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Comment by dchest | Hacker News Reader

As far as I understood the linked post, that's an incomplete tl;dr. You missed these important parts:

1) In the words of Buffet, "there would be no chance that a deal would be announced and that the buyer would then back off or start suggesting adjustments (with apologies, of course, and with an explanation that banks, lawyers, boards of directors, etc. were to be blamed)" [https://news.ycombinator.com/item?id=13906176]. Most of such re-negotiations can only be explained by screw ups in the decision making process or dishonesty of the acquirer trying to squeeze more from the tired owners.

2) Not screwing with the acquired businesses: they buy companies because they know their owner-managers are what made these companies successful, so it would be a stupid decision to replace them or change their operations.

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You're right on 1). Certainly reputation can get you much better terms, but it takes a really long time to build.

I remember a famous fund launch recently and I was about to pitch them but then read up the main partner's comment history and realised his demonstrated character and worldview did not match the (excellent) marketing. That was enough to put me off even just getting in touch. Being upfront that you play like everybody else might be a better strategy (prisoner's dilemma version: "like all the other funds, we assume defect-defect; we won't try and get you to cooperate so we can defect quietly"). In other words a standard negotiation with both sides having written in guarantees to protect themselves from worst case scenarios.

On 2), every investor claims they will be hands off and trust owner-operators. However, not only is this rarely the case in practice (why else are board seats so important?), many funds explicitly argue synergy as a competitive advantage with their limited partners and the community. E.g. they get you the C-levels you're missing, an experienced marketing and finance team from their network, help you find clients, investors... and if things go badly, they eject you and put in one of their turnaround names. How can you know ahead of time? You can't, so you assume a defector. As for Buffett, he did step in to run Salomon Brothers when things went south.

Selling your company definitely has a certain Darth Vader feel to it. The buyer usually alters the deal, and the only thing you can pray for is them not altering it any further.

Get a second buyer on the hook. Then they both will pray you don't alter the deal any further.

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