Get acquired! A guide to technology M&A

Most entrepreneurs will tell you they’re going big and will accept nothing less than an IPO. But when the reality of running a business sets in, getting acquired is no small feat, itself.

“With the exception of about half a dozen companies, every tech startup is for sale,” said Jim Moore, founder and CEO of J Moore Partners, a firm that specializes in tech M&A.

In Silicon Valley, where startup activity is at an unparalleled high, mergers and acquisitions are the fastest-growing exit for venture-backed companies. According to a recent study by Ernst and Young, the volume of M&A in the technology space surged 41 percent in 2011, reaching levels not seen since the dot-com boom.
“When you think about your startup’s strategy, you’d be stupid not to leave the door open to M&A,” said Leonard Chung, CEO of Syncplicity, an online data-management provider acquired by EMC in May. Chung advises entrepreneurs to maintain a low profile when it comes to shopping for a potential buyer without denying their true goal altogether.

“In Silicon Valley, everyone knows what everyone else is doing,” he said in a phone interview with VentureBeat. “Secrets don’t stay secrets for long.”

M&A is an outcome every founder will need to consider. But entrepreneurs may encounter unexpected administrative costs, potential horror stories, and plenty of speed bumps in the process of getting acquired. All told, the process is about as glamorous as putting your house on the market: It involves a thorough spring clean, a litany of experts to appraise the property, and mountains of paperwork. It’s often a painful and emotional process, and negotiations falling through at the last minute is a very real risk.