Bill Burnham of Celsius Capital has written a really good post on the key planning steps to take to create the right "environment variables" for a favorable M&A outcome.
To be clear, his post is less about, "If you want to get acquired, do this," and more about, "Because an M&A outcome is one of the key 'winning outcome' scenarios for a start-up and its investors, doing these things lays a foundation for an acquisition being able to take flight and get to the goal line without deal killing friction."
Having sold a company that I co-founded, Rapid Logic, to a public company, Wind River, and having taken strategic investors on (something that as an entrepreneur I disagree with Bill and recommend -- if they are truly strategic and you can navigate the financing terms that Bill references), I can tell you that most of the points he raises are bulls-eyes.
For example, not having a right-of-first-offer or a right-of-first-refusal in our prior financings (by default it seems that strategic investors ask for this), we were able to create a quasi-auction atmosphere since prospective acquirers knew they could get into an offer/due diligence discussion without getting pre-empted by the strategic investor. And it only takes two interested buyers to create an auction.
Similarly, we were able to use the imminence of a pending "no shop" commitment to get a prospective acquirer to rapidly step to the table and make an offer on the company.
The key point is that this is all a by-product of planning with the end in mind, and akin to football, the M&A window is the "two-minute warning," where how you manage the clock, what plays you execute and (failing proper planning) what plays you can't execute is key.
The only point that I would add that is somewhat orthogonal to Bill's excellent post is that founders and/or senior management really owe it to themselves and their team to have a clear post-acquisition plan lined up with the acquiring company. This includes things like, who stays, who doesn't, what roles people play, products, pricing and features to be supported, etc.
While all of this seems obvious, history suggests that the majority of M&A outcomes fail to realize their potential in terms of maintained momentum of the acquired company's products/services and engagement of the acquired company's people. Lack of communication and coordination is the number one reason for this, something easily exacerbated if the acquirer is a large company where the M&A team is different than the operational team that the acquired company will be running in.
In the zeal to make a deal, this is one area where attention to the salient details and loud, clear broadcasts on the decisions pertaining to those details is key.
