment. So yes, be excited. Yes, prepare well. But whatever happens, don’t neglect the growth of your business. Stay the course, because it’ll improve your company’s value without running the risk of your startup stalling if the deal falls through.

Step 2: Do Your Homework

Stories about acquisition — good and bad — are everywhere, so do some research and learn from them. This will help you to avoid the mistakes made by others. Find out how the acquisition will affect you and your teams. Reach out to other entrepreneurs, particularly those in your industry who have sold businesses before.

Step 3: Get Your Records in Order

The buyer is going to audit the hell out of you, so consult with your accounting, legal, and HR departments to get your house in order, including all relevant paperwork. Discrepancies during due diligence can kill acquisitions, or at minimum, hurt your valuation. So if record keeping is your Achilles’ heel, get it fixed fast; your buyer will be looking for mistakes.

Step 4: Hire Professionals

While I’m sure your staff is competent, we’ve already established in step 3 that mistakes can kill a sale. So hiring professionals with specialized knowledge of and the necessary preparations regarding acquisitions is a smart play. For starters, considering enlisting the services of a CPA, a valuation firm, a financial services professional, and a law firm with mergers and acquisitions experience

Step 5: Communicate Your Expectations

You and the buyer have different goals. Therefore, it’s important to weigh your expectations against those of the buyer to avoid trouble. It’s not exclusively about the money; think about your life after the acquisition is over.

For example, you should be able to answer these questions:

• Are you staying on? If so, in what role and what responsibilities will you have?
• Will you have any influence in decision-making?
• How will your product mesh with the buyer’s offerings and strategies?
• Do your buyers’ plans for your product align with how you see it being used? If your expectations don’t align with those of the buyer, you’re jeopardizing your long-term happiness. Some founders regret selling for this very reason.

Step 6: Look for a Culture Fit

I’m sure you want the best for your business and your employees, but it’s easy to be lured in by a great offer and neglect establishing whether or not the buyer is the right fit. Misaligned cultures cause painful transitions, so you need to understand the buyer’s values and beliefs and how their mission statement supports yours.

What’s Next?

Being acquired is a bit like selling a house. You want the best price and assurance that the new owners will take good care of your business. Follow the six steps above, and you’ll walk away with more money, fewer headaches, and unassailable confidence that you did the right thing.

After it’s done, you can think about what you want next in life. If you’re anything like me, you’ve already got the idea for your next business.

For more advice on preparing your startup for acquisition, you can find Getting‌ ‌Acquired‌ on Amazon.

Andrew Gazdecki is a four-time startup founder with three-time exits, former CRO, and founder of MicroAcquire. Gazdecki has been featured in The New York Times, Forbes, Wall Street Journal, Inc. Magazine, and Entrepreneur Magazine, as well as prominent industry blogs such as Mashable, TechCrunch, and VentureBeat. Now, for the first time, Gazdecki shares the complete story of the company that started it all.