Chapter 35It's Not You, Not Your Bankers, Not Your Board, It's the Market

In mid August 2022, after close to a year of intense reach outs, due diligence meetings, and endless iterations of our M&A decks, it was evident that the bubbly M&A market we first saw in September 2021 was a thing of the past. Borui and I initially had five actionable inbound inquiries from three tech giants and two unicorns, we were on friendly terms with a couple companies that previously reached out to us about potential acquisitions that we turned down, as well as having existing partnerships with Samsung, LG, a number of Android OEMs, eventually all of them said no. What I previously anticipated as a quick one quarter sprint to find the buyer with the most attractive offer, turned out to be no offer. Well, that was not completely true. We had one offer from a competitor that raised over a hundred million dollars but was struggling to grow and raise their next round. Their offer consisted of taking all of our assets, IPs and some team members in exchange for the lowest tier of common stock in their options pool. We would’ve been better off remaining independent or even returning our remaining cash balance to our investors. The investors would get a better payout, and the existing team members would have had better job prospects.

I went through the seven stages of grief over the span of half a year. After the shock of having no offers after a couple months of what I originally thought as extremely positive meetings with the inbounds as well as those that we reached expressing our desires to pursue M&A opportunities, it moved quickly to denial and anger. M&As were still happening up to mid 2022, but then everything dried up in the market. And then it was bargaining with anyone who had shown interest in the past or had done any form of due diligence with us, asking for any offer even if it was below the amount that the investors put in. I felt guilty that we went on this path, there were weeks of intense depression, and the final moment where I grudgingly accepted that this was the outcome at the current time. We had to continue to operate independently until the foreseeable future. There was no longer a market for our company.

Even to this day, I still carry some guilt in thinking that it was partly my fault that we could not find a buyer in 2022. Perhaps I did not speak up enough or be prepared enough during the initial meetings. Or I was too inflexible on what I thought the vision was for a joint venture, and ignored the signals from the other side in terms of what the acquirer was looking for. Nevertheless, this was the expensive tuition I had to pay for my first startup where inexperience definitely handicapped us in getting to a deal that could have been much better than the deal we had in 2025.

I also at times questioned if it was our bankers’ fault, where perhaps if we just interacted with the acquirers directly, the talks would be straight-up and there was no false sense of posturing or unrealistic expectations from our side.

I would blame the board on a number of things, but they have been nothing but supportive during the entire M&A process. They never had any expectations in terms of what the multiple must be in order for them to approve the deal.

The fact of the matter was, we not getting an offer was a direct function of the market at the time. The original thesis we had was doubling down on creator economy and the metaverse, but half way through the pandemic the market was shifting towards crypto and there was very little interest in what we had to sell. At the same time, companies are always bought, not sold. I had to accept the fact that as good as the company metrics we had, in order to sell, there had to be a buyer with an actionable offer.

If you are in the midst of an avalanche of nos and a bunch of emails that never got replies for, take solace in the fact that this is completely normal for an M&A. In fact, even the best of companies with positive cash flows and deep technical expertise do not get offers. This is not a function of you, your company, or your banker. It is purely a function of the market at the current time. This however does not mean that the market will never come back, Take what you learned from the past conversations, and recalibrate on what kind of product or technology that actually got positive feedback. Go back to the drawing board, work on the next iteration of your product. As long as there is a path to profitability and you have the patience and persistence to make it out on the other side, a buyer will eventually emerge.