Startup Acquisition

A startup is acquired for multiple reasons -

The startup might be competiting with the big company. Though this kind of acquisition is not seen very often.
The startup might be complimentary to the business of big company. eBay acquiring PayPal and Cisco acquiring Linksys are examples of this.
A tech startup may be acquired for its technology. The technology must be hard to replicate either because of time, money or resource limitations.
The startup might offer the opportunity to enter a new market. The new market could be a new geographical location or it could be a new space altogether. For example, Fox acquiring MySpace allowed Fox to enter social networking space. However, Monster acquiring JobsAhead was to enter new geographical location.
The startup might offer the resources/working-setup that's hard to replicate. Sometimes, the companies are bought for the team.

While pitching for an acquisition, the startup needs to evaluate these criteria. Based on these criteria, the startup team can assess which company might give them maximum value.

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Positioning a startup for acquisition

Some pointers on what's important in acquisition.

Tips on startup acquisition process

Some tips on what to do when going through the acquisition process.

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Startup Valuation

There are several ways a startup can be valued. But the wise people informally say that valuation is not an exact science. In fact, all the valuation methodology and the related tools are all an eye-wash.

They are important but at the end of the day, the buyers have decided their own range and the sellers have also decided their own range. These tools are there for the purpose of justifying.

Even though all these tools have been around and several enterepreneurs have been made to believe that these tools are precise, the reality is that the world doesn't work this way.

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High Tech Startup Valuation Estimator

Not sure if this will calculate the correct value. However, it does tell (very nicely) what all parameters may affect the valuation.

Startup Valuation - The VC Method

Almost like lecture notes from an MBA class.

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M&A Advisory

Several individuals with experience in the area of M&A offer their services to startups. They typically advise the startup executive team about how the startup can be positioned for M&A. It can be a very intensive exercise and may involve even restructuring the company.

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CEO ally

They provide advisory in M&A to startups and mid-size companies.

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