Through TechStars Order Alprazolam, , my other investments or just at random, I'm often approached by entrepreneurs who want advice on what to do when a potential acquirer first brings up the idea of buying their company. Often, the company being targeted for acquisition is "up and coming" and is very early stage. For that reason, Alprazolam ordine on-line, the entrepreneurs are often rightfully concerned that the "acquirer" is really just digging for information. That's a valid concern for many early stage companies. Here's the advice I usually give concerning this situation.
Step 1, order Alprazolam. Assess the acquirer. First and foremost, you should assess the potential acquirer, goedkope Alprazolam apotheek. Can you really see yourselves working with them. Do you like them. Are you willing to be an employee of that company. Order Alprazolam, Do you trust that their interest is genuine. For Alprazolam online, If the answer is no, recognize that it's either a non-starter or that it's going to take one heck of an offer to pique your interest.
Step 2. Notify the board. Notify your board and/or key investors. If you have a board of directors, Arkansas AR Ark. , you should promptly notify them (email is fine). You might also notify key trusted advisors and mentors, order Alprazolam. Make sure to mention that the interest is very early, and that you're exploring it. Cheap Alprazolam pills, As always, getting mentorship can be key.
Step 3. Set your number. Next, if you haven't already done it, Rabatt kaufen Alprazolam, you should have an honest discussion with your co-founders and key management about the minimum number it would take for you to sell the company. Order Alprazolam, When doing this exercise, it's useful to think about the following issues:
- Talk about the stock/cash mix that would be required.
- Talk about how long you'd be willing to work for the acquirer at market salary. Assume at least two years.
- Assume that you'll have no ongoing control of your company or product, and that it just won't be your baby in any way, Illinois IL Ill. , shape, or form any more.
Recognize that it's very easy to trick yourself at this stage. It's really important to define the minimum number without padding. In other words, you're effectively deciding that if the offer clears this hurdle,
παραγγείλετε online Alprazolam, then as a team you want to work towards taking it.
Step 4. Engage the acquirer. When you first enter into discussions with the potential acquirer, you should expect them to ask you all sorts of questions before they make any sort of offer, order Alprazolam. You can expect questions about revenues, Cheap Alprazolam, expenses, headcount, conversion rates, attrition rates, and all sorts of detailed stuff, købe Alprazolam.
At this point, it will be your natural reaction to ask for an NDA with the acquirer. While this is a good instinct, Cheapest Alprazolam online, delay doing it up front. Don't worry - you will use it as leverage shortly. Order Alprazolam, Without mentioning an NDA, provide a few high level answers that you're comfortable with them knowing and when the questions get into the "zone of discomfort" ask them to provide a detailed list of their questions via email so that you can work on them.
Step 5. Ask for the ballpark offer. Now that you've answered just a few high level questions and have a more detailed list of what they're after, it's important to go for the "ballpark" offer before proceeding, buy Alprazolam cheap. Explain that you've received their email, you're obviously flattered with their interest, and that you're happy to answer all of their questions under two conditions. Buy Alprazolam online, The first condition is that you'd like all of the information that they requested to be covered by an NDA. The second condition is that before proceeding, you would like for them to provide the likely "ballpark" paramaters of the acquisition via a simple email, including the likely cash/stock split, order Alprazolam.
Most acquirers will happily accept the first condition (not doing so is a serious red flag) but will avoid the second condition. It's important to stand firm on both conditions before proceeding. The acquirer will likely claim that they don't have enough information to make an offer, and that they need their questions answered, ordering Alprazolam without prescription. Assuming that you've given them basic revenue and expense figures, this is bullshit. Order Alprazolam, Hold firm. Explain that you're very busy working with customers and improving your product, Discount Alprazolam, and that you can't afford to distract the company without having at least a ballpark understanding of the offer. Explain that it's obviously non-binding and that you won't hold them to it, but that you're just trying to get a sense of it. Sometimes there is a little dance at this stage, where they will look for a couple more tidbits of information in order to give this ballpark offer, order Alprazolam online. That's fine - use your best judgement. Just avoid dropping your pants completely until you get the ballpark offer, order Alprazolam. Note that this does not mean sign the NDA and give them all the answers that they're seeking. This is your leverage to get the ballpark offer, Cheap Alprazolam online without prescription, so don't give it away. Recognize that the NDA won't protect you from giving the "fake acquirer" exactly what they wanted.
If the acquirer resists the NDA or the ballpark offer, they're probably just fishing. Order Alprazolam, You're not being difficult. You're asking a perfectly reasonable question about ballpark deal terms before wasting your time, New Mexico NM N.Mex. .
People who are not high up enough in the acquiring company to actually be making this offer will be scared off at this point. That's a good thing. Perhaps they never had permission to be pursuing an acquisition in the first place. This technique weeds those people out since they have to provide the non-binding ballpark offer in writing via email, order Alprazolam. Buy Alprazolam without prescription, Don't proceed without the ballpark offer.
Step 6. Identify mentors. Now that you have a ballpark offer, you have what I would consider serious interest. Now make sure that you're working with someone who has been involved in multiple acquisitions, generic Alprazolam, ideally on both sides of the table. Order Alprazolam, Perhaps one of your existing investors or advisors can fill this role. It's critical to have someone on your team that can help you negotiate terms, and to help you understand their impacts. Massachusetts MA Mass. , I can tell you from experience that when I had my first exit from a company I founded, I left millions of dollars on the table before I learned this lesson. Do not underestimate the ability of experienced mentors to greatly increase your ultimate outcome. If you don't have an advisor, contact someone that you trust that has done this before and ask them to help, Alprazolam no prescription. It's fine to pay for this help if you don't have other options, but you should only pay in a success case and you should recognize the dynamic that this creates: 1) This person loses nothing if there is no exit other than time and 2) they're motivated to help you maximize the exit at the expense of everything else, order Alprazolam.
Step 7. Assess the ballpark offer. Take the floor value of any "range" that they gave you for both the total comp and the cash percentage of the stock/cash split. This is all you should "hear" - ignore the rest of the range. Cheap Alprazolam overnight delivery, The actual offer is very likely to end up being very close to the low end of the range unless there are multiple competing offers. Order Alprazolam, You should now compare this to what you discussed in Step 3. If the offer isn't high enough to be interesting, then your best bet is to simply tell them that and politely decline to provide any other information.
Step 8. Get to know them and answer their questions. At this point, Tennessee TN Tenn. , the offer is "interesting." Your goal now should shift to getting some face time with the acquirer and getting to know them on a personal level. It's fine to do this by phone, but find ways to spend time with them physically. This will help you figure out if they are "for real" or not, order Alprazolam. Cheap Alprazolam tablets, Ideally, if practical you'll start to this before fully "dropping your pants" and answering all of their questions. It's a fine line between being coy and stalling. You can't stall too long, but you can offer to meet with them personally to go through their questions. Basically, the more time you spend with the potential acquirer, the more you can develop trust and build from there. Order Alprazolam, Provide the requested information under NDA to continue the process. Be sure to mark all information provided as confidential under the NDA. Keep a copy of everything that you provide.
Step 9. Push for a term sheet. Even at this stage, many acquirers will go silent for a long period of time. Sometimes this is normal - these things just take time, order Alprazolam. Internal fires that have nothing to do with you come up. People go on vacation. Things always move slowly. Do not assume this is going to happen. Order Alprazolam, Keep building your business in the meantime. Continually push for a term sheet fully describing the acquisition. At every meeting, ask what information you can provide to work towards getting a definitive term sheet describing the acquisition.
Step 10. Decide. If at any point in the discussion you decide that something is not right, just stop. Ask for the return of confidential information, and politely bow out, order Alprazolam. If the deal happens - congratulations. Assume it won't until it actually has.
Good luck. I'd love to hear your thoughts and experiences in the comments.
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David -
So, assuming they won't match your offer (and I'm guessing they won't!), do you think CrowdPitch is worth paying for to get some visibility for a start-up? Like you, I loathe this business model, but $125 isn't a ridiculous fee – unlike DEMO or conferences like that – but I don't want to just throw money out the window either…
Thanks!
i've been to one of these before, and it was pretty well attended. most attendees were not investors. some investors were there, however. sure, for $125 it's probably reasonable exposure to a somewhat random audience.
Great sentiment, David way to literally translate putting the money where the mouth is! I look forward to hearing the presentations.
Hi David,
Thanks for welcoming us to Colorado. We will blog an announcement
that you should link to here soon. Any of your readers in the comments
here should know though – starting with Colorado, and because of the
effort you and Brad are leading, we are going to start the trend of $0
for companies to present at CrowdPitch. How's that for a counter offer?
We don't want Brad to lose his lunch with us.
As we go nationwide, we think it's important to help entrepreneurs any
way that we can. This is one small way of doing that. Thanks for the
offer to pay half the fees, but since there won't be any, that means
you owe use 1/2 of $0 this time around.
See you on the 30th. Let's hope this creates some positive momentum
in this space surrounding our CrowdPitch events and the other things
FundingUniverse will be doing as we expand nationally.
Alex
Funding Universe
Simply awesome. Thanks so much, that's really fantastic. Let me know what I can do to help. Please link to any post you do here in the comments once you've written it.
I'll send that $0 check over right away!
Wow – that's very unexpected and very cool of you guys! It's kind of hard to beat that offer!
If only all the companies we have to deal with would respond in such a positive way! Congrats.
No surprise here. Brock, Alex Trent and the crew at FundingUniverse aren't vultures.
I'm hoping this event goes as well as the last Colorado event that ended up drawing a company that ended up being sold to Disney (Kerpoof, I think?).
Simply awesome. Thanks so much, that's really fantastic. Let me know what I can do to help. Please link to any post you do here in the comments once you've written it.
Good memory. Of course Kerpoof was voted second best that night after a count of the monopoly money.
Yeah… that was crazy that Kerpoof didn't win the "best of show." It's goes to show how important a strong pitch can be. Obviously, Kerpoof had a cool company, but I didn't think that their presentation came off as well as it could.
We are stoked to put our hat in the ring and show our support to entrepreneurship! We are especially grateful to the partners & sponsors that help to make it happen.
To be honest, the fees were never there to make money (it's not like you're going to get rich off of 5 companies paying $125 to pitch), they were there for 2 reasons:
1) to make sure that the entrepreneur has skin in the game and values the opportunity to pitch (so they come as prepared as possible). It seems that people don't place as much value on things that are free…
and 2) to make sure that the presenter shows up. I remember when we hosted a pitching event on behalf of the Dixie Angels and the Vegas Valley Angels. One of the local community development agencies "sponsored" a few companies so that they didn't have to pay a pitching fee. We had about 30 investors in the room ready to hear 10 presentations and 2 of 3 "sponsored" presenters didn't show up bc they had other "pressing" items. That's a hard pill to swallow after getting so many legit investors in the room. Up to that point and ever since, we have never had a "paying presenter" not show up.
Anyway… bottom line is that we are going back to making the CrowdPitch events free and are pretty stoked about it. Thanks to Brad & David for taking the lead!
Brock Blake
CEO
FundingUniverse
How could I forget? The gal who pitched was visibly ticked! I think that single event is what fueled her fire to get Kerpoof to exit. Gotta love the passion of great entrepreneurs …
So I have nothing against the guys at Funding Universe, but their model is based on charging entrepreneurs $3-5K to "prepare" them to present at one of these pitch sessions. Waiving the pitch fees is like giving up the "dealer prep" on a new car purchase. David, I respect your opinion, but you need to do more research.
Steve
Hmm, that hasn't been my experience. I went to one of these events before and nobody made them go through any prep process. They do offer these services (not near that price as far as I understand things) and they're not required to pitch at CrowdPitch. The bottom line is that CrowdPitch will be free to the presenting companies, and that's a good thing vs them charging. I'll see if I can get them to comment as I don't have much direct experience with them.
Hi Steve,
I sent you a private email on LinkedIn. I look forward to your reply there.
As a note to blog readers, many of the companies at this CrowdPitch event in Denver (and other CrowdPitch events) do not or did not pay us a dime. It is NOT a requirement. We do have many services that we are hired by entrepreneurs to help with (business plans, financing, etc.), but they are unrelated to CrowdPitch. Part of our help sometimes includes working with them on their presentation for VC's/Angels and events like ours. But that is a byproduct – we don't charge to "prepare" people for CrowdPitch. And now, following Brad and David's lead, we don't charge to actually pitch either. Again, they can choose to pay for help in a variety of other areas, but CrowdPitch is free to all and no other purchase is required to participate.
We hope to have the Keiretsu Forum (you are the Denver Chapter President, so we hope to engage you working together to help Colorado entrepreneurs) join us in many of our future events. We'd love to work with you to provide quality deals for your membership to look at. CrowdPitch is free for attendees too – free food even! We think we can add value to the Colorado entrepreneurial ecosystem and hope you will welcome us and work with us as we try to do our best to help entrepreneurs in Colorado get funded.
I hope to see you and your peers at our event on Wednesday, your invited and we'd welcome your attendance. It would be nice to meet you as well. In the meantime, I'd hope you would reconsider your comment here with this new information I have shared.
-Alex
Pingback by Nice Move By Funding Universe — September 28, 2009 @ 7:13 am
[...] week David Cohen (the founder of TechStars) wrote a post titled An offer to Funding Universe. On 9/30, Funding Universe is having one of their CrowdPitch events in Denver. The were [...]
Alex -
Just replied back to you on LinkedIn. Again, I appreciate the clarification and apologize for the mis-characterization. My understanding was that the CrowdPitch events were the "graduation" ceremonies for your clients; instead these events are independent and help market your services. Makes a lot of sense. Mea culpa.
As I mentioned on LI, I also welcome your entry into the CO market and look forward to collaborating. I believe Brett Child is coming to our Forum meeting tomorrow, and I hope he will announce details about the Wednesday event to our attendees. I unfortunately have a conflicting meeting on Wednesday, but look forward to joining you at the next CrowdPitch event.
Steve
David -
OK, I'm the one that needed to do more research
However, I think their model even further underscores the presentation fees issue: how does a small angel group survive without charging presenters? I can tell you that increasing my member dues to offset the loss of those fees would likely result in a near 100% drop in membership. Given that we are probably the largest and most active angel group in CO, that says a lot about the sensitivity of investors to their own fees, and to the sustainability of these groups. Do you really want us gone?
Oh, absolutely not. I refer people to Keiretsu all the time. I think it's great that we have a chapter of a credible national group here in Colorado.
My opinion is one thing, but it is after all an open market. People can pay to pitch if they want to, of course. But I think you do get some adverse selection. Meaning, companies that know how to pitch and have wide access to investors aren't going to bother. I assume it would benefit your membership to allow those with strong momentum and presentations to pitch for free. I think the fees are usually designed for two reasons in most angel groups. First it's to make sure companies are "serious" about presenting (usually a $100 or so fee is used) and second it's to "recoup the costs of helping them make an appropriate presentation". I suppose there are other reasons (I'm sure your differ somewhat at Keiretsu). It's most sad when memberships are unmonitored (meaning, full of non-investors – and I clearly understand that this is not something Keiretsu suffers from but the problem is generally rampant) and fees are used to make sure the venue and wine are nice enough.
So, in order to try to be constructive, I'd suggest a couple of alternative models to think about. Knowing you, I'm sure you have and I comment and write here for education, so I'm happy to get feedback.
I assume that the fees go mostly towards the "screening process". In my experience, these processes mostly suck. Why not get rid of it? Eliminate the cost center. Leverage your membership. Any company that is presented by a member gets looked at by the group. If a company can't impress a member of a national organization enough to get him to vouch that the company is worth looking at, then it's probably not. Everyone in the organization should be reasonably accessible for 1 or 2 coffee meetings a month (we all do it anyway, right?) to meet with entrepreneurs. if you're not – then you're not serious about investing in them in the first place. I must have 30+ meetings like this a month. I'd vouch for about 3 a month as "interesting enough" to get looked at by an angel group. Then my reputation is on the line. No further screening needed. No cost. And, bonus, if I see something that I think is interesting, I can coach them a little on getting their presentation in order and I'm the hero for bringing it to the group!
Thanks for the comments Steve. Nothing here is meant to attack Keiretsu specifically. I've just seen so much disservice to entrepreneurs by taking their money and giving them essentially nothing in return from other groups, that I've formed a strong opinion.
I'm totally with you: I've been on the other side of the table, paying to APPLY to pitch and getting zip. So I am very sensitive about finding the right kind of companies for our investors and building good relationships with the entrepreneurs.
Interestingly enough, the companies most willing to pay presentation fees are those that are doing well in their fund-raising, as it becomes a more efficient cost of capital. If they can get in front of a qualified group of investors and hit them all at once, it is much faster than chasing down a bunch of individuals. Plus groups typically work from a single term sheet (versus n X number of individuals), so the closing process is less onerous.
But I keep coming back to the concern that we aren't getting enough promising young business out in front of investors, and I might have a solution. What would you think of a "Pitch-a-palooza" where we get 5-10 early, early stage businesses to deliver 5-7 min quick-pitches to our members at no charge? We could do this as part of a regular Forum meeting, maybe quarterly?
Let's keep the dialog going – I hate to be cast in among the vomit-inducers.
No vomit here. Just a little throwing up in my mouth.
Sounds like CrowdPitch!
Don't want to duplicate what they are doing for sure. Will coordinate with them for sure.
Here's a virtual bottle of mouthwash – we can all improve!
Thanks Steve. I'm glad our model makes more sense to everyone now. I'd like to talk with you about your group joining ours to host the CrowdPitch events. I'm traveling but perhaps we could grab dinner Tuesday or Wednesday night? My email is alex@fundinguniverse.com when you have a minute. Thanks again for coming on here and clearing things up.
-Alex
Your Pitch-A-Palooza idea really is identical to CrowdPitch. Why don't we team up to make the event the best of the best for the next go-around? I believe we are looking at January for our next CrowdPitch event. We'd love to partner with you on it.
I was at the CrowdPitch event last week and it as very well done. I agree with you, David, that I'm not a fan of charging a fee. I'm glad that the guys got rid of it. That said, it was certainly a great opportunity to network with fellow entrepreneurs and some investors. Big thanks to Alex and Brock for putting on the event.
Good to know!
there's a drop down at the top of the comments.