Then there's the question of "ad creep": Some parents and online commentators have pointed to the ads for plush toys and video games on Club Penguin's gateway site as a sign that the partners have succumbed to consumerism. Merrifield defends the practice, saying the use of ads remains restricted to venues outside of the virtual.
But in the end, the partners maintain that the site won't change as a result of the Disney deal - and neither will their lives. Krysko has added a swimming pool to his house, and Merrifield has bought a nicer car, but all three say the money they've earned hasn't altered who they are. "I don't even think the people at my local Starbucks where I go every day know who I am, or even care," says Merrifield, whose own children still don't realize their father is a multimillionaire or that he runs the site to which so many of their peers have devoted a significant chunk of their young lives.
Krysko puts it another way: "Our values have remained the same," he says. "A good example is, we used to be able to support a child in Ethiopia or Kenya."
"We had 10 kids at one point," adds Merrifield.
"And now each of us can adopt villages. So it's the same values. It's just on another scale."
Trying to learn how to dance with a huge suitor who has scads of cash?
In the midst of time-consuming negotiations with a sophisticated buyer, you need to keep your company running smoothly while you angle to get fair value for your business. Here's how:
-Understand the buyer's strategic intentions: If a large firm is on a campaign to hoover up a series of smaller rivals, make sure you aren't last in the queue - you'll be crushed before realizing any value. In some cases, such as the Club Penguin deal, the buyer may want existing management to stay on. But the entrepreneur has to decide whether he or she can make the difficult transition from fleet-footed boss in his own shop to division head in a large bureaucracy. "There's an old expression: You can be rich or you can be king, but you can't be both," says Becky Reuber, a professor of entrepreneurship at the University of Toronto's Rotman School of Management.
-Weigh the structure of the payout: Cash is ideal, says Robert Orr, of PricewaterhouseCoopers. But some buyers may also offer stock or an earnout, meaning part of the payment is delivered up front and the balance is paid out if the acquired company hits certain targets. These decisions hinge on the scope of the owner-operator's new role and where the control lies. Orr says that vendors "have to make sure they have the ability to influence the direction of the company to make those milestones."
-Control the flow of information during the due diligence process: Non-disclosure agreements are standard during acquisitions, and some vendors may even seek non-compete or non-solicit clauses. But Neil Sheehy, a securities lawyer at Goodmans LLP, points out that no business can prevent buyers from learning strategic details as they kick the tires. He recommends a two-stage release: Following the submission of a letter of intent, provide corporate information, organizational structure, trademarks, some financial data, and anything that could be unearthed with routine corporate searches. After the formal offer to buy, release specific sales data, pricing, recipes, manufacturing process details. Some businesses don't disclose their ultra-sensitive information (such as names of major customers) until closing day. - John LorincReport Typo/Error