M&A, Before and After: What Founders Need to Know

4 snips

Jan 26, 2022

Guest

Blake Kim

Guest

Martin Casado

In this enlightening conversation, Blake Kim, a partner at Andreessen Horowitz and former investment banker, teams up with Martin Casado, a general partner and Nicira co-founder, to dissect the M&A landscape. They explore essential frameworks for founders, focusing on the psychology behind selling, the importance of pre-acquisition relationships, and post-merger integration challenges. They also highlight how different buyers assess value and share anecdotes that illuminate the complexities of decision-making in M&A.

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INSIGHT

Decision Frameworks

Maximizing shareholder value is complex and depends on various market dynamics.
Factors to consider include the acquirer's performance, potential kingmaking scenarios, and risk-adjusted value.

ANECDOTE

Nicira and VMware

Martin Casado shares his experience with Nicira's acquisition by VMware for $1.26B.
Despite being the market leader, they sold due to VMware's kingmaking potential in the networking space.

INSIGHT

Founder Psychology

Founders' personal circumstances, such as financial background and age, influence M&A decisions.
Younger, first-time founders may be more risk-averse due to financial security and age.

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Welcome to the a16z podcast. Today we’re talking about the mindsets and frameworks founders should know about when navigating the mergers and acquisitions or M&A process, both before and after – including how to think about the pricing dynamics, factors that go into the decision-making process, and what to expect from the integration once the deal is done.

A16z editorial partner Zoran Basich recently talked to two a16z experts here to give us their big-picture view of the most important things to know – for founders seeking to acquire companies and how they might think about it, or those considering selling a company, or just those deciding to merge with an acquirer.

Blake Kim is a partner on our Enterprise Network team and a former investment banker who works with companies on strategic partnerships; he also recently co-wrote a post on Future outlining all the different exit options and considerations for companies. And general partner Martin Casado discusses common M&A issues and shares his experiences both as observer and participant – including the challenges of integration, which he saw from the inside with Nicira, which he cofounded and was acquired by VMware for $1.26 billion in 2012, and where he remained for years to lead its networking and security business unit.

As a reminder, none of the following should be taken as investment advice. Please see a16z.com/disclosures for more important information.

They start the discussion by outlining the frameworks for understanding M&A dynamics, including the “kingmaking dynamic” and the difference between “selling your company” and “getting acquired.”

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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

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