How To Lure A Giant Like Facebook
Into Buying Your Company
A great business is bought, not sold, so, if
you look too eager to sell your business, you’ll be negotiating on the back
foot and look desperate—a recipe for a bad exit.
But, what if you really want to sell? Maybe
you’ve got a new idea for a business you want to start or your health is
suffering. Then what?
As with many things in life, the secret may
be a simple tweak in your vocabulary. Instead of approaching an acquirer to see
if they would be interested in buying your business, approach the same company
with an offer to partner with them.
Entering into a partnership discussion with a
would-be acquirer is a great way for them to discover your strategic assets,
because most partnership discussions start with a summary of each company’s
strengths and future objectives. As you reveal your aspirations to one another,
a savvy buyer will often realize there is more to be gained from simply buying
your business than partnering with it.
Facebook
Buys Ozlo
For example, look at how Charles Jolley
played the sale of Ozlo, the company he created to make a better digital
assistant. The market for digital assistants is booming. Apple has Siri, Amazon
has Alexa and the Google Home device now has Google Assistant built right in.
Jolley started Ozlo with the vision of
building a better digital assistant. By 2016, he believed Ozlo had technology
superior to that of Apple, Amazon or Google. Realizing his technology needed a
big company to distribute it, he started to think about potential acquirers. He
developed a long list, but instead of approaching them to buy Ozlo, he
suggested they consider partnering with him to distribute Ozlo.
He met
with many of the brand-name technology companies in Silicon Valley, including
Facebook, which wanted a better digital assistant embedded within its messaging
platform. They took a meeting with Jolley under the guise of a potential
partnership, but the conversation quickly moved from “partnering with” to
“acquiring” Ozlo.
Jolley
then approached his other potential partners indicating his conversations with
Facebook had moved in a different direction and that he would be entering
acquisition talks with Facebook. Hearing Facebook wanted the technology for
themselves, some of Jolley’s other potential “partners” also joined the bidding
war to acquire Ozlo.
After
a competitive process, Facebook offered Jolley a deal he couldn’t refuse, and
they closed on a deal in July 2017. Jolley got the deal he wanted in part
because he was negotiating from the position of a strong potential partner,
rather than a desperate owner just looking to sell.
*** Richard Kranitz (Wisconsin) is an experienced attorney and business consultant in the areas of corporate, securities and tax planning for corporations, partnerships, joint ventures, limited liability companies, multi-unit enterprises, and a variety of different non-profit entities. In addition, he has counseled their owners and executives in compensation planning, estate plans, and asset protection. Attorney profile at: https://solomonlawguild.com/richard-a-kranitz-esq
