Ethical Acquisitions: A Guide for Startups

When starting a new business, the best way to make money is to be acquired

Starting a new business has the potential for big payoffs when the company gets acquired. While some startups go public, the likelihood of being acquired is much higher than going public.

However, the possibility of getting acquired often leads new founders to make mistakes that can cost them a lot of money and time.

Having advised many founders over the years, I’ve seen many make mistakes when dealing with investors. I’ve also been involved in acquiring numerous small businesses to help them grow. From this experience, I have learned that there are steps that founders can take to ensure ethical acquisitions with founder-friendly terms.

Tips for Ethical Acquisitions

Here are some tips to watch out for when considering an acquisition, and how to protect yourself.

Keep proprietary data hidden

One of the most unethical things some investors do is mine for sensitive information, often in private equity. They may try to get access to your intellectual property and proprietary trade secrets under the guise of being interested in acquiring your startup. Make sure to keep your proprietary information confidential until the sale has gone through.

Keep deals simple — especially the terms

Be wary of letting the other party determine the terms of the acquisition deal, as they may end up in a more favorable position. Keep the terms of the deal simple and straightforward to ensure a fair outcome for both parties involved.

By following these tips and being cautious throughout the acquisition process, founders can protect themselves and ensure a successful and ethical acquisition.

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