M&A, IPOs & Exits

SaaStr on TechCrunch! The M&A “Nibble” And What To Do When You Get One

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Jason Lemkin

Hopefully, you saw us last weekend on TechCrunch.  We’re trying to do our small part and hopefully save you a few headaches and mistakes as you scale your SaaS start-up from $0 to Initial Traction to $10m in ARR, $20m in ARR, and beyond.  We’re glad — on a good day — to get as many as 8,000 readers now plus terrific syndication on CloudAve, as well as expanded SaaStr coverage on Quora, where we were named one of the Top Writers of 2012.  There’s more to come here.

It was great of TechCrunch to pick up the piece below.  After a suitable gap … we’ll just reproduce the first half here, with a link back to TechCrunch for the rest.

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BallmerSachs

Editor’s note: Jason M. Lemkin served as CEO and co-founder of EchoSign, the web’s most popular e-signature service, from inception through its acquisition by Adobe Systems in 2011. Follow him on his SaaS-focused blog, on Quora, and on Twitter.

If you are in a reasonably hot and/or interesting space, and you have a modicum of traction (or perhaps even perceived traction), after X months or X years (likely years in SaaS), you’ll probably have a day when you get an M&A {a merger/acquisition} nibble. And later, two or three or four.

The nibble can come in several forms and, more importantly, from several actors. In my experience at least (maybe 10 serious nibbles across four startups – two as a co-founder), there seem to be about four types of nibbles, and your responses and expectations should vary according to which one you get.

1.  THE CEO/CFO NIBBLE

This is the easy one. If Marc Benioff or Mark Zuckerberg email you or call you up about “getting together,” you know you’ve got a high-probability offer at a high price. Be ready for it.

At a smaller scale, this is what happened with the first start-up I co-founded, NanoGram Devices. Okay, it was the CFO on authority of the CEO, but basically the same thing. The CFO asked to meet directly, discretely, after a conference.  He said to us: “We want to acquire you.  Go shop the deal if you want — we’ll pay more than anyone else.” Well, okay then. Crystal clear. Not that the deal itself was that easy (the diligence was painful), but everything else was fast, simple, and easy. These deals are the best ones, with the best prices and the least drama. No one sweats the small stuff.

2.  THE SVP OF THE BUSINESS UNIT NIBBLE

While this one isn’t as serious as No. 1, it’s still ranks highly. Most M&A less than $100-$200 million is really driven by the head of a business unit, the SVP, not the CEO of the acquirer. If he or she wants to meet personally and talk about “synergies,” you’ll know it’s serious. But the thing is, they aren’t the CEO. So all it really means is that it is serious. Nothing may happen, and he or she is probably also looking at your competitors. And even if it does happen, it could take months or years if there’s no sense of urgency or, more importantly, fear.

3.  THE SVP OF CORPORATE DEVELOPMENT NIBBLE

See the Rest on TechCrunch here.

Published on January 23, 2013
  • markokenya

    Congrats Jason – your blog entries deserve TC visibility as they’re super informative and actually useful to entrepreneurs, unlike some startup yodas who write a lot but fail to help much 🙂

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