When acquisition negotiations fail, might both parties come to the table again in the future?
Like many things in life, I think it depends. Ultimately in my experience in depends on the why.
Let me give you two personal examples.
In my first start-up:
- Before we got up and running, I went to our ultimate acquirer and asked them to buy our technology for $50,000. They said no.
- Two months later, we’d signed one of their largest customers. They offered to buy us for $5,000,000. We said no.
- The next month, they flew us out to HQ and met with everyone and offered to buy us for $9,000,000, pre-funding. We said Sort of Yes. But … they didn’t close it.
- Instead, they offered to invest. We said no.
- Two months later, we’d closed $6m in contracts with their customers.
- Eight months after that, they bought us for $50,000,000.
We were an existential threat to their core business, at least a part of it. Until that was no longer the case … the interest was always there.
On the other hand, the second time, it was different. We’d known our acquirer for 5+ years but they’d never made an offer to buy the company. When they finally did, it was with the direct discussion that if we didn’t sell … they buy someone else in our space.
So I do suspect that was a one time-ish thing, for a variety of reasons. If we’d said no, they would have bought a smaller competitor (most likely). And importantly … by the next year … the strategic imperatives likely would have changed. In fact, they did.
So my uber-learning is there are two types of acquisitions here. CEO-drive acquisitions of “jewels” that the CEO always wants, and will see as accretive for years to come at least. When that jewel comes on the market — the CEO will still want to buy, even 1, 2, 3 years down the road. Especially founder CEOs. Founder CEOs are always thinking 3, 4, 7 years down the road once they are at scale.
But an SVP-driven acquisition is usually done to fill a hole in this year’s plan. The SVP may be planning years down the road … but her #1 priority is hitting this year’s plan. And the “simplest” and fastest way to fill a hole in that plan is a quick acquisition.
Thing is, next year … the hole may be different. ‘Cuz the SVP-level KPIs and plan may well change.
So … if you are a jewel for the CEO, be cool when you say no, you’ll probably get another shot. But if you are a tuck-in for an SVP … when you say no … that may well be it.
A little more here: