There are so many articles on how to "maximize an exit event," and even more consultants willing to be paid to help you do it. When PopCap was being sold, we spoke to multiple potential acquirers, and in the end were extremely fortunate to get a great deal from a great partner. Part of the reason things worked out so well is that we focused on more than just dollar signs. Here are some of the things we learned:
Focus on the big picture
When we were growing, a potential acquirer would express interest, and our first question was always, “Well, how much is it?” We'd spend countless hours talking with the other company about growth, numbers, and deal structure.
We’d get through all that, and then say, "Okay, we have that figured out. Now, does this make sense in the long term?" and the answer was always no. We wasted so much time in the first seven years of the company doing this. We should have focused on everything besides the numbers first.
Make sure an exit event gets the company somewhere better
In most of the successful acquisitions I've seen, the partnership makes a big difference in a non-financial way. For us, with Electronic Arts, it was about achieving a scale that otherwise would have taken us years and years, millions of dollars, and huge risk. Once that became the bar, we were able to write off a lot of potential acquirers. We were forced to figure out where we were going as a company, to make sure our partner would get us there faster, better, and safer.
Ask yourself: Would I hire these folks?
When we were talking to multiple potential acquirers, the best question I could ask myself is whether I’d want to hire the CEO or executive on the other side of the table. The answer was often telling. While there were a few extreme outliers, most of the people we spoke with weren't narcissistic fascists, and no one was dumb. But there are a lot of smart people I wouldn't hire because they were bad listeners, inept leaders, or poor cultural fits.
Focus on the legacy
When we sold, PopCap was a twelve year-old company, and our emotional tie to its long-term success was huge. The best advice I heard, and took to heart, was to focus on the legacy. What parts of PopCap would live on without me? Would it be a great or better organization in ten years, or would it disappear into the night? The process of thinking about those questions really helped me speak about PopCap and ask the right questions of the potential acquirers. It also helped them see we were serious about PopCap's long-term future.
Make sure it's a place you want to work
Look to see if the acquirer is a place where you would want to work. Do you agree with the culture? Can you learn from the leaders? Will you be challenged and grow? Will you be able to thrive and do your best work? Entrepreneurs aren't used to interviewing for jobs, but great candidates spend as much time interviewing as they do being interviewed. They don’t make a move unless they’re sure the new company is a place they want to work. Founders and executives should do the same.
PopCap was extremely lucky. We had some great investment bankers on our side, and the market was great. Even so, the most valuable energy we put into the acquisition was about ensuring the legacy of what we’d built. The great acquisition price was the by-product, not the goal.