Hacker Bits, April 2016

advice I got. I actually wish I’d
hired them a little bit sooner.
There were quite a few
things we negotiated to change
in the APA, but the two that took
the longest were:
• Confidentiality
• Indemnification
Confidentiality
Basically I spent 2 weeks convincing
them to let me write this
blog post!
No joke. The original terms
were something along the lines
of that I couldn’t tell anyone
about the sale, ever, which is
crazy since it’s going to be publicly
available in their Q3 10-Q in
about a month anyway.
Thankfully they finally
agreed to let me talk openly
about most things in the transaction,
which is why I’m able to
write this post.
Indemnification
For people who aren’t familiar:
indemnification means “if I get
sued for something you did, will
you protect me?”
This is generally a reasonable
term and is included in
basically every M&A deal under
the sun.
Generally the pieces that get
negotiated are 1. how long does
it last and 2. whether there’s a
liability cap.
E.g. How long after the sale
do I have to indemnify them,
and in some disaster scenario if
they got sued and lost, what’s
the max I’d ever owe them?
In the end we agreed on a
length of time and cap that was
comfortable for both of us.
I will say this: I had to push
back hard to get my terms on
this point. Initially they wanted
uncapped liability forever, which
was unacceptable.
The most tense moments in
the entire 7-month process was
on a phone call about this very
subject.
I told them I was going to
walk away from the deal (after
~6 months of work) if I didn’t
get some sort of compromise.
That was followed by roughly 45
seconds of silence on the other
side of the line, but eventually
the guy spoke up and said he’d
see what he could do.
And I wasn’t bluffing.
From this phone call we were
able to finally agree on indemnification
terms that were acceptable
to both parties.
4. Closing
The best day of all.
Once we’d agreed on every
detail in the APA it was time to
schedule a day to close the deal.
In my case that meant signing
and transferring the assets all
in the same day (in high profile
acquisitions you see online the
announcements happen after
the deal is signed but usually
before it’s closed.)
34 hacker bits