In the past couple of days I’ve come across two start-ups that have been given acquisition offers. In both cases the Founders are completely torn between taking the cash now which will give them a cushion of cash for the rest of their lives; or saying no to the offer and continuing on their mission and maybe selling it for a lot more or a lot less down the track.
From a financial perspective there are many ways to assess the merits of selling. I am not going to dive into that Pandora’s box here and instead i’ll share a more philosophical and non-financial way of thinking about the decision.
The first part of the decision process for mine is understanding and respecting the gift you’ve be given and not to disrespect it by thinking there’s a conveyor belt of these things and you’ll stick your hand out and grab another one. I’m a believer that getting the gift of a ‘problem worth solving’ and having the ability to actually solve it is very rare.
The ‘problem worth solving ‘ is in your hands right now and it is up to you to decide if it is the right time to hand it on to the next person to solve it. Without romanticising it too much; you need to decide if you’ve actually nurtured it to the point that the time is right for its next shepherd.
Not all acquisitions mean that the current management team goes, infact invariably they are encouraged and incentivised to stay. The dynamics around this are obviously very important, as are the economics of the decision, however purely from a shepherd perspective, the decision can still be taken by looking through one simple lens.
Assuming you truly believe in the problem and your solution and you think the acquirer does too, the simple lens to look through is to ask yourself if you think the acquirer will bring a more effective way to deliver your solution. More effective might mean faster or to a wider audience or better value or a bunch of other things depending on your business. It could also mean, depending on the state of your business, that an acquirer keeps your solution alive a little bit longer.
I know being faced with this decision is very difficult and assessing things like the effectiveness is very hard. The reality is that 99% of people gravitate toward the financial merits of selling in the end.
However I hope after reading this you’ll consider my perspective and balance it against the financial merits because I often wonder how many great companies haven’t been built because they were acquired (and probably stunted) early because the Founders sold out for the cushion of cash.