Acquisition is an exciting time, but it comes with plenty of challenges you may not have not anticipated.
By Nancy Vitug (VP Engineering, TeleSign)
You can read many great articles about founding a company or working in a startup to find tips and tricks if you’re starting a new business. But what’s it like when your startup gets acquired? Acquisition is often the pie-in-the-sky goal for young companies. You have dreams about a large enterprise seeing value in your products, your team and everything you’ve built together. When an offer is actually made, it’s a certainly an exciting, validating time.
But the transition can also be challenging. For those who haven’t experienced acquisition as a startup employee or founder, here are a few key points to keep in mind.
1. Due Diligence can be Adversarial
As a key member of the technical team, I was in the hot seat during due diligence. The acquiring company wants to be sure what you’ve built is real – after all, they’re (hopefully) going to shell out big bucks for it.
Given that you’ve poured your heart and soul into your startup, you might take these tough questions personally. Try instead to focus on where you might have gaps; the questioning can reveal what you can or should be doing to improve. Above all, remember you’ve built something worthy of interest — otherwise you wouldn’t be sitting in a due diligence session.
2. Not Everyone Will Come Along
Part of the process for the FrontBridge acquisition included interviewing with Microsoft. It became clear that not everyone would “make it.” I hadn’t anticipated that some team members might not be offered full-time positions post-acquisition.
This can be tough on the team. Colleagues and friends may not be invited to continue with the new company, and you may also lose people who decide not to stay on after the acquisition.
3. Company Culture will Change
I wasn’t surprised that the culture changed in general. But I was surprised by some of the nuances of moving from a small company to a large company. Some of my assumptions about large companies were also wrong.
For example, I had totally incorrectly assumed that a big company would be stable and unchanging. Yet at a large company like Microsoft, people tend to move to different groups and products over the course of their career. At a small, successful startup, people tend to stick around for the duration.
4. Your Life Might Also Change
When FrontBridge was acquired by Microsoft, we were required to move from Los Angeles to Redmond. This meant making the tough decision to move from southern California to Washington State.
Combined with the team size being reduced, this was a challenge in the first few months after acquisition. Redmond is a beautiful place to live, but moving your entire company while reducing staff and trying to keep your product or service running full steam ahead is a challenge.
5. You’ll Learn More Than You Thought You Would
In my own experience with startup acquisition, I not only learned about the acquisition process, but also spent the five subsequent years at Microsoft. Working for Microsoft gave me opportunities to see how a large software firm operates — from finding great candidates, organizational structure, discipline excellence, development lifecycle and more.
This has been incredibly valuable to me as I moved back into the small company post Microsoft. The view from both sides of the fence allows me to pick and choose from an array of experiences and apply what works best for me and my team.
Of course, every acquisition will be slightly different. While the event was exciting and monetarily rewarding, there were many tough-to-navigate aspects I had not anticipated. For many people, an acquisition event is an exit from the startup – but for technical team members, this isn’t always the case! It is often the beginning of the next stage of your career.
Have you experienced a startup acquisition? What was the experience like?
About the guest blogger: Nancy Vitug drives TeleSign’s product roadmap and provides technical and managerial leadership for TeleSign’s global engineering team. She draws on twenty years’ software development experience with some of the world’s leading Internet properties, including Skype, Microsoft and FrontBridge. She was a crucial member of the FrontBridge team that facilitated the acquisition by Microsoft in 2005.