I find this topic very interesting mainly because I work at a PR agency with a client base that includes several tech startups. In the past, we’ve seen some of our clients get acquired and others are still mapping out their future plans. I wanted to share what I found on the topic and how the acquisition process may have a lot to do with how companies conduct their public relations initiatives.
One interesting article I came across on PRNewser discussed a recent Ragan PR Daily story on how investing in PR can boost a company’s likelihood of being acquired. I’m not suggesting that every startup wants to get acquired, but if that’s your company’s long-term goal, then investing in PR might be a good idea.
Ken Gaebler, author of the Ragan PR Daily article, shared his experiences with the first tech startup company that he co-founded. It was eventually sold for $10.5 million, one year after attaining a $750,000 venture capital round. Prior to sharing his story, Gaebler talks about calling some of his contacts in investment banking and corporate acquisitions, asking them how they go about finding corporate acquisition targets. He was given four key points:
- We track industry news, searching for companies with potential.
- We attend industry and networking events.
- We talk and get in contact with industry analysts.
- We keep our eye on, and know, key players in our space that might make sense to acquire.
After gaining some insight on how companies are scouted out for being bought, Gaebler came to three conclusions:
- The people who might be interested in buying your company are most likely learning about you through your marketing and PR efforts. If they don’t hear about you, they don’t know you exist.
- Public relations is a great way for your startup to build solid credibility. A positive press-related endorsement from a credible third party lets people know your company isn’t a fraud.
- Lastly, PR can score you a higher valuation price on your exit. Think about all the awards and different recognitions your company has received. That all gets factored into the sale price – if you’ve created value for your company, acquirers will pay extra for that value.
What do you think about PR and acquisitions? Is it important to invest in PR if you intend for your company to be bought out?