Expert Advice for Selling a Game Studio

The gaming industry has experienced a significant surge in mergers and acquisitions, with 2020 and 2021 seeing record levels of activity. However, the current market has cooled down due to various factors such as the Russian invasion of Ukraine, economic downturn, and rising inflation. Despite this, buyers are still interested in acquiring studios, but at lower valuations. To navigate this complex process, it is essential for independent studio founders to understand how to make the most out of any agreement they make. A recent Megamigs panel discussion featured two studio heads who have sold their operations to acquiring companies and a third who is preparing to do the same. Beamdog founder Trent Oster, who has gone through the acquisitions process twice, emphasized the importance of thinking like a businessperson, not just a game developer. He advised developers to learn business terms and concepts to effectively communicate with potential buyers. Oster also stressed the need to keep things simple, from corporate structure to share and partnership standpoints. This simplicity can help streamline negotiations and reduce complications. He noted that every buyer has their own set of requirements, which can be overwhelming, but a straightforward approach can make the process more manageable. Kabam Montreal general manager Johan Eile, who sold his midcore mobile studio Riposte Games in 2019, highlighted the time-consuming and stressful nature of the acquisition process. He advised having a resource or working with someone who can help navigate the process, as it can consume a significant amount of time and energy. Eile also emphasized the importance of maintaining a good relationship with the acquiring company, as it can have a lasting impact on the studio's culture and values. He noted that retaining creative control and other aspects of the studio's operations can be beneficial, but it can also become a problem over time if not managed properly. Norsfell CEO Julian Maroda, who is currently going through the M&A process, emphasized the importance of timing. He advised trying to secure a deal either before or after a major launch, as the process can take at least four months and can be stressful for the company and decision-makers. Maroda also suggested having an intermediary to help make negotiations less personal, which can create an efficient buffer and maintain relationships. He stressed that having a fundamentally solid business at the heart of the studio is crucial, as it can make the acquisition process smoother and more attractive to potential buyers. Ultimately, the key takeaways from the panel discussion are the importance of thinking like a businessperson, keeping things simple, maintaining good relationships, and having a solid business foundation. By following these principles, independent studio founders can navigate the complex world of mergers and acquisitions and make the most out of any agreement they make.