What should you consider before you sell a startup company to a big company?

George Deeb, a manager partner at the Red Rocket Ventures Venture company in Chicago, published an article analysing the issues that entrepreneurs should consider when selling their new Gen, Red Rocket ventures in addition to investing Consulting services for new ventures are also available, as follows: I was very fortunate to have been involved in two new venture acquisitions, which were eventually acquired by large companies with a turnover of more than 1 billion dollars: The travel company IExplore Company was TUI Travel; Mediarecall, a television media company, was deluxe. In both acquisitions, investors were satisfied that they could recoup their costs, and that entrepreneurs were excited to see rapid growth after joining large companies. Although both sides will have good expectations at the time of acquisition, but integrating a start-up into a large company still faces a lot of problems and challenges: the expectations of what big companies can offer are a lot of unrealistic expectations for the things that big companies are offering, after they have been acquired. These ideas are also very logical, because large companies always have a lot of budget, planning to invest in product development, marketing and maintenance of customer relationships. But unless the specifics are put into the acquisition document, more often than not, big companies will not bring what they expect from new ventures. Of course there are many reasons, most notably because big companies focus on other, more important businesses. So it's important to put everything you expect into paper. To ensure that the person performing the acquisition is also involved in the process of the acquisition negotiations as the continuation of the above, many times if a company's support for the new company less, then the more likely to be by those who are not involved in the acquisition negotiations to carry out the follow-up work. Usually, the person involved in the negotiation is not the person to be executed in the future. This means that the future of your new ventures rests with those who have never seen them. People in big companies are busy, and there are different groups, and the last thing they want is to start a new project that they don't know about, to help entrepreneurs who have never known each other to succeed. So if you can, try to make sure that the people who carry out the deal are involved in the negotiations. The slow pace of big companies entrepreneurs are fast, quick-moving people who are happy to make quick decisions, but not in big companies, where they like to spend a lot of time making decisions and making decisions carefully to make shareholders happy. It takes only 5 minutes to make a decision in a start-up company, and it takes one months in a big company. So we have to prepare for this. After the process of a large company becomes part of a large company, it faces serious bureaucratic and cumbersome processes. So be prepared for a lot of things, like the approval process for a financial budget, a monthly financial report. There are also new project contracts, recruitment of new employees, areBe subject to the various processes and rules of a large company. For example, when I was a CFO at IExplore, he thought the company had lost 25% of his time after being acquired because he had to deal with the process in many large companies, and repeated the month after. So have a clear understanding of these things. Big companies like earn outs the so-called earnouts refers to the transaction mode that the traditional one-time payment method is changed into payment according to the performance performance in a certain period due to the inconsistency between the two parties ' judgment on value and risk. Similar to the usual gambling agreement. It just does not involve the business authority, only involves the reward plan. These earnouts are related to future performance, and specific performance indicators, depending on the contract between the two sides, such as future business income, pre-tax profit and so on. But many big companies have a way to deal with such earnouts contracts, which means that many of the earnouts that should be paid are not paid, and these are beyond the capabilities of the new-venture seller. Even big companies pay earnouts, but sometimes they fall below expectations. So when the entrepreneur is in the bargain, don't be fooled by the earnouts promised to pay, unless you see the real revenue, don't have any expectations of earnouts, or even assume it's not happening. In short, the integration of startups and big companies is like mixing oil and water, which in corporate culture is deep into the corporate DNA level. So before you sign the deal, be sure to think about it as a labor contract for a big company employee. The key point is that the acquisition of the two sides to a number of key issues to 100% of the synchronization, such as the acquisition of why the two sides are good? After the acquisition of the timetable, the budget should be aware of the situation. And don't get me wrong, I'm not saying that we shouldn't talk to big companies about acquisitions, or that acquisitions are not going to end well. Instead, remind all entrepreneurs to be prepared for potential pitfalls and problems in order to create a successful takeover deal.