What to Do When Someone Wants to Buy Your Startup
So, it finally happened. After years of grinding, someone has made an offer to buy your startup company. The first feeling is pure euphoria—you can already picture what life looks like after the deal closes. But then, a wave of anxiety hits. How do you actually prepare for an acquisition? This is where the real work begins.
If you handle this process poorly, you could scare off the buyer, tank your valuation, or walk away with a lot less money than you deserve. And what about your team? How do you make sure they have a smooth transition into the new company? I’ve been through this a couple of times myself, with two successful exits, and I’ve learned a few things along the way that can help you get to the finish line without any major hiccups.
1. Keep Your Foot on the Gas
An acquisition offer isn’t set in stone until the final papers are signed. So while it’s okay to be excited, you can’t afford to let the growth of your business stall. Stay focused on your goals and keep hitting your targets. Think about it this way: continuing to grow only improves your company’s value and strengthens your negotiating position. Plus, if the deal happens to fall through at the last minute, your business startup won’t be left dead in the water.
2. Learn from Those Who Came Before You
You aren’t the first founder to go through this, so take the time to learn from the acquisition stories of others—both the good and the bad. Understanding common mistakes can save you a world of trouble. Reach out to other entrepreneurs in your network, especially in your industry, who have sold their businesses. They can offer practical, real-world advice on how to navigate the process and what to expect.
3. Get Your House in Order
Prepare for intense scrutiny. The buyer is going to put every aspect of your business under a microscope, so it’s time to get your records organized. Work with your accounting, legal, and HR teams to gather all the necessary paperwork. Any discrepancies that pop up during due diligence can kill a deal or, at the very least, hurt your valuation. If bookkeeping has never been your strong suit, now is the time to fix it, because you can be sure the buyer will be looking for any mistakes.
4. Bring in the Experts
Even with a competent internal team, managing due diligence is a massive undertaking. Hiring outside professionals who specialize in acquisitions can be a game-changer. It costs money, but their expertise leaves very little to chance. Here’s who you should consider:
- : Getting a pre-sale financial audit gives the buyer independent confirmation that your records are accurate. This builds a huge amount of trust and can speed up the process.
- : The buyer naturally wants to pay as little as possible. An independent valuation of your tech startup gives you a fair, accurate number that can stand up to scrutiny.
- : Your team will be buried in requests for financial statements, revenue reports, expense accounts, and cash flow projections. Bringing in outside help prevents your staff from getting overwhelmed, which is when mistakes happen.
- : A good legal team can help organize all the documents the buyer requests and take the stress out of communicating with the buyer’s lawyers.
5. Define What 'After' Looks Like for You
You and the buyer have different end goals, so it’s critical to get on the same page about expectations. This goes beyond the sale price; it’s about your life after the acquisition. You need clear answers to questions like: Are you staying with the company? If so, what will your role and responsibilities be? Will you have any say in key decisions? How does the buyer plan to use your product, and does that vision align with yours? If your expectations don't line up, you're setting yourself up for long-term unhappiness. Many founders end up regretting their decision to sell for this very reason.
6. Find the Right Home for Your Team
When you’re looking at a great offer, it’s easy to overlook whether the buyer is the right cultural fit. You owe it to your employees, who helped build the business, to find them a good home. A culture clash can lead to a painful, disruptive transition for everyone. Take the time to understand the buyer’s core values and mission. Can you and your team genuinely get behind their way of doing things?
Selling your startup company is a lot like selling a house you lovingly built from the ground up. You want to get the best price, but you also want to know the new owners will take good care of it. To do that, you have to clean everything up, fix what’s broken, and bring in specialists for an independent valuation. By following these steps, you’ll not only walk away with more money and fewer headaches but also with the confidence that you made the right move for yourself and your team.
