Stypi is a YCombinator backed startup that was recently acquired by Salesforce.com. Their story details the mechanics for how a small company can manage an acquisition. It provides lessons for startups going through the process for the first time. Stypi is a real-time editor that multiple people can edit at the same time. It also supports several programming languages which makes it an especially cool collaborative tool. Jasen Chen is one of the founders who now works at Salesforce.com on the Stypi project. His story mostly relates to acquisitions of $ 25 million or less. Here are his five insights into the courtship and the eventual exit: First Contact. That first contact is like meeting someone from the opposite sex. Intentions are confusing but the prospects are enticing. First forays are usually from a founder or the corporate development department of a larger company. These people usually act on behalf of an interested internal team. Get comfortable with this person as this is the individual who will set up and facilitate your meetings. This person is also the one you eventually haggle with over terms. Further, be prepared for a long courtship. It can cost a lot of money to go through a deal and in the end there may be nothing to show for it. Don’t believe the finish line is just yards away. If you get rejected, then it will hurt all the more. Courtship. A series of meetings will take place. Mutual NDAs are part of the ritual with larger companies. Decisions to go forward are made quickly after each meeting. Remember, rejection can go both ways. Chen said they decided to end the relationship early with more than half of interested potential acquirers. Meetings move fast when things are going well. Priority for for acquisition meetings are reasonably high. Term Sheet. The relationship is not exclusive. Hopefully you are lucky enough to be pursuing several. Each company will have its own way for managing the term sheet process. How long this takes comes down to due diligence. It’s not unreasonable to ask for timelimes so expectations can be set. One you get a term sheet, it’s time to celebrate such an incredible accomplishment. Then it is time to get a lawyer who negotiates the key terms. The lawyer will explain it all and help you decide how hard to push for more favorable terms. Due Diligence and Closing. When the term sheet
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