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Think Tank M&A

Trade Sale, Open Innovation, Corporate Venturing

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Marketing

9 incredible tips to sell your startup early

You have enjoyed the ride, maybe you have had enough or maybe you feel it is the right moment to exit at the highest possible price point.

So now is the time for you to sell your startup and move on.

What do you need to know before getting started ?

Here are some hands-on tips and tricks to prepare and execute the sale of your startup and start a new one, an even cooler startup !

Tip #1: Why making an investment in a Startup is only the beginning of the journey ?

  • What types of investments, exits and returns have you made so far ?
  • How to decorelate between exit of the investors, exit of your startups and the priorities of the different entrepreneurs ?

Tip #2: What is the right exit path for my startup ?

  • How to review and chose the various types of exit paths ?
  • What are the triggers, prerequisites and timings for each exit path ?

path

Tip #3: Why, how and when should you exit ? What might happen when you choose to exit ?

  • What difference does it make whether I exit to an Angel Investor, a Venture Capitalist, to a Private Equity or on a Secondary Market ? Why should I care ?
  • IPO, is it possible for your startup ? Is it really a jackpot for you ?
  • Share repurchase by entrepreneurs, is it really a win-win alternative everyone is talking about
  • 9 distinct areas in a Due Diligence process. Sellers do their Due Diligence. Buyers also do Due Diligence! Then we talk ! It is important to understand this process and its consequences.
  • What are the risks in these transactions ?
  • What are the personal liabilities for investors & entrepreneurs ? How to limit them ?

Tip# 4 – What are the most successful exit path in Switzerland ? Why is the Trade Sale so popular ?

Is it the right deal type for you ?

  • Buy-Sell Agreement
  • Share Purchase Agreement, what is its timing, intention and what are main clauses

Fiscal optimisation for all parties involved: this plays a key role in many transactions.

Tip #5 – Would hiring a professional negotiator make a big difference ?

There are many advanced negotiations tactics, to chose from, which ones have you used ? which ones have worked ? Which ones have you seen being used ?

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Tip #6 – Who will be around the negotiating table ?

handcheck

Who will not be there but will be influential in other ways ? Always useful to keep in mind your list of stakeholders and to manage your counterparties proactively: shareholders, investment banker, lawyer office and buyer. They are usually somehow in the game.

Tip #7 – Valuation of your startup – No one else knows your startup better than you. So roll your own and be well prepared.

rollyourownHave your own way to do the startup valuation. Get some advise of course.

bridesWe all know that all brides look sexy. The seller is always looking good. We will find it difficult to know all the hidden problems and to be 100% sure about the intention of buyers and sellers. It is part of the pocker game and the negotiation preparation.

  • I know how much money I can get but what will they gain?
  • How do you chose your lawyers ? They are probably your most expensive friends. What can you prepare without them ? Where can you save a couple of hours of their time ? Where do they truly add value ?
  • Does the company need a CFO, a CEO, or some kind of CxO ad interim for managing the transition and the acquisition integration ?

Getting paid in cash vs shares. What can you exercise?

 

Tip #8: Are you really really ready ?

  • How to know if I am ready to sell and exit?

Here is a Free Exit readiness assessment tool.

Tip #9 : Secret booster

  • How to accelerate if you have to ? The buyer is ready and wants to move fast. You are half ready to sell but unsure you are not missing a unique exit opportunity. How do you deal with that.

CONCLUSION

Better safe than sorry, it is super important to have the right team around you to manage your exit and to be well prepared before you reach the negotiation tables. Startups need to build a growth plan and exit path early in their life cycle to unlock the value created and to maximize the chances of their founders and investors making financial returns.

We would like to hear from you, how did it go for you ?

If any of this is useful, please comment, we would like to hear from you.

If you are asking yourself some of these questions, let us know.

 

Our references

Date Role $ Deal Structure Industry Company Name Target
2013 – 2016 Scouting, Due Diligence, Fund Raising, Negotiation 1-5 Mio Acquisition / JV IOT, Golf, Biotech, Skincare, renewable energy Under NDA Under NDA
Aug 2011 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Acquisition US Crop forecaster Thomson Reuters

(70000 employees)

Lanworth (22 employees)
Aug 2011 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Acquisition Metals analytics Thomson Reuters

(70000 employees)

GFMS (Gold Fields Mineral Services)
Oct 2010 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Acquisition Direct Market Access Trading (DMA), buy-side quants and hedge funds doing algo trading. Thomson Reuters

(70000 employees)

Aegisoft
May 2010 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Acquisition Essential trading analytics, news and content for the energy and environmental markets. Thomson Reuters

(70000 employees)

Point Carbon
Nov 2009 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Acquisition Swiss environmental, social responsibility and governance (ESG) data provider Thomson Reuters

(70000 employees)

Asset4
Sep 2009 Acquisition Integration for Sales and Customer Service 42 Millions Euros Acquisition News release Thomson Reuters

(70000 employees)

Hugin Group
Aug 2009 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Acquisition Enterprise tick data solutions, velocity analytics Thomson Reuters

(70000 employees)

Vhayu (founded by Intel)
Jul 2009 Acquisition Integration for Sales and Customer Service The terms of the deal of privately held Streamlogics remain undisclosed. Acquisition Results-driven webcasting solutions Thomson Reuters

(70000 employees)

Streamlogics
2008 – 2010 Acquisition Integration for Sales and Customer Service The terms of the agreement were not disclosed. Partnership / JV / Acquisition Order routing FX derivatives Thomson Reuters

(70000 employees)

Autex (Tradeweb)
May 2007 – March 2012 New Operating Model Implementation 17.2 bil Acquisition Information, news, data, graphics, hardware, software. Thomson

(35000 employees)

Reuters (35000 employees)
1995-1997 Post Acquisition Rebranding The terms of the agreement were not disclosed. Acquisition Oil distribution, service stations network Elf Minol
1993-1995 Post Acquisition Strategic Planning The terms of the agreement were not disclosed. Acquisition Biometrics authentication and identification systems (AFIS) Sagem Morpho Systems

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