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Comment by ChuckMcM | Hacker News Reader

Here is a suggestion, tell them to state their intentions or go away. Once they state their intentions tell them they have to sign a Memorandum of Understanding about what you're going to talk about and if they walk away it will cost them $X million (pick a number that would be able to resolve your debts and pay off any investors with a slight return).

What ever you do, do NOT be lured into thinking they are thinking about maybe a big exit for you, your interests are not aligned yet and you need to realize that. If there is any IP possible make sure you have provisional patents filed before you talk to them about anything. Even if you don't think it is patentable, force them to either buy you or risk infringing you if they go into competition with you.

Seriously, you have nothing to gain from this distraction if they aren't serious, and if they are serious they will put it in writing for you.

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As a former M&A guy and later a founder - It's not just that your interests aren't aligned in terms of financials or IP, your timelines aren't aligned and your desired outcomes aren't aligned.

There is ZERO hurry with a lot of BigCo acquisitions - there are layers and layers of board approvals, analysis, opportunity costs, competitor research, etc.

There may not be any actual interest in an acquisition of people or technology, but rather a curiosity about the space - e.g. "what are smart and hungry people in X space capable of actually building?" or "what does technology Y in the wild actually look like?"

It's all fun and games for the BigCo but can absolutely kill a startup with delays and 180 degree turns on the product roadmap.

@mblevin Completely agree with this. I went throught this from a startup perspective.

@mblevin completely agree with you. Bigco will take its own sweat time to close, so better focus on product launch and have parallel discussion on acquisition.

Parallel tracks is very tough for a 3 person team and not sacrifice the product.

@ryanhuff ya, can understand. then 1 person can focus the discussion and other 2 can be on product. I know easy to tell, but really difficult to practice. :(

BigCo know this too :)

Yup.

Had a similar story here, but didn't have that in place.

Very educational and made some good contacts though.

In the end there was not a deal we could live with, so we ended up with no deal. But also with 6 months of almost 100% delay for us. Total loss of focus.

Agreed on delay, these things are very time consuming.

Yep - had a similar experience with our little start up about one and a half years ago. I would have saved a lot of time and second guessing by making them put their cards on the table at the outset. Instead I dicked around providing info and data and eventually we came to the conclusion a deal couldn't work - but only after I'd spilled my guts thinking I was about to land the big one...

Excellent advice. We lost a lot of time "working with" a large company, including building a detailed demo using part of their platform – and it ended up coming to nothing.

Right, I get that, but at the same time how can we expect them to buy something or commit cold hard cash when they are pretty much in the dark?

That's their decision. You don't have to make it easy for them--especially if they are going to be your competitors.

For a motivated big company, cold hard cash isn't as hard to come by as you might think.

As for now, the only thing I can do is echo how absolutely crucial it is for you to have a knowledgable lawyer on your side RIGHT NOW. Get several on the phone today, and make a decision as soon as you can. If you're in the Dallas/Fort Worth area, I can make a recommendation but please, please do this.

While it never hurts to have a good lawyer, if you are ever in a contemplating a deal where you say something like this to yourself: "they can't do that to us, we have a contract", you're already screwed. I have gotten screwed too many times on this, despite spending tons on lawyers ahead of time.

Bottom line, make a deal that is a WIN WIN and doesn't put you at huge risk w/o some offset you consider reasonable or don't do a deal at all.

You do not have an easy road ahead, but you can at least avoid a disaster. Remember, your BATNA is continuing your startup as if you'd never been approached!

I'll give you a more specific example from my past. A startup seemed interesting to the large fortune 50 company I was working with. We, the large company, had a rather large budget to buy them, like 7 figures, not bad for a company without a published v1 and with no revenue. We did not specifically say how much we were willing to give or what we were willing to do for them, because that is negotiation. On the other hand, they hide behind lawyers, talked to us only generally, and left us in the dark. In the end we decided the time wasn't worth it (their technical skills and product offering sure were, but that's another story), so we ended the discussions. Ultimately they ran out of funding and said it was our "large companies distractions" that kept them from "making it big". Maybe that is true, I can't rewrite history to know for sure whether it is or not. However, what I can say is if they had said "Sure we're willing to show what we can do, we want $x,000,000 if we can show we are capable", we would have given it to them. Hell we would have paid for the due diligence ("We want $200,000 to go through your due diligence whether we make a deal or not" would have been a very acceptable request). Your milage WILL vary, but remember business, funding, and moving forward can take a number of routes.

What sort of information have you shared already?

Enough for them to realize they can either buy us or spend the next year with a team of at least 5 people replicating it. We didn't share anything that got them to realize we are now unnecessary, quite the opposite in fact.

Right, so they're either trying to buy you, or trying to steal information. Seems like you'd want to establish which.

Yeah, remember how best buy had to pay out $25m for stealing a startups IP -- http://techcrunch.com/2012/12/05/techforward-wins-27m-in-law...

This. Focus on your launch.

Launch and then talk. Depending on how big the company is, it'll take them most likely at least 3 months to get a deal done.

Unfortunately only have one upvote. All the above is true.

I'd also recommend provisional applications for patent. They don't cost much and they're an asset anyway.

If you're seriously oriented towards an aquire-hire, an option can also be to look for an experienced corporate dev to join you as an advisor or as part of the team.

I would also add to this: lawyer up.

This is excellent advice!

Just stick to this advice.

i have never been in this situation but i like this answer.

what you're doing is forcing them to negotiate as soon as possible on something specific and concrete - someone who isn't willing to negotiate isn't willing to give you any money.

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