In less than 20 years, Silicon Valley veteran Godard Abel has built and sold two companies for hundreds of millions of dollars.His first company, BigMachines, sold to Oracle for over $400 million in 2013.Just three short years after BigMachine's sale, Abel was in acquisition talks again. This time, it was for his new software platform company, SteelBrick.In 2016, Abel sold SteelBrick to Salesforce for a reported $360 million.Now, Abel is building yet another new company. His third startup is business reviewing site G2Crowd, which raised $45 million in five years from investors including Accel, LinkedIn, and Chicago Ventures.In tackling his latest venture, Abel has spent a lot of time considering what makes a company an attractive investment to a prospective buyer. As entrepreneurs clamor to Silicon Valley in hopes of becoming self-made millionaires, Abel says that he sees startup founders making the same mistakes again and again as they attempt to sell their companies.In an interview with Business Insider, Abel outlined the top five critical errors entrepreneurs make as they consider potential buyers for their companies:1) They try to get acquired.Selling a company is a little bit like dating, says Abel. If you're looking for a prospective partner, often the worst thing you can do is to make yourself too available."Great companies are bought, not sold," said Abel. "The buyer comes to youit's not the other way around."With both companies he's sold, Abel said he's never attempted to snag the attention of a prospective buyer. "It's never been our mindset to try to sell," said Abel. "We're always busy trying to build a business. If you want to build a winning company, then you want to build a product. Build something beautiful and someone will probably want to buy it."2) They overplay their hand."People get arrogant," said Abel.Abel said he's encountered several entrepreneurs who played hard to get after they were approached by an interested buyer. Often, said Abel, this reluctance ends up costing founders the deal."When you're dealing with a big company like Salesforce or Oracle or Google, they'll make an offer when they want to make an offer," said Abel. "It's fine to say no, but they probably won't come back. Usually, when they want to do it, they want to do it now. If you're perceived as arrogant or overly reluctant, it will ruin the deal."3) They don't have their house in order."If another company is going to spend hundreds of millions of dollars on your company, they want to know your house is in order," said Abel.Typically, this means that startups should keep meticulous records of everything: customer agreements, legal issues, lawsuits, patents, employee agreements, and trademarks."In the M&A process, you get into deep due diligence," said Abel.When Abel sold his second company to Salesforce, he estimates that he handed over more than 2,000 different documents for the company to review.To streamline this process, Abel recommends starting early."Always make sure you're making your employees sign confidentiality agreements. Makes sure you have the necessary IP protections. Get all of the appropriate patents and trademarks for your technology," he said. "A lot of deals blow up because companies haven't done their due diligence."See the rest of the story at Business Insider
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