Last year companies like Google, Twitter, Facebook and Salesforce gobbled up a multitude of startups to strengthen their talent and technology strategies.  However, just because they’ve got money to burn doesn’t mean you should consider selling.  75% of acquisitions fail due to timing, out clauses, and cultural fit.  Google’s failed acquisition of Groupon is a classic example. However, some startups hit timing perfectly such as Bebo’s sale to AOL for $850M.

Entrepreneurs must ask themselves if exiting is the right strategy versus building up their company for a potential (yet sometimes reachable) IPO.

To know if selling is the right thing to do successful entrepreneurs must ask themselves these questions:

-  What type of company are you?  A full-fledged offering or a feature looking for a product?

- What type of acquisition are you? Talent, Business, or Technology?  Each will have different valuation.

-  Will your market grow and what are your chances of thriving amid competition if you go it alone?  Who else could your buyer acquire?

-  Is it the right time given your traction?  Will you have a significantly higher valuation in the near term?

-  What is your long term vision for the company?  Is it aligned with the buyer’s goals?

- Is the buyer the right cultural fit for your company?  Could you hang out with them?

- What service level agreements and out clauses do you have with your customers?

- Are your internal finances in order?  What things do you need to clean out from under the rug?

We will be tackling some of these questions with established corporate acquirers and acquired entrepreneurs in Los Angeles in March.  Come join us for an Acquisition Strategy Session in Los Angeles on March 6, 2012.