Multiple Buyers Create Leverage

Shaan Puri shares his experience selling companies and emphasizes that most companies are sold, not bought. He stresses the importance of running a strategic sales process with multiple potential buyers to maintain leverage during negotiations.

Key Points:

• Most Companies Are Sold, Not Bought

  • The "great companies are bought, not sold" advice only applies to exceptional cases like Instagram
  • Regular companies need to actively run a sales process
  • Managing your psychology during the sale is crucial

• Types of Potential Buyers:

  • Unicorns (high-growth companies seeking acceleration)
  • Dying dinosaurs (incumbents needing fresh blood)
  • Adjacent alligators (peers/competitors for mergers)
  • Talent farms (companies just wanting the team)

• Key People in the Process:

  • Executive champion (internal advocate for the deal)
  • Company router (usually corp dev, connects you to decision-makers)
  • Deal doula (trusted advisor who's done M&A before)

• Strategic Approach:

  • Find multiple partners simultaneously
  • Never negotiate with just one buyer
  • Run parallel conversations with 10-20 prospects at once
  • "One choice is no choice" - need multiple options for leverage

• Negotiation Tactics:

  • Create urgency with multiple offers
  • Use other offers as leverage
  • Sometimes go cold to make them sweat
  • Leave breadcrumbs about talking to competitors
  • Don't burn bridges - deals often fall through

• Deal Momentum:

  • Speed of follow-up is critical
  • Sprint hardest after getting term sheet
  • Keep pushing until deal closes
  • Have all materials ready (financials, data room, etc.)
  • Make it easy for buyers to say yes ("giant buy button")

• Communication Strategy:

  • Be careful about discussing with team and investors
  • Frame your company as solution to buyer's specific problems
  • Write the narrative for them (memos, announcements)
  • Package yourself as answer to their pain points