TOP 5 Questions You Need to Ask Yourself Before Going Through Acquisition — Founder’s Insights
Got an acquisition offer? Thinking of merging? We are bringing a special founder’s insights to this debate. On this year’s South Central Ventures Summit, an event where all of our portfolio members, fund investors and SCV team meet and discuss their experience, we had a Fireside Chat with Danielle Weinblatt, founder of ConveyIQ, an HR solution company that recently got acquired by Entelo. The companies see the acquisition as a quest to create the world’s first recruitment automation platform from end to end, from source to basically your first day on the job.
ConveyIQ, now Entelo, has been a part of South Central Ventures portfolio since 2018, so we are excited to share its founder’s point of view on this topic in this exclusive Q&A. Listen to Danielle’s journey through a successful acquisition story and learn what are the 5 questions you need to ask yourself before going through with the acquisition to make a successful merger.
- How much is this company going to pay you for your organisation?
Firstly, take the broader view of the matter. As a founder when you’re trying to navigate an acquisition you need to think not just about valuation and how much is this company going to pay you for your organization, but also wrap your mind around the all of the questions below. When you have answers to them or at least idea in which direction you are willing to go, only then you can proceed with the acquisition talks. It’s also important for you to know whether they are interested in cash or an equity deal or a combination of both, in order to set up your acquisition talks in the right direction.
- What will happen to your employees?
Are they going to keep your existing operations or are they going to cut my office? Danielle emphasises that employees are super important to her: “They’ve taken me from the early stages of this journey until now and so we built a really incredible development and product team.” As a founder, you have a responsibility to your employees as they trust you to guide the ship from an idea to a successful business.
- What is your role?
What is your role in the merged company going to be? Do they want to keep you on board or are they interested just in acquiring the company? It comes down to whether or not do they see the value of you as a contributor to the future company and what you can offer.
- Is there a future potential?
If your company is being acquired for the equity you need to consider is that something that I would invest in as a founder? Do you believe in the future potential of this company? Another thing to consider is what is the strategic direction of this business unit inside a larger company — not just for the founder but the entire founding team — would there be some synergies inside sales/distribution, development, HR and other functions? In other words, what can a big company bring to your startup?
- Do acquirer’s culture and mine go together?
Danielle emphasizes, that this might very well be the number one reason mergers or acquisitions end up failing. If the company’s culture doesn’t mesh with the acquirer’s culture you can end up being in big trouble later on. Corporate culture is one of the hardest things to change and you have to go about it strategically in hopes of success and you also have to be willing to deal with the quirks as they come.
ConveyIQ and Entelo are now well on their way to make their goal of becoming the world’s first end-to-end recruitment automation solution happen. Danielle is the President and Chief Product Officer at Entelo and continues to make hiring experience better for the candidates as well as the hiring managers.
Are you a founder with a similar experience? If you have any additional advice for founders going through the acquisition for the first time, share it in the comments below.