Question

Topic: Strategy

Acquisition/merging Help!

Posted by AdvertSMS on 12/10/2008 at 11:42 PM ET 600 Points
We are a mobile marketing agency and as such exist more than 10 months. We've just moved from the hard period and when we started working with profit we had a proposal for acquisition/merging

What is the deal?
Another company from other country(Which is working more than 6years, has way more experience & money than me) is interested in taking over our brand. They want we to close our company and to transfer the brand to their company (allow me to stay as director of that brand offering me fixed salary + share in the company).

I've spend 1year only for the development of the idea and 10 months of hard work in order to create my company. But on the other hand If I don't accept they will enter my market anyway with much more resources and will throw me away from the business

My question:
I need advices what to do and how to get the best for my brand?


The other company still hasn't specified the details, but I need all ideas and tips on what to be careful and what to demand from that company...

Thanks in advance
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RESPONSES

  • Posted on 12/11/2008 at 5:06 AM Member
    Since they haven't give you an offer outlining the details, it's hard to respond, except that it is somewhat unusual that you would get an offer for your company after just 10 months. On the other hand, if the other company is in expansion mode and your market was on their list of areas to penetrate, they may simply view this as less expensive (and faster) way to break into your market and it could be a great deal for you. They certainly will include a non-compete clause so that if you left their company, you wouldn't be able to compete with them for a year or two--in other words you wouldn't be able to go out and start another like company, at least in that market, for a period of time.

    If the company is reputable and the deal provides you with long term security and provides adequate compensations for the work you put into starting the business, then look at this with an open mind.

  • Posted by CarolBlaha on 12/11/2008 at 7:14 AM Accepted
    Make a decision based on your long term goal of providing your service to the community. You have obviously done something right. You would have share of a bigger company. My best advice -- and I'm not saying do or don't-- is do not let pride influence your decision. Sit down, list pros and cons, make a spreadsheet, do a weighted scale analysis. I know your business is your "baby", but stick to making a good business decision. Good luck!
  • Posted by Jay Hamilton-Roth on 12/11/2008 at 10:06 AM Accepted
    What's your ultimate goal? If it was to sell the company in the future, then the future may have arrived. If the goal was to have your own company, learn, and enjoy the process, then working for someone else won't satisfy you.
  • Posted by Frank Hurtte on 12/11/2008 at 11:03 AM Member
    Welcome to the world of business. What you are describing is not uncommon. There are companies in all sectors (technology, marketing, manufacturing, drugs, etc) whose business strategy is to purchase well run start-up companies rather than starting up organically.

    And, there are people who are serial-entrapeneurs. When you look at their past you see a long string of companies they have started, owned for 2-5 years and then sold. Each one bigger and better than the last.

    You need some expert advice that should not come from a web-searchable forum. There are a number of things to think about. Contact me via my profile and I will share a couple of other thoughts.
  • Posted by mgoodman on 12/11/2008 at 11:07 AM Accepted
    Jay is right (as usual). Your decision should be based more on what you want out of your business venture than on the specifics of what you're being offered. It probably isn't reasonable to expect that you'd be able to exist without competition forever, so now you have to decide if you'd rather compete with your prospective acquirer or join them and become an employee.

    And that depends on why you started your business in the first place. If it was mostly a lifestyle decision, then nothing has changed. If it was with the hope that you could build the business to a point where someone bigger would buy it, then you're on a faster track than you anticipated.

    Don't get bogged down in the numbers and details of the offer and the negotiation unless/until you make the high-level strategic decision of what you want and how you want to live your life over the next few years.
  • Posted by AdvertSMS on 12/11/2008 at 1:07 PM Author
    I've really read good explanation and to summarize all it is all base on what think: What is my future goal? Am I oriented toward selling the brand now or in future, or am I oriented toward having own company...

    My answer is that I've started the company because I had an idea that I've spend 1year on it. I treat my company as a child. Ive established it, watching it grow, giving it direction, and keeping it reputation to be clear.... So I am emotionally bound to my company and my brand.

    My point was, the following:
    1. Should I fight for my child and even if I know that I might lose, and damage it?
    2. Should I give it to someone bigger/better that I believe that will give better future to my child?

    It is not about money here.. that is why I said that crucial to my decision will be the fact: will I have managerial power over my brand in the other company? if not, there is no way to give it like that...

    Looking foward for additional information
  • Posted by CarolBlaha on 12/11/2008 at 6:32 PM Member
    I'll repeat-- don't let this decision be emotional or based on pride. You planned to work on it 12 months, and you are ahead of the curve. I know a lot of people posted the differences between working for someone else or yourself. But it can be all. If you don't like the way things are developing, you can take your stock and quit. You'll probably have a non compete- which is fine, you can make another child. I mean you have already said it-- you feel the deal will give a better future for your child. I am a forever entrepreneur. I have owned various businesses in unrelated fields-- and its been great, always learning.
  • Posted by Chris Blackman on 12/14/2008 at 8:53 PM Member
    Hello Danco

    Well, you say it's not about money, so what is it about?

    You are concerned for your child (your brand) but if you give it up, you will lose control, unless you write the terms of the deal very carefully.

    Principally, this has to be first about what you want. You started this, it's going successfully, so where did you envisage it heading?

    There's no shame in selling for a quick profit especially if it's a big win.

    On the other hand, there's no point giving the business up if you feel there is more value to you in terms of feeding your intellect as well as your bank account by developing it further.

    You seem scared about the prospect of competition. But the competitor who wants to acquire you must surely be concerned about you and the progress you've made in the market in such a short time, otherwise they would start from a blank sheet, not by acquiring your brand. They are doing so because they think you've done something worthwhile, and because it would cost them more time/money/resources/risk to get to the same place you are now.

    So, the ball is in your court. What do YOU really want from the deal?

    I'll keep monitoring this thread for your response.

    Hope that helps...

    ChrisB
  • Posted on 12/17/2008 at 5:32 PM Accepted
    While I agree with most of the advice on how to make a decision regarding whether you want to merge your company into this larger company, I see one big omission in all the suggestions:

    You need to talk to a good attorney!

    I can suggest an excellent deal-maker who is perhaps the best negotiator I know: Ed Lewis edwlewis@sbcglobal.net

    If I were you, I would contact Ed or any good attorney you know and have that attorney negotiate for you. Negotiating a deal like this for yourself, without the help of a good attorney, is asking for disaster!
  • Posted by AdvertSMS on 12/18/2008 at 6:43 AM Author
    Thank you very much for your ideas and suggestions...
    I'll see the offer and see if it good enough to persuade me to sell my company...

    But anyway.. as soon as I get the offer I'll try to put another question with much more details
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