California Business, Insurance And Environmental Law Blog

Depending on your industry, you may have the opportunity to acquire start-ups in your space. If this is something you're strongly considering, it's critical to understand the steps you can take to protect your organization, all while negotiating the best possible deal.

Once you pinpoint a start-up that you're interested in acquiring, it's time to reach out to gauge their interest. You'll typically find that these companies are in one of three positions:

• They're actively seeking an acquisition
• They're staying the course with the idea of going public in the future
• They're in a growth phase and have no intentions of "selling out" at the present time

Many business owners in California are looking for ways to grow their companies or expand their reach to new markets. Acquisitions are some of the most important ways for companies to expand as they can acquire entirely new sets of customers or markets from those who have already built a reputation or experience in a particular area. Some of the most successful large companies were built by acquiring and integrating smaller firms to make a new, comprehensive whole.

One large content management and marketing company, Mediafly, is adopting a related approach to growth. Mediafly made its name by developing strategies and business-to-business sales for corporate giants like PepsiCo and NBC Universal. Long known as an enterprise company, Mediafly's services are known by many for their quality and reliability. Still, they have also been widely perceived as out of reach or excessive for small or medium-sized businesses. However, the company recognized a growth opportunity in working with smaller companies. In order to expand its reach to more moderately sized companies, Mediafly acquired another firm, iPresent LLC. iPresent had built its business on servicing smaller companies in business-to-business sales and online marketing, making it a logical expansion for Mediafly.

California residents may have heard about a proposed merger between Sabre Corporation and Farelogix, Inc. The proposed deal would be worth $360 million, but the Department of Justice has moved to block the transaction. It claims that Sabre Corporation is attempting to buy out a rival that is attempting to disrupt the travel technology space. If the deal were allowed to go through, it could hamper competition in that industry to the detriment of customers and airlines alike.

Sabre currently processes more than half of all airline bookings in the United States that are conducted through travel agencies. The president and CEO of Sabre says that the company has done everything it can to mitigate any concerns that the government might have. Furthermore, Sabre says that it will show in court that the deal is good for competition.

One of the biggest challenges faced by California entrepreneurs is securing the capital they need to fund a new business venture. Traditional banks adhere to strict underwriting standards and will generally want to see an established track record before they lend money, which means that many entrepreneurs turn to friends, family members and alternative lenders for the cash they need.

Borrowing from friends or loved ones is perilous because business is unpredictable and failing to pay back this type of business loan in a timely manner can strain or even wreck relationships. Online crowdsourcing websites like Kickstarter have become a popular place for entrepreneurs to find backers in recent years, but they are extremely popular and attracting attention can be difficult if ideas are not novel or interesting. Loans guaranteed by the Small Business Administration are another source of seed capital, but qualifying can be difficult for people who cannot put up any collateral or have had credit problems in the past.