Get your startup M&A ready with these tips from Line and Google

Weighing dreams against reality is something that all startup founders have to do at some time or other.

Many dream about taking their company to an initial public offering; about being the next Bill Gates or Jack Ma.

The reality is that the majority of startups don’t survive long enough for their founders and investors to successfully exit. And of those that do, the exits are much more likely to take the form of an acquisition than a float on the public markets.

Talenta founder Joshua Kevin (right) shares his experiences from his startup’s merger into Mekari. / Photo credit: Talenta

When an offer for a buyout or merger lands on their desk, founders have to make a decision that is life-changing not just for them, but for their employees, customers, and investors, too. They may want to keep going it alone, convincing investors to fund their growth strategies, and chasing the IPO dream.

But an M&A deal can mean that they never have to worry about fundraising again – and, depending on the counterparty, it could bring the positive effects of being associated with a well-known brand, a larger network, and more job security and career progression options for staff.

Combining forces

It’s a decision that Joshua Kevin had to make when Talenta – the human resources startup he founded in Jakarta in 2014 – got a takeover offer from its rival Sleekr toward the end of last year.

Kevin and his team decided to accept it. By April 2019, when the deal was publicly announced, Talenta and Sleekr revealed that they would be merging with two other enterprise service startups (Jurnal and Klikpajak) to form a new platform called Mekari.

Never underestimate your competitor… one day, they may be your acquirer.

Speaking on stage at Tech in Asia Conference 2019 in Jakarta this month, he compared a startup’s exit journey to dating and seeking life partners.

“When we’re talking about exit, we know its always there, but we don’t know how to get there,” Kevin said. “It’s kind of like marriage – we know we want it, but don’t know how [to get it].”

That’s why it pays for founders to have potential exit scenarios, and their possible consequences, thought out in their heads before they receive takeover offers, he suggested.

“You should have a proper dashboard [in place]. The reason we sold to Mekari [was] I believe SaaS is still [in the early stages] in Indonesia, so we believe together we will be stronger [by] combining forces with Mekari, being all in one SaaS app.”

Talking from experience, Kevin dished out another piece of advice: “Never underestimate your competitor – because one day, they may be your acquirer.”

Before you sign on the dotted Line

Getting M&A ready

Lessons from Mountain View