8 Tips For Getting Acquired

This blog post was written by Dan Martell and was published on Maple Butter yesterday.

People say that companies don’t get sold, they get bought and I couldn’t agree more. On October 4th, 2011, my startup (Flowtown) got acquired and I wanted to share some thoughts on how things came together. First off I wanted to personally thank Steve Anderson, Tim Young, Alex Bard, Tony Conrad and Leonard Speiser for their time and advice throughout our process. It definitely takes a village. So, with that – I’ve taken some time to reflect on things that worked for us and compile a list of tips that might help you if you plan at some point to exit via an acquisition.


Flowtown started as a scrappy bootstrapped self funded startup. In the beginning we were a product company disguised as a service company (for customer development) then decided on our first product; landing pages (a.ka. Flowtown V1) – which failed miserably. Luckily, we moved fast from failure, “pivoted”, and quickly launched the product that got us to profitability and a model to scale: Social Discovery (a.k.a Flowtown V2).

There’s definitely a longer story behind this but the reason I’m telling you this is because we never planned on getting acquired, or raise venture for that mater. We wanted to create a huge, meaningful company that made social media marketing easy for the small business owners and created a lot of value in the world. Along the way we nailed our model and decided to grow by raising money. That’s when things changed as our investors (and us) obviously wanted to deliver a 10x return on that capital. The key is to focus on growth and creating value for your users or customers, not building a company to get bought.


SunriseSteve Blank talked about this last year at SXSW 11′. He “suggested” that for most startups – we’re essentially filling a white space in a larger companies trajectory. If you list out the potential companies that might find what you’re doing interesting, lets say 10, and assuming 3 people per company, you could potentially reach out and start a relationship with the 30+ people that would be involved in making this decision. That’s pretty interesting if you think about it. My suggestion is that you make the list of companies, and people at each, and reach out to them early. Find them at events, share interesting perspectives on the market or whatever to create a relationship early even if they you don’t plan on selling.


If you’re going to get acquired, there’s really three mail people at each company that will be involved in this process.

• Product Manager

• CEO / Founder

• VP of Corp Dev

Depending on your size that might be one person but it’s more likely that it’s three people. In those situations it makes sense to list all three people per potential acquirer and figure out a ways to start a relationship with each.


marina bay sandsWhen we started Flowtown, the social discovery product, we realized that we needed to get as many emails in our system – which meant create integration with as many CRM, Email and Form applications out there. We spent the first 8 months reaching out and building integrations with ConstantContact, Salesforce and Wufoo – in total we create 13 integrations. Even though we had no intentions in selling the company – we realized that it made sense to start building these relationships.


The number one thing you can do to help optimize for getting acquired is creating a bunch of value for both your customers and everyone that you come into contact with. Maybe it’s just part of both Ethan and I’s nature, but we love helping others. Everyone from early customers who trusted us with your early prototypes to product managers at big companies that want to have coffee and talk about where the industry is going. We believe that the only way to succeed in life and business is to create value for everyone that you connect with. In hindsight, many of the relationships and introductions that enabled us to have this outcome were based on this core belief.


Reid HoffmanWhen we initially got inbound inquiries from companies looking to “talk”, the first thing we did was reach out to our lead investor Steve Anderson. Steve has been investing in seed stage companies longer than I’ve been an entrepreneur and has helped many portfolio companies over the year through the process (most recently – Heroku). His advice was invaluable and made us feel comfortable with the reality. We then reached out to friends in our network who had recently done similar. Talking with a half dozen entrepreneurs who within the last 6 months announced their acquisition and getting an understanding for the steps involved, how to negotiate, what to expect and what things to understand really helped bring clarity to the process. It was energizing and amazing. If you don’t have a network of people to call, don’t hesitate to cold email another entrepreneur who’s done it and just ask. Trust me, if you’ve built something worth buying – most entrepreneurs will spend 20-30 minutes on a call with you to give you advice. We realize how critical good advice can be at that stage.


The best situation is to create a competitive process. The only way to do this is to have multiple offers. Try and get all conversations moved forward and arriving at the same place, at the same time. Easier said then done – it’s definitely like herding cats. However, if you do this – something magical happens, you get leverage. You can also get leverage by first going out to raise a round from VC’s and getting a term-sheet. The process is definitely a huge time suck so manage it accordingly. Like any sales process it’s a funnel. Ideally you’ll want to start with a list of 9 companies in the top of the funnel to get 2-3 in a place to make offers and get leverage.


There is only one place i wan`t to be in everyday.......Home!Having recently gone through this process it’s important to mention that you should really think hard about what kind of “home” you want to live in. We ended up choosing Demandforce because they aligned with our company, culture and product roadmap and they’re amazing people. I could easily see where a company might make a different choice based on the brand, price or terms of the acquirer. You startup is your baby and you should think hard about which family or “home” you want it to grow up in – it makes a HUGE impact to your happiness outside of the financial up side. Remember $$$ won’t make you happy.

All the best.