Startup CEO, 2nd Edition

Chapter 50Preparing Yourself for an Exit

As I said earlier in the book, entrepreneurship is full of extreme highs and extreme lows, and the thing you have to get used to is when they happen at the same time. Nowhere in your startup CEO journey will you find this to be truer than during the process of selling your company.

How Do You Know It's Time to Sell?

This is a tricky question. There's an old adage that “great companies are bought, not sold.” I don't quite agree with that wording. Certainly, great companies, those “lightning in a bottle” rocket ships, are likely to attract proactive offers from strategic buyers early and often. And it's also true that weak, financially unhealthy, or more run‐of‐the‐mill companies may never attract a proactive offer. But sometimes great companies don't have an obvious natural buyer, or the timing of wanting or needing to sell a company doesn't line up with the needs of the market.

Regardless, the question stands: How do you know it's time to sell your company? There are a few times that point to the answer of “could be now”:

• You receive an inbound, unsolicited offer that is very exciting to you, your team, and your shareholders, either because the number is disproportionately large relative to where you believe the company should be valued today, or because the buyer and the opportunity of the combination of the two companies is exciting. Inbound offers are in some ways the easiest to get your arms around. My long‐time friend and board ...