A senior executive describes acquiring a company from Twitter: assembling a 13-person due-diligence team over a weekend, facing sudden legal objections that nearly killed the deal, and negotiating through a "deal off" moment before finding a workaround. He learned that every deal dies three times before closing, and that a strong alternative to negotiating matters most.
Chapters
This is a little dark, but this is sort of the deal team. This is the technical due diligence team within my company. There were only about 13 of us who knew that this was going down. And we all gathered in my VP of Engineering's house, and we worked all weekend to prepare ourselves for the meetings that happened next week, the next week. And we thought everything was going magically well. And we basically were high-fiving after the meetings because everything was great. And then I got a call. That call came from Kevin Weil, who spoke here a few weeks ago, upper left-hand corner, who is SVP of product, and he is like, uh, we need to talk. And so we jumped into a conference room at the Rosewood. I drove down from the city, he drove over from Portola Valley, and this is a picture of us here. And then the other picture is of Adam Bain, who is Chief Operating Officer, so there's kind of a threesome, or a three-part deal team, the CFO, the COO, and then the SVP of product who are all working on this deal. And the two of them— this is Adam doing his best, like, I'm blowing up your deal face— say, legal has looked at your contracts. They don't agree with some of the wording. Like, you know, we're really getting— this is not good. And I'm like, well, what are you talking about? Our contracts were written by one of the best law firms in Silicon Valley. Like, all of our customers sign them. Their legal teams have been through them, so I can't imagine what— you would have to pick about. And by the way, it's just contracts. Like, I'm sure we can get through this. And for whatever reason, well, Twitter's legal team has a lot of clout at Twitter. And obviously, I mean, it's a big company. They have a lot to defend. But it spun us out for about a month. And at one of the points, I reached just a real stalemate. And so Adam and I got on the phone. And we just kind of came to a head. And he's like— He's like, "All right, well, if you're going to be so dogmatic about this, I guess the deal's off." And I said, "Well, look, I told my team to put their pencils down. We're not working on this anymore until you guys come back with something more reasonable." And he's like, "Okay." And we just hung up the phone. And my heart just sank because we had worked so hard to get the deal all the way through. And now I involved my team and everybody was getting spun up on what the future could look like with our two companies combined. And we really, I mean, it was dead. It was dead, dead, dead. And then a couple days later, the phone rang and they said, "Okay, we think we found a clever way around this. Let's work it out." So as luck would have it, everything came together. There's a nice little picture of our two logos mashed up, which I think I made myself in Photoshop while being interminably bored on the phone with lawyers one night. And I wanted to screenshot this just because it's pretty special. So Dick, who's the CEO, had texted me. And this is like, the deal was clearly going to go through. It's like the morning that we were going to announce. And he says, how you holding up? Did I ever tell you my M&A rule? Probably should have told you earlier. Costolo's rule of M&A. To which I answer, no. Never go in against a Sicilian when death is on the line? Any Princess Bride fans? He says, close. Every deal dies 3 deaths before it closes. And that was really magical for me. Our deal did not die. Our deal went through. This is a picture of us in what I still maintain is the world's largest coordinated champagne sabering ever. Everybody on the team got a champagne saber engraved with that Deal logo that you just saw. We went up to the roof of our building, we filmed it by drone, and I think it was executed absolutely expertly. Only one person was harmed in the making of the film, and it was just a very minor, very minor cut. But this was really special, and it was really amazing. So to reinforce, you're in control of your destiny. Think about this. Think about how you want to proceed with your company. Expect 3 deaths. And believe in what's called your BATNA, your best alternative to the negotiated agreement. What made me so confident in holding my ground against Twitter is that we were running a really great company with really great characteristics that was very profitable, and we knew we could always go back to being that.
