When I was doing my first startup, my rule number one for M&A: Companies do not get sold, they get bought. It’s probably the single most important thing. It’s very difficult to take a company, dress it up and go sell it. Any good acquisition happens because buyers come looking to find the company being acquired.
The second thing is: it’s important to make sure the M&A process is not a one-time thing or an isolated incident. It’s something you have to be thinking about and working towards for the life of the company. For example, with CardMunch (which I invested in and which was acquired by LinkedIn). They pitched an idea (to me as an investor) that they wanted to work on. But I didn’t like the idea but I said, “Let me pitch you on another idea.” (It became an app to digitally capture business cards and integrate with your address book). I said to them, these are companies that could be interested to buy you: LinkedIn or Salesforce. So at the point of inception we’d already identified who could be potential M&A targets.
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