The M&A Letter That ...


Between the internet, social media and human beings’ proclivity for talking, transparency is the rage.

Companies figure that even sensitive information — especially sensitive information — eventually finds its way to the outside world, so they’re better off sharing their perspective before the grapevine kicks into gear.

Yet, there’s zero transparency in the letters that companies send to their customers after someone buys them. Virtually every letter starts with the phrase, “I have some exciting news …” when the reality is the individual penning these words, typically the CEO, feels just the opposite. Her or his dream of buying a second home in Johannesburg and changing the world just went up in smoke.

And these letters go out with regularity. In fact, the value of mergers during the first half of 2018 reached record highs.



Of course, I understand why companies feel that they can’t be entirely truthful in these letters.

Still, here’s what a letter from an acquired company, in this case a startup, to customers might look like if not bound by protocol.



I’m not going to sugarcoat the news.

We’ve been bought.

Something about seeing those words in black and white makes it more real. Truth be told, I’ve been in a fog since BMOC approached us with an offer that we could refuse. Actually, I did refuse it. Twenty-three cents on the dollar and folded into a bureaucracy that makes the DMV look progressive didn’t seem like a just reward for working 24 X 7 the past three years.

Unfortunately, our venture capitalists jumped at the opportunity. I thought fine, our VCs don’t believe in us. I’ll find some VCs that do. I had no idea that once your current VCs want out, they might as well brand you with the scarlet letter “D” … as in DONE. I couldn’t even get a meeting with a Tier-3 firm in Provo.

I know this isn’t the right forum to diss venture capitalists, but man, talk about a group of people with an attention deficit.

Looking to the future, you’re probably wondering what happens now? The terms of our agreement with BMOC require me to say that nothing will change.

Nothing will change.

Now that I’ve fulfilled my contractual obligation —

The BMOC CFO plied us with Dandelion chocolates and then presented a model — his word; looked like an Excel spreadsheet to me — that showed if you and other customers renew your license, the transaction pays for itself.

I didn’t exactly get a golden parachute. If the renewal rate hits 92 percent, I get my bonus which should be enough to fly to Thailand and study mindfulness for six months or so. If the renewal rate falls short, I’ll need to open an Upwork account until I figure out what’s next.

So I’m highly motivated to do whatever it takes to keep you happy. In this way, our intersecting interests create what the BMOC CFO termed as “synergy.” You want the product to continue delivering on its proposition. I want to be in Thailand next year.

Until we meet again (perhaps on a beach in Ko Samui).


Again, I appreciate that everyone wants to be positive and upbeat. But how about writing with conversational language instead of a sounding like an attorney representing the insurance industry.

Then there are those rare instances in which the startup negotiates from a position of strength and the suiter backs up the Brinks truck. This was the case when Facebook acquired Instagram more than five years ago.



Here’s what the Instagram founder wrote to the community.


When Mike and I started Instagram nearly two years ago, we set out to change and improve the way the world communicates and shares. We’ve had an amazing time watching Instagram grow into a vibrant community of people from all around the globe. Today, we couldn’t be happier to announce that Instagram has agreed to be acquired by Facebook.

Every day that passes, we see more experiences being shared through Instagram in ways that we never thought possible. It’s because of our dedicated and talented team that we’ve gotten this far, and with the support and cross-pollination of ideas and talent at a place like Facebook, we hope to create an even more exciting future for Instagram and Facebook alike.

It’s important to be clear that Instagram is not going away. We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.

The Instagram app will still be the same one you know and love. You’ll still have all the same people you follow and that follow you. You’ll still be able to share to other social networks. And you’ll still have all the other features that make the app so fun and unique.

We’re psyched to be joining Facebook and are excited to build a better Instagram for everyone.

CEO, Instagram


Yes, Kevin was psyched. Given the $1B price tag for Instagram, Kevin ended up with roughly $400M, definitely enough to buy a second home in Johannesburg.

It’s true that the Instagram letter never mentions that the founders and VCs are cashing out rather than retaining independence. Still, the letter comes across as transparent and rings true today.

Then again, it’s easier to be transparent from a position of strength.




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