Startup M&A: 7 Mistakes Founders Need to Avoid | Dose 055

Why do M&A deals fail? Get key lessons & common mistakes to avoid.

So, how do startup exits work? Mergers and acquisitions are inevitably going to be a part of that conversation. The failure of M&A deals can be attributed to several avoidable factors founders need to be aware of. Whether it’s a startup acquiring other startups or being bought by a large strategic, you’re probably wondering: How do I make my acquisition successful? In this guest Dose, fundraising consultant and M&A advisor Alejandro Cremades offers his take on what you need to know about mergers & acquisitions. Throughout the Dose, we’ll touch on questions like: How does a startup acquisition work? What happens during an acquisition process? How long does a startup acquisition take? How do you prepare a startup for an acquisition? Alejandro’s lessons will help you understand how to successfully navigate the startup acquisition process. That’s the common mistakes and top M&A strategies for startup founders in a 15-minute Dreamit Dose!

Alejandro’s DealMakers Podcast:

0:00 - Intro
1:18 - #1 | VC Return Expectations
4:32 - #2 | Raising & Exiting Concurrently
5:23 - #3 | Stock vs. Cash Deals
7:35 - #4 | Post Merger Expectations
10:25 - #5 | Cultural Fit
11:44 - #6 | Emotional Attachment
13:25 - #7 | Renegotiating Terms
14:34 - Outro

[JasonPullara]

Man, this episode really made me say "wow, Alejandro is fucking *smart*" I'd love to see more content with him in the future.

[WeatherGuardLightningTech]

Very useful info on M&A's and how to approach the process!

[ahmadalanazy]

Thank you Steve, great content as usual.

[kchwophy]

Interesting twist to the series. I'll definitely watch out for these when I get to the point of exit in 4 years (maybe) lol. Thanks Steve!

[daverobau]

Another great video. Thank you, Steve.

[UtoobNam]

Hey great info!
Regarding this first point; what would happen if a founder takes a couple of million and turns it into 'just' a reasonably profitable business, just not amazing or scalable; the investors get mad because they don't get their 10x return? What would they do in such case? Can they fire the founder if he isn't interested in taking up more investment/risk?

[williamphillips]

Too high level…provide specifics. True in the “M&A” acquisition phase most parties are wearing blinders. That’s why it is crucial to have a set of assessment gates and 3rd party that is unbiased (outside viewpoints whether they are in or outside your company) perspective. Deals fail because expectations are not met.

[basedpatriotLT]

Can you explain how early investments makes it harder to exit (investors wanting at least 10x)?
Let say early investor is for 50k for 20percent shares. Company valuation 250k. So you only need to exit for 2.5 million to satisfy 10x.
If late investor invest 500k for 20 percent, your evaluation is 2.5 million. You need to exit for 25 million to satisfy 10x.
Seems harder, not easier. What am i missing?