Thoughts on Early Talks With a Potential Acquirer

Over the course of the five-and-a-half years Pardot was in business as a standalone company, we received a half dozen overtures from potential acquirers with differing levels of seriousness. After a startup gains quality market traction, potential acquirers will start sniffing around. Now, most of the inquiries are just to gather information for a corp dev spreadsheet, but occasionally there’s more to it.

Here are a few thoughts on early talks with a potential acquirer:

• Remember that there’s little chance a deal will happen, so try and keep the expectations low (don’t start dreaming of a big pay day as it’s very distracting)
• Use the interaction with a potential acquirer as a learning experience
• Even if you don’t want to sell the business, it’s a useful exercise to learn what acquirers look for in a startup
• Continue to grow the business and don’t lose sight of building a great company
• Mutual NDAs are standard but sharing detailed information isn’t a requirement
• External validation from a potential acquirer helps boost the confidence of the entrepreneurs

The biggest takeaway is that each talk with a potential acquirer should be a learning experience with minimal expectations. Potential acquirers will come out of nowhere and disappear back where they came just as quickly.

What else? What are some other thoughts on early talks with a potential acquirer?