I moderated the M&A panel for the Angel Capital Association Northwest Regional Meeting, which attracted about a hundred investors from Washington, Idaho, Oregon and British Columbia. The panelists included professional angels (yes, there is such a thing) and successful entrepreneurs. One of the first questions from the audience was, when should bankers get involved? The consensus on panel was that a CEO is already pushing his or her limits, running the business. Adding the M&A process to the workload will harm the business and reduce its value, right when it is under a microscope. The only reason not to involve bankers is if the deal will be so small that it won't support fees. One panelist took the position that "being approached is the worst thing that can happen to a CEO" because the company won't manage the selling process properly, and will get sidetracked with the buyer that made the approach.
There was also an interesting debate about whether angels should invest for home runs, or base hits. The youngest guy on the panel, who recently sold his company to Google, recounted a recent conversation when someone asked him why he got involved in angel investing. He answered that he liked to be involved in cool projects, and he wanted to give back to the community that created opportunities for him. After he finished answering, the person asking the question noted that ROI was not on his list.
The more seasoned investors on the panel argued that ROI should come first, and that angels should invest pragmatically in sustainable, cash flowing businesses.
The meeting was extremely well organized. Kudos to Dan Rosen and Yi-Jiang Ngo, my primary contacts, for their efforts.