Three rules for buying your friend’s company

Better Advertising bought Ghostery, an awesome Firefox add-on that David Cancel built. Read the Better Advertising take and David’s take.

Other than the fact that Ghostery is awesome and a perfect fit for the mission at @betterads, the reason I’m writing about this is that I’m co-founder of Better Advertising and David has been a friend for some years. So my company bought my friend’s company. Everything went well and here are three lessons I learned about buying a friend’s company:

  1. The right start. Many deals never get done because the initial approach sets the wrong tone or frames the discussion in an awkward or confrontational manner. If you know both side well, you can help establish the right, fair and balanced tone and positioning from the start because of both understanding and empathy.
  2. Deep alignment. This type of alignment makes the relationship strategic and sets a partner-like tone for any follow-on negotiations. This takes trust. Trust takes time. Time is always short. By understanding both businesses and by putting your credibility at stake, you can accelerate the trust-building process. Opportunistic/tactical deals often skirt by the trust-building process, which can have negative effects on the outcome as well as on the person who has a relationship with both sides.
  3. Minimize conflicts. If there is another way,  don’t be involved directly in the financial negotiations. Instead, use your understanding to put yourself in the shoes of both sides and, if asked, advise on how to reach a win-win outcome.

If you’ve acquired a friend’s company, I’d love to hear from you in the comments or on Twitter. I’m @simeons.

About Simeon Simeonov

I'm an entrepreneur, hacker, angel investor and reformed VC. I am currently Founder & CTO of Swoop, a search advertising platform. Through FastIgnite I invest in and work with a few great startups to get more done with less. Learn more, follow @simeons on Twitter and connect with me on LinkedIn.
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One Response to Three rules for buying your friend’s company

  1. David Cancel says:

    Thanks for the thoughtful post and for introducing me to BetterAdvertising!

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