Usually when founders of startups sell their firms to larger entities the deal sometimes turns stressful as they want to ensure job security of their employees and of their brand but since buyers have the upper hand they may not always provide the expected benefits. To avoid issues like these software product firm Atlassian published its rule book to share specifications about how it will function if acquired with details about funds and time set aside for escrow. Its move shows how competitive tech firms are when it comes to undertaking new technology and talent.
Enterprise software developer Atlassian that competes with large names in the ERP space like IBM, Microsoft and others aims to identify itself as an entity that small software product firms can safely sell their firms to and help it to win more assets. Atlassian was established in 2002 and since then has spent nearly 1 billion to take over 20 firms. Their deals extend beyond direct acquisition and include study of several deals to set out terms that are specifically structured to accommodate companies that are being bought. All their acquisition deals go through two phases of negotiating terms and then agreeing on a common integration plan.
Atlassian’s chief legal officer Tom Kennedy said that during amalgamations advisors get involved in the first phase of discussions but do not bother about how matters proceed after initial agreements are made. But Atlassian goes beyond the initial phases of merger discussions to the end of merger deals to ensure that founders are truly pleased with the complete transition process.
Kennedy and his colleagues believe that median escrow for software deal is 10 % of company’s price which can also reach 20 % towards the end so they insist on 5 % escrow. The company keeps funds in escrow for 15 months and does not trouble founders about privacy issues that may arise after end of escrow period.