Selling Your Business

@ksrikrishna

http://designofbusiness.com/

All images are the copyright of the respective owners via Compfight cc.

Is everyone but you selling?

by Quixey

by Yahoo!

by Persistent

The wheel keeps on turning

• Quit reading TechCrunch or the papers

• Focus on building your business

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• M&A is neither new or about to take off

• More startups == more M&A

• Founders always make out like gangbusters

• Founders always get screwed

• Not everything you read in the paper is true

Busting some myths

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Photo : Ajith (അജിത്ത്) via Compfight

More than meets the eye

• Which founders did better?

• Which investors did better?

• Was the world better?

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Broadcom adds Bluetooth software through Widcomm acquisitionEE Times, 4/19/2004

Transaction value $56MCapital raised $50M

SiRF acquires Indian Bluetooth firmImpulsesoftEETimes 1/25/2006

Transaction value $15 MCapital raised $0.5M

Qualcomm buys Bluetooth and GPS chip maker CSR Venturebeat, 14/10/2014

Transaction value $2,500 MCapital raised $125 M

Where do you start?

• Understand what you want

• What do you want?

• Why do you want to sell

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Photo: I like via Compfight

The 3 people that matter

YOU YOUR TEAM EVERYBODY ELSE

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Risks in Selling Your Business

• Losing focus on your business

• Scaring or losing customers

• Scaring or losing your employees

• You lose purpose 8

Photo: Uxía via Compfight

Why do people sell

• To make money

• They prefer the starting up to running

• Want to do something different

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Photo: e-magic via Compfight

The Starting Block

• Getting stakeholder buy-in

• Knowing what’s in it for everyone

• Pulling together your selling team

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Photo Jonas Tana via Compfight

Getting Stakeholder buy-in

• Your partners & co-founders

• Your management team

• Your board and investors

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Taking care of

• Your partners

• Your team & employees

• Yourself

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Your Selling Team

• Investment Bankers

• You & your partners

• Accountants

• Lawyers 13

Finding buyers

• Customers

• Competitors

• Partners

• Others 14

Process

• Pitch

• The Dance

• The Proposal

• The Due Diligence

• The Marriage 15

Photo: bubbo.etsy.com via Compfight

The Pitch

• Information Memorandum

• Your company bio

• Why anyone should care

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The Dance

• What you want

• What they’re prepared to give

• What else you want

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The Proposal

• Term Sheet

• Spells out terms & conditions

• Nearly engaged

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Valuations & other esoterica

• More than just money

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Typical cattle market

• Information asymmetry

• Customized deals

• Sealed with a hand shake

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Photo: UNAMID Photo via Compfight

The Due Diligence

• Accounting checks

• Closet check

• Closing information asymmetry

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Photo: pasukaru76 via Compfight

The Marriage

• Definitive Agreement

• Exchange of cash & equivalents

• Legal process of merger & acquisition

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Photo: cleiph via Compfight

Sh*t that can go wrong

• Your partners go ape sh*t

• Your investors decide not to cooperate

• Your key employees cut loose and run

• Your customers or other suitors send you legal notice 23

Photo: livemint.com

Sh*t that will go wrong

• It will take much longer

• RBI rules will change

• Lawyers & accountants will complicate stuff

• The media will get it wrong

• One or more team member will be p*ssed 24

Photo: CarbonNYC [in SF!] via >Compfight

It’s a process

• Selling is not the end, it’s a new beginning

• It takes time and it takes a team

• Be clear about what you want

• Don’t be an a**hole, cynic or jerk 25

Photo : Kemeny_x via Compfight

Selling your business

• Is a project – maybe important but only one project

• Keep building your business

• Don’t forget to have fun!

• Be nice – its good karma!26

We’re selling all the time anyway

• HomeBound – a fun game from Zebu

• Now available on the Android Store

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For startup insights and lessons

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@ksrikrishna

http://designofbusiness.com/