Great Companies are Always Bought (or Why Its Hard to Sell a Company)

Last week, I attended the monthly Startup2Startup dinner down in the South Bay.

In general, Startup2Startup tends to be one of my favorite startup events with high quality speakers and engaging small group conversation over dinner and last week’s event was no exception.

This month’s theme was “How to Sell Your Startup” and featured a panel discussion from Jack Abraham of Milo (recently acquired by eBay), Brian Mason of Typekit (recently acquired by Adobe), and Leonard Speiser of Clove (who sold his previous startup to Yahoo!) discussing the details of their acquisitions and best practices for selling a company.

Following the panel, each small dinner table group spends time discussing the panel and their own experience with the topic and what became quickly apparent was how the title of the panel was a misnomer – that in reality, none of these companies had been sold – but rather had been acquired with Founders not initially having plans to sell the company.

For both Milo and Typekit, the companies were simply growing and building out partnerships down the path to building a long-term business.  In both cases, one (or more) of their partners had realized the incredible amount of strategic value each represented for the company in terms of both product and team – and pushed to acquire the company.  Similarly, Leonard’s team had just launched their product and had a long runway still available to keep growing – but the business became highly strategic to their acquirer and acquired them early in their lifecycle.

In all three cases, the Founders had told the company that would eventually acquire them that they were not for sale and that they were building a long-term business – in some cases, multiple times to multiple people – and each of the Founders mentioned this commitment to building value and long-term belief in the vision of the company as a reason that they were able to have successful transactions.

For a panel on how to sell your startup, it was an interesting lesson to be learned:

You can’t really sell your company.  Focus on building long-term value and a real business and the outcome will happen.

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I work for True Ventures, an early-stage venture capital fund with offices in San Francisco and Palo Alto. We partner with promising entrepreneurs at the earliest stages in the technology market providing hands-on management support to guide our portfolio companies through the challenges of early growth.