5 Lessons From a Startup Exit

Should you lead a startup, there could come a day when it is time to take into account an exit. We have a tendency to listen to about exits as success tales instructed solely as soon as all is claimed and achieved. We see them within the type of headline-making, billion-dollar acquisitions, or splashy social media posts from startup CEOs. 

However we hardly ever discuss what it actually takes to get there: the various steps and levels {that a} CEO and their crew goes via on the highway to exit. 

I not too long ago went via this when Affectiva, the startup I co-founded greater than a decade in the past, was acquired by Good Eye, a publicly traded firm in Sweden. It was an intense course of. However now, a number of months out, I’ve had time to mirror on key learnings I gained alongside the way in which.

Listed here are my prime suggestions for CEOs and startup leaders contemplating an acquisition. 

1. 
   

   Create the chance. 

As soon as you have determined to discover an exit, do not watch for consumers to come back to you. Be proactive: create a shortlist of potential acquirers who may be an excellent match, and take into account the professionals and cons that every has to supply. Assess the match, not solely from a expertise and enterprise perspective, but additionally by way of imaginative and prescient, values and tradition. 

Additionally, the extra alternatives you create, the extra leverage you’ll have. In our case, we took a twin monitor, entertaining acquisition discussions whereas exploring elevating one other funding spherical. Understandably these discussions are sometimes extremely confidential. Nonetheless, in case you can, discuss confidentially to friends or mentors in your community who’ve gone via an acquisition earlier than, and be taught from their experiences. 

As CEO, you need to personal the method. Faucet into your community to facilitate introductions, or be courageous and simply attain out. Even when you have retained a banker, essentially the most impactful outreaches are ones that come from the founder or CEO. Early on, I acknowledged that Good Eye may very well be an incredible match — nevertheless it was not till I initiated partnership conversations with their CEO that these discussions segued into an acquisition. 

As soon as conversations are underway, signal as much as tackle motion gadgets to maintain discussions transferring ahead and the place they have to be centered. Meaning not placing the onus on the opposite firm to come back again to you or provoke subsequent steps. The deal could not all the time be their largest precedence, however extra doubtless than not, it is yours. By taking possession, you may achieve extra management over the velocity of the method in addition to the narrative across the deal. 

3. 
   

   Sit down on the desk and be in all the main points.

It is true what they are saying: the satan’s within the particulars. As CEO, it is advisable take note of the little stuff simply as a lot as the large stuff, as a result of these particulars can usually make-or-break a deal and may have main post-acquisition implications. Attempt to be on each name. Even when you have the perfect bankers or legal professionals, it is your firm, your crew, your tech and your future. The extra conversations and particulars you are concerned in, the higher you may affect the end result. 

That is to not say it is advisable do all of it your self. Should you sense you are turning into a bottleneck, delegate to your crew, your legal professionals or your bankers. However once you do, be sure to all the time circle again to remain on prime of what is going on on. 

4. 
   

   Align your stakeholders. 

Out of your government crew, to your traders and your board, it is vital to get everybody on board. Aligning early will be the distinction between constructing pleasure and buy-in, and shedding stakeholder help. I did plenty of 1:1 calls with our traders and board members early on to inform them about Good Eye and why we have been excited concerning the alternative, and it made an enormous distinction in rallying everybody behind the acquisition. Moreover, your stakeholders could have gone via this earlier than, so you may go to them for introductions or recommendation when you have any points or considerations alongside the way in which. 

Alignment can also be essential amongst your government crew. You need them to be excited and engaged within the course of. They’re uniquely positioned to translate that pleasure to traders or an acquirer throughout due diligence, and to hold that via to the remainder of your organization as soon as the deal has closed.

5. 
   

   Retain counsel that represents you and key staff 

The most effective selections I made as soon as the acquisition path began to progress was to retain authorized counsel to signify the important thing staff together with myself on points associated to employment and compensation. Whereas we had superb company counsel, their focus and precedence are usually on completely different points. There are legal professionals who specialise in representing founders on M&A transactions (do attain out in case you want a referral). And all the time maintain your counsel included in all conversations associated to negotiating the deal. 

6. 
   

   Keep in mind, it is nonetheless enterprise as regular. 

This course of will develop into a second, full-time job for you. But it surely’s extra essential than ever to take care of enterprise as regular. If you would like the deal to undergo, you continue to have to ship a product, help key purchasers and meet with key companions.

Acquisition conversations are additionally extremely confidential — your total firm can’t be looped in. However, in case your crew suspects one thing is going on, uncertainty will create worry and hypothesis, so persevering with with regular course of enterprise is one of the simplest ways to maintain the corporate and the crew on-track, even on the precipice of main change.