Archive for May 5th, 2009

Here is some interesting viewpoints from Venture Capital Dispatch – a WSJ Online blog written by Scott Austin.

“Last August, Hewlett-Packard Co. signed a letter of intent to pay $360 million cash for LeftHand Networks Inc., a venture-backed provider of storage systems. A few weeks later, Wall Street’s collapse sent the economy in a tailspin and threatened to knock the screws out of the deal.

But after a two-week pause the two sides got back together and in November closed the acquisition on the same terms.”

The article continues…

“LeftHand was able to hold its ground because it had proven itself valuable well before Hewlett-Packard offered to buy it. H-P had been reselling LeftHand’s software on some of its servers for nearly three years, and realized it couldn’t do without it.

The deal signifies the importance of setting up strategic relationships with possible acquirers, especially in this environment, said the aforementioned investor, Matthew McCall, a managing director with Draper Fisher Jurvetson Portage Venture Partners.

“When your hair’s on fire as a corporation, you’ll try anything to make the pain go away,” he said. “Now’s a great opportunity [for start-ups] to enter partnerships, distribution agreements, and dialogues with larger corporations.”

Matthew McCall´s advice continues:

  • Form a strategic relationship with a potential buyer,
  • Look at it from the acquirer’s perspective,
  • Identify the alternatives,
  • Finally, make sure at least two mortal enemies are bidding on your start-up.

Read the full article here.

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