Cambridge’s Conduit Labs was just purchased by west coast Facebook gaming company Zynga. The deal, announced yesterday, was partially reported just over a week ago by Scott Kirsner in a tweet after he heard about it while standing on line for ice cream at Fenway — setting up, as Nabeel pointed out, one of the best puns in journalism ever.
While in this instance, all’s well that ends well, the deal went through and Scott got to write his story, there are lots of instances when deals in discussion are just that. In discussion. Talk. And nothing more. Companies sometimes entertain more than one suitor. They think better of throwing in with another company. An intended IPO can become an acquisition. An acquisition becomes a merger. Or, a partnership. Or, nothing happens.
Like the WW II adage, “Loose lips sink ships.” Going public with a conversation prematurely can wreck the deal. The glare of public attention changes the circumstances. Other companies get involved, blocking the original suitor’s access, or the stock price goes up or down because the company is “in play” making it a poor deal and changing the valuation.
People talk. A secret’s often not a secret for long. The more people involved means there is a greater chance of things slipping out. Every person who knows brings their our entourage — whether family, friends, roommate, neighbor, or random eavesdropper. Remember, the person on the bar stool next to you could be Scott’s wife’s cousin’s next-door neighbor. And know enough about the industry to recognize the significance of the chatty conversation you are having with your girlfriend about what’s going on at work.
I’ve been on airplanes and in elevators and overheard everything from M&A discussions to detailed analysis of why a company’s stock is worthless. Sometimes it is just chatter/background noise…especially if you don’t know the company or can’t identify the talkers but in today’s social media-heavy world, you need to assume that you might indeed be recognizable, especially in a close market like Boston. I have my picture on my Twitter accounts and while taken on a rare good hair day, I might be recognizable if I was ever hanging out in Cambridge discussing a potential deal.
- Create your own personal non-disclosure policy. Anyone who speaks to me about doing business, or just wants my advice on their new product or start up, gets the same consideration, with or without a piece of paper detailing my assurances that I will keep their secrets. I’ll “blind” their company name and details for any necessary discussions on their behalf but even commit to having as few of those as possible. (As a “connector” I often have permission to discuss specific clients or contacts with third parties.)
- Ask what information is public and what is private. Companies often bounce ideas off me. If I see it on your website, I assume it is public knowledge but there may be instances where our discussion brings up nuances that aren’t public. You need to tell me what they are.
- Assume that every person you are talking with is a reporter and carries a microphone and could potentially post everything you say. You’ll be more cognizant of what you spout off if you think about how it appears in print with your name next to it.
- When in doubt, be silent.
- Have a strategy for dealing with semi-inevitable leaks. Before they happen.