Yesterday I hosted a virtual session with 2 former Box co-workers who encompassed the 2 sides of a bona fide M&A transaction: (1) a head of corporate development representing an acquirer and (2) a startup CEO representing the acquiree. We titled the session “Don't Get Arrested During Diligence and Other Startup M&A Advice” because (a) that was an anecdote that actually came up during the discussion and (b) we all share a a sense of humor around the quirkiness of corporate life. But all joking aside, M&A is a topic on which there is not much public literature, because the people involved are too busy innovating or operating, so it was really eye-opening to get a first-hand account of how a deal came together (Box’s acquisition of Butter.ai). The most interesting thing for me was this all happened in 2018, long before it was cool to put .ai in your company name…
Check out the whole conversation, including some great audience Q&A, in this video episode. Note the full video is only for paying subscribers, so if you haven’t upgraded yet, you can do so via the link below.
We’ll also be discussing this episode further in the Run the Business private Slack community, another benefit of the paid plan!
We started the conversation talking through how an acquiring company sets a strategic vision and shortlists a set of investment areas for which acquisition might make sense. We also touched on the criteria used to find the right team - one term that was used to describe the type of startup talent required to up-level a focus area at a larger company was a “kick down the door mentality”. It was also interesting to learn how critical executive sponsors were to getting a deal done and how much effort goes into maintaining momentum within a larger organization.
From the perspective of the startup being acquired, the serendipity of how things come together was surprising; if you’re busy building a business and you get an inbound offer, it triggers a diligence process that you hadn’t accounted for at all and can be a distraction if it drags on too long. Given that the example we covered was ultimately a successful deal, the big takeaway was actually integrating startup into scaleup was “the best MBA you could ever imagine”.
