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Prepping for Exit - a Founder’s Perspective on M&A - Issue #9

Relationships and Runway will have a dramatic impact on your outcome.
Issue #9  •  January 22  •  View online  •  Suggest a link
Prepping for Exit - a Founder’s Perspective on M&A
Prepping for Exit - a Founder’s Perspective on M&A
Is it time to consider selling your startup? Looking for a founder’s perspective? Dave Parker is a five-time founder with >10 exits. This reading list is practical advice on prepping for exit, pricing and the process.
Relationships and Runway will have a dramatic impact on your outcome.

Building relationships before you need them
Selling your company is going to take time. Especially if you’re looking for a great outcome.
Upstream buyers usually have larger organizations, in the case of acquisition, and you’re going to meet with Corp Dev, Product and perhaps that Strategy teams. With smaller companies, for a merger, you’ll likely be talking to the CEO.
Corp Dev teams are generally on the hunt for companies that have been identified by the strategy team or the product team. they are looking to fill product gaps or fill in the more long term product road map. Corp Dev also responds to inbound requests and then manage the process and vet the company that is for sale. They are going to quarterback the deal process.
You’ll also need a champion inside on either the product team or strategy team to be the advocate of your deal. For that to happen, you’ll need to have some history with that person or a great reputation for your product or service. Being in stealth mode here won’t help you.
Find opportunities at trade shows to talk about your plans, without giving away trade secrets. Understand the buyer’s product roadmap. Talk with them about mutual customers and the customer’s needs or how you could jointly work to solve customers’ problems. Even larger companies have limitations, so understand where your products feature map to their platform as well as the strengths and weaknesses.
Will your product features decrease or increase their product sales cycle? One of the companies I sold was able to decrease the sales cycle by 50% for the buyer!
You’re also going to need a runway. Ramping up an M&A process will take 6-18 months. Having less than 6 months of cash in the bank puts you in a risky position. If you’re making a decision to pursue the next round of funding or look at a sale process, get started on it earlier. If not, you’ll be talking to your investors about a bridge round to carry you through. If the buyer knows they can delay closing for 30 days and you’ll miss payroll, they may drag their feet. 
4Q 2019 PitchBook Analyst Note: 2020 Emerging Technology Outlook | PitchBook

The VC Female Founders Dashboard | PitchBook

Exit value tops $256B as 2019 closes a record-setting decade in US VC [datagraphic] | PitchBook

Tech M&A boomed the past five years — but executives need to update their playbook, Bain says
Techstars Startup Digest Prepping for Exit - a Founder’s Perspective on M&A is curated by:
Dave Parker Dave Parker
dave.parker@startupdigestmail.com
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