Selling Your Startup

12Communication with Stakeholders

Communicating with stakeholders is critical throughout the M&A process. Understanding to whom you need to talk and what their roles are is critical to the success of the deal. It can greatly affect the net outcome, how smoothly the transaction goes (or not), and the legal and financial risks you may incur by not following protocols.

There can be a variety of stakeholders involved in this process. Know who they are, what their roles are, and how to interact with them.

The Role of the Board of Directors

What is the role of the board of directors in an M&A transaction?

As the founder or CEO, you may end up getting the first real call, conversation, or pitch to sell your company. Despite your history with the company, it is important that you don't forget your new place in the organization.

When it comes to corporate law, most jurisdictions dictate that the executive team operates under the direction of the board. The board of directors governs. They decide the strategy and direction of the company. The management team, including the CEO, COO, CFO, and CIO, operates under their guidance and simply executes on their decisions.

That means you don't really get to have an opinion on an offer or price. By law, you are operating at the direction and on the decisions of the board. Otherwise, it wouldn't be much different than your CMO or customer service lead engaging in an M&A conversation with a larger competitor.

This can be a hard pill to swallow ...