Our startup is the process of being acquired. We're past the LOI, due diligence and have agreed on a price and terms. We haven't discussed a potential closing date yet.
We aren't thrilled about the offer, but we've determined that it isn't feasible for us to continue our growth alone. We are passionate, experienced and love what we are doing but we all have little mouths to feed and aren't in a position to downsize and eat ramen noodles. We are late bloomers so to speak.
I can't help but feel that it would make sense to reach out to other companies whose future plans may align with the space we are currently growing in but I have no idea if that's considered wrong. I'm the software engineer and I view this as the selling of anything else. To me, it would seem wise to at least see if anyone else would be interested since we never made it public to anyone that we'd even consider selling. This company flew me in under the pretense of potential partnership and bam, they surprised me with wanting to acquire us.
The entire team feels very grateful but most of us feel like we'd regret not asking anyone else.
So, would it be wrong to reach out to others and essentially convey that we are in the process of being acquired but if you're interested, we are entertaining offers?
Would rather suggest you focus on current buyers and either table a deal you expect to them or walk away and then solicit other bids...See two prev messages re soliciting bids.
I'm not an attorney but your options could be limited to what your LOI states. In general though I think the shortest distance between you and getting the deal you want is likely with your existing potential buyer, not some third party you havent started speaking with yet. M&A activities are typically a very long and drawn out process. Start soft suggesting alternative packages now to see how your potential buyer responds, but I'd focus your efforts on negotiating those efforts with the current company first and foremost. Put right and wrong aside for a second (that is in the eye of the beholder), the better strategy with the better return for your time is negotiating with the existing team.
You should consider reaching out other potential buyers through an investment banker. I would not recommend you to approach them directly. An investment banker will take care of everything.
Feel free to setup a call if you need my help.
Yes, reaching out to other companies to test the water is vital. But that's something you do BEFORE you sign LoI and get into DD. In fact, you are probably under exclusivity anyway (and are legally bound to not discuss the sale with any other prospective buyers).
When the sale is being handled by a professional advisory firm they would ensure that competing bids are attracted at the start of the process, not past DD with one party.
Apart from the ethics, there are many ways you could end up losing your existing deal if you start entertaining or soliciting other offers at this late stage.