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Merger (or Acquisition) Recommendations?
pauly asks: "We are a small (5 man) specialized software company which is merging with a larger (200+ employee) company. Basically they are buying us to
add a whole new product line and have us be their development skunkworks. What recommendations would Slashdot readers have before, during, or shortly after the acquisition? This post is not a solicitation of legal advice: we have a very nice contract drawn up which is agreeable to both parties and which we will be signing shortly. We are looking for practical precautions or recommendations.
If you have gone through the same type of deal, what would you do the same, or differently?"
Do they really want a skunk works? Will they still want it during the next revenue crunch? If they're actually believers, why didn't they have one already?
Make sure the salespeople know what they need to about your product line.
If you've already negotiated the contract it's too late to talk about precautions.
Scarcely Credible Operation, Software Career Over, Sold Crap Only. Sued Competitors Often, Strangely Claiming Ownership.
I would say "start searching for another job" :(
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nico
Nico-Live
when i worked for a company that was bought by a larger company, i thought everything was daisies. yay, we were promised more money, large lumps of vacation time, and other assorted goodies, but the day after we were bought, we were laid off. no warning, no apologies, no severance, nothing.
if you're willing to sell your loyalty to someone with the money, make sure you get to keep your job afterwards. that's my advice.
Hear me out. Why do you want to be aquired? Here's what I see: You've developed a small and successful software company, and a larger company wants controlling interest in your company to improve its profits. You can give them that interest without sacrificing your independence, or your profit.
If you're aquired, you become employees of the larger company and will not share in the financial gain the larger company will aquire. Obviously, they see a potential for profit which outweighs cost of aquiring your company and yourselves. Most likely, by aquiring you they'll get something you would NOT give them if you gave them interest in the company and a royalty contract. Exclusive rights to your software and related expertise, most likely.
You can give them stock in your company without giving them your whole company. You can give them voting or non-voting stock, if you want. You can grant exclusive licenses to projects. So, my question is, why do you want to be aquired? Do you want a check with lots of zeros up front? Would you rather administration be handled by division manager instead of someone you have to hire and pay a salary? What are you gaining by merging? You really have to know what you want to gain to know how you should prepare.
My recommendation is to consult (read: pay) a corporate lawyer and corporate accountant (or two) over dinner. If it's administration and book keeping you're after, you can hire administration staff: as stockholders, you're in charge, they do the paperwork, give advice, and ask for direction. If it's a merger you're after, paid counsel is usually the best advice you can get, and they'll teach you how to maximize your returns and maintain control.
I'm as mimsy as the next borogove but your mome raths are completely outgrabe.
I've been outsourced twice, neither was a great experience, although the first experience, where I was "sold" to IBM at least offered better pay cheques.
The only thing I would do differently is not believe the "nice and agreeable" contract. There will be a loophole your, or their lawyers missed, it will cause problems and bitterness. Accept it will happen and plan accordingly.
Generally speaking I wouldn't recommend mergers, if you have a good product sell it to the company on an exclusive for x years contract. Don't sell the talent, it rarely works out smoothly or for the best.
The second time the company I worked for was sold, I learnt some crucial advice for the CEO. Don't say you're going to be there and support the team you built from scratch throughout the whole transition period, and then 4 days later quit, take the massive cash offer and disappear to a golf course for the rest of your life.
The people you leave behind tend to get paranoid and start looking for new jobs before you hire your first caddy...
It has become appallingly obvious that our technology has exceeded our humanity. --Albert Einstein
Be sure you know exactly why they are buying you out. Does it really make sense? By that I mean do the acquirers know what they're doing?
When the (under 10 employees) company I was working for was acquired, the owner's response was a succinct "These guys are idiots. If I could raise that kind of money I'd start my own company." He realized he was being offered a good deal and took the money and ran. The rest of us didn't make out quite so well! He was right: they had no knowledge of the business, ignored the advice of all the employees who had been there for years and ran the company into the ground.
A common request when these things happen is that you're asked to sign an employment contract so they know the important talent just won't quit. Don't bother! If you're that valuable, they're not likely to fire you anyway and the contract is unlikely to offer you anything you need. Request an immediate raise and if it isn't offered, start looking elsewhere. Not treasury stock, not stock options -- cash!!
One thing I learned from the experience is just how easy it is to take a profitable, smoothly run company and start hemorrhaging money from every orifice within months.
If the business takes a direction that doesn't make sense, ask for an explanation. If one isn't forthcoming, start looking elsewhere. The place you may have enjoyed working for can do a 180 within weeks.
The skunkworks promise bothers me. It may sound cool to do research, but you're effectively taken out of day-to-day operations where you can be cut loose without any short term effects other than the cost savings.