Should you build a startup expecting to be acquired by a specific company?

Compatibility with your vision? Does 1+ 1= 3 or even 5? Personality mix? If you are going to stay with the acquired entity. These might be more important than any of the numbers.

I think the best place to start is your startup's net worth which includes all assets, the salaries of your staff, and total sales. Say for instance, your business' net worth is $300,000. That's a good middle ground starting point, but your price to this other company can rise or drop from there. The next step would be to study your competitors and see if you can estimate their approximate net worth. If you can research about 3 to 5 companies in your competition and space, take the average, so the average could be $450,000 for instance. Next, have several meetings with this company and see how bad they really want you and how far they are willing to go to acquire you. When I say several meetings, you need to really see what they are willing to pay and compare it to your net worth and average net worth of your competitors. You may be able to go higher from there and let this company negotiate your price down. Be prepared to show them the average net worth of your competition and yours, but only show them the higher figure so they can negotiate your price down. Have an absolute lowest price that you are willing to go to sell. Good luck. Bruce

Naturally 1001 variables play into this that I'm blind to but here are some assumption laced thinking points: You're profitable, upwards trending, business, in a very competitive vertical. Yes? You guaranteed have a Buyer, unless: 1. Your asking price is outrageous. Not likely as we've closed strategic sales that were 12x revenues. It doesn't get much more aggressive than that. 2. There aren't enough strategic or institutional buyers. Nope. The buyer market is wide with creative outreach. We've rarely tapped let's say 20% of our pool before successfully securing multiple qualified offers. (And we hold a 100% close rate). 3. You're so big ($1B+) that only a few have an opportunity to buy you AND they don't like you or your brand. Unlikely? More likely... 4. The outreach effort is nominal. Most brokers and M&A intermediaries boast a sub 40% closing ratio and far too many of them are "listing agents" -- whereby they list a property, announce it to a pool of buyers in their database and then "wait". We've seen deals that we normally turn around in 60-days with all-cash offers, take 18-months for "payment plan" deals closed by other firms. The results based on the experience and model employed is indeed apples to oranges. 5. How your business is presented (packaged) is not producing conversions. This too would then be a fault on your banker's side. We "spy on" the competition - it's business as usual on our end - and the typical prospectus and marketing collateral and followup materials are, well, embarassingly slim from, well, everybody. I've never encountered a problem with "the market" (the strategic buyers) and we've sold very niche and distressed properties. We have declined taking on deals where the asking price was a number picked out of la-la-land (in which case we offer complimentary guidance, feedback and let them pursue other avenues for closing the deal - which basically never happens at that asking price)... but that's a sensible discussion and likely one that was already had. If your exit is sub-$100M, your asking price is reasonable (even if aggressive), your business is indeed strong on its metrics, growth and brand value -- then any lack of offers sits with your banker. You're likely looking to play professional basketball but you brought in a kid from a high-school team. Skills mismatch. Upgrade your "player" and you'll move towards a win quite rapidly.

Hello, I might be interested. My name is Humberto Valle. Feel free to Google me and let me know if you would like to partner.

Let's start with the premise that an investor is willing to invest "subject to mobile." Unless there is a term sheet that states this, what is far more likely is that an investor was pitched and declined to invest citing that they don't have a mobile offering. The entrepreneur likely said something along the lines of "well can we come back to you when we have a mobile offering?" and said "sure." In this scenario, there is no actual commitment or even high probability of closing an investment. So you want to start by clarifying what the actual commitment is - if any - since entrepreneurs can often misinterpret investor sentiment. Although startup to startup mergers do occur, they have a high point of failure (failure to actually close the deal) because it's very difficult to value the two companies and without real resolve from both teams, it's difficult to establish which is worth what percentage of the merged entity. All of this being said, it's really about what you want. Do you want to go it alone and build a big business behind your app, or would you prefer to be part of a team? Can you recruit a better team on your own than the one they already have? If you are unsure of your desire to go it alone, and unsure of your ability to recruit a better team for your own startup, then you may wish to consider their offer, but I would caution you not to actually close the merger until after the money had been raised. Otherwise, you are at risk of assigning your work to this combined company and if it can't raise you're then stuck. The good news is that it doesn't sound as though you have investors in your company so that actually reduces the complexity of the sale. You should really focus first on whether you love these people. Do you want to work with them everyday for the next 5-7 years? Get there first, and then consider everything else I've said. I'm happy to discuss this in more detail with you in a call. Best of luck!