How to Sell Your Startup

Ramy Adeeb

Startups are bought, not sold. However, there are many things you can do as a founder to set your company up for a successful exit. The key is thinking about it ahead of time. Here are a few steps to guide you through the process.

Decide On Using an Investment Bankers

The decision to engage investment bankers for your M&A process is highly contextual. If you use an investment banker, they will handle many of the steps below on your behalf, including building the top of funnel and managing most of the negotiations. Here’s when it makes sense and when it doesn’t:

When Bankers Add Value:

• Your company is at Series C or later with significant revenue (>$50M ARR)
• You’re running a competitive process with multiple potential acquirers
• You need help reaching strategic buyers outside your immediate network
• The deal complexity requires dedicated financial modeling and transaction support

When Bankers May Be a Negative Signal:

• You’re an early-stage startup (Seed to Series B) where relationships matter more than process
• You already have strong relationships with potential acquirers
• You’re in preliminary discussions with a single interested party

Build Relationships

• Create a list of potential acquirers. Your acquirers tend to fall into a few buckets: larger competitors, partners/customers of your products, and larger companies that are threatened by your competitors. The third bucket, while less obvious, can be one of the most strategic outcomes.
• Start building the relationships with these business well before you need to get acquired. Think a year or two. If they only have 3–6 months of cash left and you want to start an M&A, you will end up with a fire sale for pennies.
• Make sure you’re building the relationships with right decision makers—namely a CEO, GM, or a CXO level executives. Don’t waster your time with Corp Dev teams; while they execute on the M&A decision, they don’t actually initiate it.
• Consider partnerships that could lead to acquisition.

Start the Conversation

Bringing up an M&A conversation can seem daunting. Here are a few practical steps:

• Schedule a casual 1:1 coffee or lunch with the potential acquirer’s senior executive (not Corp Dev). Frame it as a catch-up or partnership discussion rather than explicitly mentioning acquisition.
• Share your company’s recent successes and growth trajectory, then naturally transition into discussing how your solutions could complement their strategy (more on positioning below)

When you do broach the topic, keep it exploratory:

• Use phrases like “exploring strategic options” or “evaluating potential deeper partnerships” rather than directly stating you want to sell.
• Ask about their build-vs-buy strategy in your space and their thoughts on recent industry consolidation.
• If you already have interest from another party, say something along the lines of “I value our partnership, so I wanted you to know we’ve received some inbound interest from [strategic/competitor]. We’re still in the exploratory phase [and I expect our partnership to continue], but given our relationship, I wanted you to be the first to know, etc.” Be prepared to not answer a slew of questions on who the acquirer is and at what price.

Position Your Company Around the Combined Value

Many founders focus too narrowly on their team, current revenue, or product features when positioning for acquisition. However, talent, revenue, or product acquisitions are actually some of the less valuable M&A outcomes. The highest value comes from positioning the acquisition as a strategic threat or a defensive move.

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Start by telling a compelling “1+1=11” story - demonstrating how combining your company with the acquirer can create exponential value. For example, highlight how your product could drive massive revenue when distributed through the acquirer’s existing customer base, how your technology could transform their core business, or how your team’s expertise could accelerate their strategic initiatives. Paint a picture of transformative potential rather than just current metrics.

If your goal is to be acquired by a large strategic, consider quietly engaging with that company’s top competitor. Letting it “slip” that you’re in conversation can create a sense of urgency and FOMO. It’s a tactical way to drive interest and speed.

Drive the Deal Structure

• Start thinking about the right structure and whether an asset acquisition, stock acquisition or a full merger is the appropriate structure here. For more on these see Structuring M&A
• Think about what matters to you beyond just the cash and consideration such as timing of payments, earnouts, title and role, etc. For a comprehensive list of the typical M&A terms see Terms To Negotiate in an M&A Transaction
• Always get a second bidder.

Convince Your Investors

In certain situations, your investors may be hesitant to sell if they perceive the outcome as less favorable than the company is worth. You can use a mix of fear and greed here: of your company’s outcome as a standalone entity and greed about the acquirer’s stock potential if it’s a stock acquisition.

This may sound self-serving, but don’t screw over your investors. The top VCs won’t care if they’re getting 1x or 1.5x financially, but they will remember how you handled the process. Be fair. You may need those same investors to vouch for you during your next venture.

Post-Deal Considerations

1. The period between signing and closing is typically the most demanding phase in the life of the founder, requiring extensive documentation, legal reviews, and detailed integration planning. Expect 4-8 weeks of around the clock work dealing with every detail from a missing NDA for a consultant you hired five years ago to replacing an open source module in your codebase the acquirers deems too risky
2. Prepare your team for the transition. Their biggest two questions are how much will I be making and is my job secure. Addressing concerns about job security and changes in company culture. Set expectations about the new operating world. And if the merger includes layoffs plan for these conversation carefully.

Common Pitfalls to Avoid

1. Don’t neglect your core business during the process. Ideally no one knows about the process aside from your co-founder if you’re early (or your CFO and a handful of key folks if you’re late stage). This news will spread like wildfire and will effectively pause your company’r progress.
2. Don’t wait until you’re forced to sell.