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Fundraising and M&A force startups to codify their company strategy

Matt Switzer · 20VC: 3 Things Acquirers Look For In Startup M&A's, How To Price A Startup Acquisition & The Biggest Risk of M&A with Matt Switzer, SVP of Corporate Development @ Hootsuite · Oct 2, 2017 · at 5:08

Matt Switzer, SVP of Strategy and Corporate Development at Hootsuite, explains why early-stage startups often delay formalizing company strategy until forced by major corporate milestones.

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“There's two big forcing functions for codifying company strategy, and I think one of those is financings and raising money, and then the other is M&A”

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Insight
Putting an explicit for-sale sign on a startup destroys value
“I think generally, unless you are in a situation where you absolutely need to sell, I think it's inadvisable to put a for sale sign in front of your company. I really think it's too much opportunity to destroy value. I think you can just leave too much value o…”
Matt Switzer Oct 2, 2017 ▶ 15:11 20VC: 3 Things Acquirers Look For In Startup M&A's, How To Price A Startup Acquisition & The Biggest Risk of M&A with Matt Switzer, SVP of Corporate Development @ Hootsuite
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Funding rounds signal M&A availability or price startups out of acquisitions
“Funding rounds are interesting. It could either signal that someone, you know, could be open or interested in M&A, or it could mean they've gotten beyond what we could do a deal in, and maybe they're out of our range.”
Matt Switzer Oct 2, 2017 ▶ 12:17 20VC: 3 Things Acquirers Look For In Startup M&A's, How To Price A Startup Acquisition & The Biggest Risk of M&A with Matt Switzer, SVP of Corporate Development @ Hootsuite
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Startups built specifically to sell early are obvious to acquirers
“Reaching out too early just defocuses the business, and can be a huge distraction, and businesses that have been built to sell early are really, really obvious to acquirers.”
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Disclosure
Hootsuite only engages VCs regarding M&A with startup management consent
“We almost always try to work through the management team directly, or if we are interacting with VCs, we are typically trying to do so with the consent of management.”
Matt Switzer Oct 2, 2017 ▶ 18:01 20VC: 3 Things Acquirers Look For In Startup M&A's, How To Price A Startup Acquisition & The Biggest Risk of M&A with Matt Switzer, SVP of Corporate Development @ Hootsuite
Insight
Acquirers prefer trusted founder relationships over engineered corporate perfection
“I think you often see startups trying to engineer the perfect process, trying to make the company look as perfect as it can possibly be, and I think probably the thing I like founders to know the most is really that trust is everything. You know, we, it's more…”
Matt Switzer Oct 2, 2017 ▶ 19:29 20VC: 3 Things Acquirers Look For In Startup M&A's, How To Price A Startup Acquisition & The Biggest Risk of M&A with Matt Switzer, SVP of Corporate Development @ Hootsuite
Insight
Technology, talent, and traction are the three M&A value drivers
“Ours is called the three T's, and these are really the three sources of value in a transaction. Everything that we do here through the M&A process centers around these three T's, and they are technology, talent, and traction.”
Matt Switzer Oct 2, 2017 ▶ 6:23 20VC: 3 Things Acquirers Look For In Startup M&A's, How To Price A Startup Acquisition & The Biggest Risk of M&A with Matt Switzer, SVP of Corporate Development @ Hootsuite
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