What Exactly Happens When Your Startup Is Being Acquired? – techcrunch

what does an acquisition do What does the process look like?

There are two types of acquisition process: planned and opportunistic. A planned process is one where a company searches for a suitable buyer for its business, whereas an opportunistic process is initiated by a buyer.

In any case, the process begins with first making a strong list of potential acquaintances, as covered in Part 1 of this series. Then, it’s a sprint with those potential acquaintances that (hopefully) results in a letter of intent.

From there, it’s time for due diligence, which can last several weeks. With some luck and hard work, the deal will close and you’re on to post-acquisition consolidation.

shopping sprint

Even if the sale price isn’t record-breaking, it is an opportunity to create a successful result that will maximize your long-term impact.

In an opportunistic process, an acquirer contacts the company it wants to buy.

If you have been contacted and decided to pursue an acquisition, you have a short time frame to continue that conversation and reach out to other companies on your list of potential acquirers.

In your initial conversation with an active buyer, you can expect to find out how much they are willing to offer, as well as create an outline for the process.

In a planned process, you control the timing, but you have to think about a triggering event in your business that creates some timing pressure.

In opportunistic processes, the triggering event is being contacted by an active buyer. For venture-backed companies in a planned process, the triggering event is often a funding round. You might find it interesting to the companies on your list if they think they can get you on today’s valuation at a higher valuation after raising another round.

That’s when things get busy.

a LOI. road to

Regardless of how the process began, you, your board, and advisors have only a few weeks to negotiate with all interested parties. As a founder, you will either reach out to potential buyers yourself or ask board members to do so on your behalf.