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How Not To Sell Your Company

David Helgason

Sooner or later someone will approach you with an acquisition offer. Here’s how I think about it, though of course biased by how much faith I have in Unity as an independent company.

Know your opportunity. If you’re committed to staying independent, like we are, you should have a good reason why. Make sure everyone on your team knows. Staying independent is a long-term project versus selling, so having a clear vision will help keep people motivated. For us it's about finding ways to help developers be more successful, and to be their Switzerland to help them navigate our highly multi-platform and multi-device world.

Maintain perspective. Big companies have entire departments that look at acquisitions. People who work there are paid to kick the tires of interesting companies. From time to time they’ll pitch deals to their bosses, but often their goal is to be able to point back and say "see I suggested that we acquire this recently IPO'd company when they were just a wee little team.” From my point of view, their job is often to waste your time.

95% of these talks never go anywhere. This may exaggerate the miss rate, but it's better to underestimate them than overestimate. Assume the odds of reaching a deal are low, and ask yourself whether entering into negotiations is even worth it.

Try to get something out of it. There are plenty of ways to get value out of deal talks besides an acquisition. It's likely that there's a way to give the would-be buyer what they want in a partnership, way short of selling your company.

Keep talks secret. Tell few people inside your organization. People go nuts when they start thinking about money, lose focus, and when you don't sell (~95% odds) they can get disappointed or confused. Also, don't get too excited yourself.

Assume the other guy won’t. I've been shocked by how careless big corporations are about the secrecy of negotiations. One usually extremely secretive company gladly talked about a potential deal with partners. Another public company announced an imminent acquisition on stage at a customer event in Asia. Expect that rumors of the talks will get out and figure out before you begin negotiating what that will mean to your relationships with partners, employees, and so on.

If you’ve lost your grip, consider selling. One serial entrepreneur told me to not hold on past the point where you feel you're starting to lose the grip on the organization. I can't attest to this, but I've kept it with me.

Use it as a motivational moment. You can use an offer to galvanize your management team: if we're not selling now, everyone suit up and be ready for another few years in the fray. Ready? Here she goes!

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