Here’s something you will not read every time an acquisition deal collapses at the last minute: an account of what happened, and why it did. Let alone why it happened twice over.
Backblaze, an online storage and backup startup based in Palo Alto, this morning published a blog post about not one but two acquisition deals that fell through, ‘breaking down the breakup’. They don’t name names, but other than that it’s a refreshingly open account.
The first acquisition offer for Backblaze came from a software company they are or were partnering with – they refer to them by the fictional name Spacely – and was low enough for the startup to contact other potential buyers in order to see if they would be inclined to make a better offer. One of the companies they approached (‘Cogswell’) went along for the ride and also bid for the company.
After considering both offers, Backblaze finally decided to accept the ‘Cogswell’ offer. Months of further negotations, due diligence, ironing out the details and mocking up the definitive agreement ensue – and then everything blew up at the last minute anyway.
As for the other potential acquirer: evidently, ‘Spacely’ wasn’t keen on buying the startup anymore after months of silence, and that’s how Backblaze was almost acquired, twice.
This is a summary of a long blog post, and it’s intentional because every entrepreneur (and decision makers at companies in a position to acquire smaller companies) should read it in full.
It’s a story that’s played out tens of thousands of times in the past – it’s part of the business game – but you usually don’t read or hear about it from one of the protagonists in public, and especially not in such detail.
Read it and learn, young Padawans.