When Google Wants To Buy Your Company, This Is How The Letter Looks
Back in 2007 Google reached out to a startup called Zlio with a proposition of acquisition. Founded in 2006 by Jeremie Berrebi, Zlio allowed anyone to start an online store- even if they didn't have any products of their own to sell. The stores could be stocked with products from partners of Zlio, such as Apple.
Google contacted Berrebi and assured him that the acquisition would be seemless and speedy. The outcome was exactly the opposite. Berrebi signed the requested NDA and Google made a nice offer, however, 30 days later there was still no final term sheet to be signed- so Berebbi went to Mangrove to look for capital. This decision cost Zlio its life.
“It killed the company,” writes Berrebi.
What does an acquisition letter from Google look like?
Thanks for this. I have had internal conversations now. We would like to move on this urgently as an acquisition. We realize you are late in your cycle and we are early in ours but frankly your idea and personal background is a good indication of strength in our mind and we have already got the internal senior nod to proceed.
Add to this the fact that we share your vision and would want to execute on something similar anyway means we would like to move forward discussing with you. We believe the combination of your vision, leadership and first mover advantage with our ability to create Googlely products, our consumer and partner relationships and distribution, our checkout product and our scale infrastructure will lead to a great solution that enables you as an entrepreneur to reach your goals more efficiently. We have a pretty smooth acquisition process here at Google to make deals happen but here is how you can help us be quick:
1) sign the nda so we can start to exchange info – this is our standard nda. You should realize that we make absolutely sure that no engineers working on similar areas in Google are involved in the assessment of this deal at this stage so we can avoid tainting
2) send me captable (with names) and loan/liabilities info (Jerry tells me there are some complexities around ownership?), CVs of your team (we are especially keen on good engineering and prod people and in Israel we are already building out our team. You can delete the names on the top of the CVs if you want to protect anonymity)
3) consider location – Israel is great for your prd and eng people but relationship, partnership and business team may have to relocate to UK or US but we do have a Paris office that may be expanded – I just cant guarantee that right now.
4) consider valuation – if we are to act as quickly as you want we need strong guidance. You can give me a range and I will respond. You have indications of value from your VC termsheet and I can tell you that we will give strong monetary incentives to the people who join us in terms of bonuses etc on top of consideration for the equity of the company. Naturally, we believe we take away the risk of successful execution through an acquisition so value of the equity should reflect this.
5) send me financials
6) send me IPR/patent details
7) send me something that describes how difficult this is to do from an engineering challenge and arrange a conference call between your lead engineer and one of our deal team engineer members to have a discussion around this
I will take all this and the corporate presentation you have given me and create a presentation for internal use to our executive board (Larry, Sergey and Eric) for approval to negotiate then issue a termsheet to you
We will want to do some DD post then just like a VC, normally we front end some of this via a visit to meet you and the team but in the interests of time we can back end this but you need to be helpful with the 7 points above instead.
I hope this is exciting news for you as it is for us….
Let me know and also pls send me your mobile phone as it is not on your business card
Paul Hudson | Elite.