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Startup Acquisitions: What’s Grace Got To Do With It?

The stars were aligned for GetApp. Gartner was in, and after years of sleepless nights, the highs and lows, the ups and downs–it was all coming together. A new journey was about to start. 


Thinking through an exit strategy

When Manu & Christophe founded the company, first and foremost they agreed on one thing, being laser-focused on making GetApp profitable. They were both in an unknown territory. So instead of having a set exit strategy, they decided to use a level-headed approach.

They both were in their 40s. They understood that they wouldn’t have many more opportunities to get this right. “Failure was not an option for us. We figured if we build a good company, and the rest will happen organically. Knowing who would acquire you in 8-10 years from now seemed impossible at the time.”

They decided against building GetApp’s business around an exit strategy. Banking on an acquisition seemed too risky, even though “some people are really good at it,” Manu clarified.

Manu explained how some companies will “identify what’s missing in someone’s portfolio and they build a company around it. Many startups build their companies around an exit strategy. Companies like Salesforce, Facebook, and Twitter will eventually acquire the lucky ones.”

However, GetApp’s founders found this business model too aggressive and risky. The knowledge of their geo-specificity had a lot to do with their decision, too. “In Europe, we’re slightly more conservative. We don’t consider a failure on a resume as a good thing,” said Manu, laughing, “it’s very different from the U.S.”

GetApp's Office: Prior to the startup acquisition

Considering an acquisition offer

Both Manu and Christophe looked closely at company fit when they analyzed acquirers. “We were conscious that not only our product was getting acquired, but so were our people,” Manu reflected. 

Manu witnessed first hand how ugly startup acquisitions can get when working at Sun Microsystems. “Startup acquisitions can quickly become huge failures if there is a lack of product alignment or a culture shock. Our people helped us get to this point and we really wanted them to also reap the benefit of their hard work.”

“Surely, one part of the exit process will always be selfish. An acquisition is a game-changer for you, your family, and your career. However, the acquisition is also a game-changer for our team.”

With a lot of pride, Manu went on to explain how “an extremely satisfying part startup acquisitions is knowing that the company we built is still rapidly growing,”

Startup acquisitions: Celebrating the acquisition

So when is the right time to plan an acquisition?

“As long as you’re growing and profitable you’re in control of your destiny. That’s why the main KPI in a B2B startup should be revenue. If you are profitable, you don’t need to raise money or get acquired. Not only can you pay yourself and your team, but you can also make business decisions without an additional pressure.”

Following their initial strategy, Manu and Christophe growth-hacked their way to profitability through SEO & SEM. Their company’s profitability made them a favorable startup acquisition. They were not in a huge rush, but they didn’t want to miss their window either.

Manu and Christophe still wanted to make sure they understood their market and monitored market trends constantly. As a result, They set up Google Alerts, monitored TechCrunch, and even built their own mini-integration to Crunchbase to monitor funding announcements.

“We wanted to understand who is getting funding, who’s buying whom and why” — Manu explained. “When you see that startup acquisitions are happening in your market, you need to ask yourself if that’s a threat or an opportunity for you. Will that make your competitors stronger? And don’t be shy about reaching out to a company who’s acquiring in your space to understand the rationale!”

And this approach paid off. The rest was history.


6 tips for startup acquisitions

Here are some tips for entrepreneurs looking to build out their exit strategy:

  1. Make sure you have a “clean house” from day one. Accounting, legal, IP, HR — have all your ducks in a row. Everything is scrutinized during due diligence. A small inconsistency can kill the deal or shave some serious dollar signs off your valuation. Don’t be cheap when paying for financial and legal services – or you may regret it.
  2. Don’t get lost in translation. Hire a local advisor if your buyer speaks a different language, or is from a different culture. 
  3. Be in touch with M&A managers at companies acquiring in your space to build your exit strategy.
  4. Resist the sirens of intermediaries that will attempt to solicit you earlier, but don’t miss your last window of opportunity either. It’s a fine balancing act.
  5. Make sure you have a Plan B if Plan Acquisition does not pan out. The best way to plan for your exit strategy is to keep growing your business.
  6. Never have a bad relationship with your competitors. You never know how life will turn out. Your competitor could be your acquirer. It’s a small world.