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Strategy

Mergers & Acquisitions

  1. Intro to M&A

    Mergers and acquisitions (M&A) is a strategic move that companies undertake to achieve growth, expand their market share, or gain access to new technologies and products. M&A is a complex process that involves financial, legal, operational, and cultural considerations. It is essential to have a clear understanding of the goals, risks, and challenges of M&A before embarking on the journey.
    • Union Square Ventures logo
      M&A Fundamentals

      Fred Wilson, Managing Director, Union Square Ventures

      Fred explains what a merger is vs. what an acquisition is, the two types of payment (cash and stock), and the standard structures (full company purchase vs. asset deal).

  2. When to Sell

    Deciding when to sell a company is a critical decision that requires careful planning and analysis. Some of the factors that may Influence the timing of a sale include market conditions, competition, industry trends, financial performance, and personal goals of the owners. It is crucial to have a realistic valuation of the company and to prepare it for sale by addressing any operational or financial issues.
    • Color Genomics logo
      5 Reasons To Sell Your Startup

      Elad Gil, Co-founder, Color Genomics

      Elad covers reasons to sell your company: 1. You are exhausted and dont want to keep going. 2. The founding team is about to blow up. 3. The acquirer is willing to "pay ahead" substantially. 4. You are about to get massively crushed by a competitor. 5. You need financial security or regular cash flow.

  3. How to Run an M&A Process

    • Shopify logo
      How to Sell Your Startup: The Complete Guide to Running an M&A Process as a Founder

      Daniel Debow, VP, Product, Shopify

      As a 3-time founder, Daniel provides guidance for founders on navigating an acquisition process. He stresses the importance of cultivating relationships with executives at potential buyer companies well before beginning an acquisition process. These relationships can help position a founder's startup as a solution to a larger company's problems. When ready to initiate discussions, founders should leverage trusted contacts and be prepared to clearly articulate how their startup fits the buyer's needs. Proper preparation includes researching a potential valuation range and having sales materials optimized for each target company. Daniel outlines factors that can attract buyers and red flags to avoid, such as inflating metrics. He also emphasizes treating the process like a job interview and providing a timeline. Finally, he provides tips for founders and their teams to smoothly transition after a deal closes, including setting 90-day goals.

  4. Pricing: How Acquirers Value Acquisitions

    Pricing is a crucial element of M&A, as it determines the value of the target company and the terms of the deal. Acquirers use various methods to value acquisitions, such as discounted cash flow analysis, comparable company analysis, and precedent transaction analysis. The pricing process involves assessing the target company's financial performance, growth potential, market position, and competitive landscape, among other factors.
    • Color Genomics logo
      M&A Ladder: Position Your Startup To Sell it For More

      Elad Gil, Co-founder, Color Genomics

      Elad goes through different ways acquirers value acquired companies, with valuation ranges as of 2011: 1. Team Hire ("acqui-hire") 2. Team Buy 3. Technology Buy 4. Business Asset 5. Strategic Asset
    • Union Square Ventures logo
      M&A Issues: Price

      Fred Wilson, Managing Director, Union Square Ventures

      Fred summarizes pricing in M&A: do the work upfront to get to a target price that makes sense to you, your senior team, your investors, and will make sense to the universe of buyers you want to target. Then figure out how to get multiple bidders to the table to get the best price. And make sure you want to sell the business before you go through with all of that. Because getting a great price for your business is not easy and when you've accomplished that, you'll want to be able to say yes comfortably.

  5. Integration: What Happens After the Sale

    Integration is the process of combining two companies after a merger or acquisition. It involves aligning the Organizational Structure, culture, systems, processes, and people of the two companies to achieve the strategic goals of the deal. Integration is a complex and challenging process that requires careful planning, communication, and execution. Successful integration can create synergies, reduce costs, and enhance the value of the combined company.