People, not companies, buy startups: An M&A happens when a CEO or a VP sees a strategic gap in the future of the company. They get startups to see what they can get done in the next few months with a deal that can be found in the business being offered.
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M&A can be capricious: Priorities may change along the way. Your company may be a good strategic fit in a year’s time, but if priorities change, you can be just a memory.
Selling your company does not mean you have to leave: M&As aren’t like grocery purchases that you just pay off the counter. Most deals have two to three-year retention, vesting, and re-vesting programs and potential earn-outs. If you are committing to an M&A, you have to work for two to three years at the acquirer’s company.
Some big company bosses look for M&As for the wrong intentions: A merger may have to do with glory-seeking than improving business strategy. Some CEOs want to prove their worth by signing in as many startups as they can, but they do not see potential hazards of their “company-hoarding.”
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Before signing and agreeing to the terms of an M&A, management should evaluate if it is the best option for the company.
Ryan Binkley is the president of Generational Equity, a Dallas-based M&A firm. Follow this Twitter account to know more about business trends and issues.
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