In the fast-paced world of startups, the focus is often on the journey to a blockbuster IPO. However, the reality is that startups are much more likely to be acquired than to go public. This fact is not often discussed openly, leaving many founders unprepared for the possibility of selling their companies.
During a recent panel discussion at TechCrunch Disrupt 2024, industry experts highlighted the importance of considering acquisitions as a viable path for founders. Naveen Rao and Kamakshi Sivaramakrishnan, both successful founders who sold their companies, emphasized the need for mental and physical preparation for the acquisition process.
While both Rao and Sivaramakrishnan did not initially plan to sell their companies, they recognized the value of the right deal with the right company. They stressed the importance of building a strong company first and being open to acquisition opportunities that align with the company’s goals and values.
Dharmesh Thakker, a general partner at Battery Ventures, provided valuable insights into determining the right time to sell a company. He outlined a three-point framework that includes analyzing the product, sales performance, and financial position of the company. Thakker emphasized the need for founders to be open-minded and realistic about the company’s prospects before deciding to sell.
When the decision to sell is made, Thakker advised founders to negotiate a deal that benefits not only themselves and investors but also their employees. By providing retention packages for employees, founders can create a positive outcome for all parties involved and potentially pave the way for future ventures.
While selling a company may not always be the initial plan, founders should consider all options and be prepared to make tough decisions when necessary. By staying open-minded, evaluating key indicators, and prioritizing the well-being of employees, founders can navigate the acquisition process with confidence and potentially set the stage for future success in the startup world.
