0M.
Negotiate earnouts with metrics you directly control and guaranteed resources.Secure double-trigger acceleration for your team's equity to protect them post-acquisition.Build a virtual data room now, not when a buyer is waiting.
The Decision to Sell is Never Just Yours
An acquisition offer feels like the ultimate validation. But the decision to sell is not yours alone. If you have co-founders, a board, or investors, you have a legal and fiduciary duty to get aligned. Many promising deals die because founders didn't have this conversation early.
Mistake #1: Waiting for an Offer to Talk About Exiting
The worst time to discuss your exit philosophy is when a term sheet with a 48-hour fuse is on the table. The conversation is instantly politicized and emotional. You must have this strategic discussion with your board annually.
Put "Exit Strategy Alignment" on the agenda for your next board meeting. Your goal is to agree on the parameters of an acceptable deal. Frame the discussion around questions like:
- Price & Structure: What is the minimum enterprise value that makes us consider a sale? Are we optimizing for cash, or do we have conviction in a potential acquirer’s stock?
- Strategic Rationale: What kind of buyer helps us achieve our mission faster? Who would be a terrible home for our product and team?
- Founder & Team Goals: What do we, the founders, want to do post-acquisition? What are our obligations to the team?
Document the consensus in your board minutes. When an offer appears, you can refer back to this framework, depersonalize the debate, and move with conviction.
Running the Numbers: What Do You Actually Walk Away With?
The headline price is vanity. Your "walk-away number" is sanity. You must calculate this by modeling the full distribution waterfall. Ignoring this leads to shock and disappointment when the wire hits.
The Distribution Waterfall: Order of Operations
Here’s how the money flows from the acquirer to your bank account:
- Transaction Expenses: First, your lawyers and investment bankers get paid. Budget 2-5% of the enterprise value for these costs.
- Company Debt: All outstanding venture debt and credit lines must be repaid.
- Investor Liquidation Preferences: This is the most critical calculation. Your preferred stockholders (investors) get their money back before common stockholders (founders, employees) see a dollar.
Understand Your Investors' Preferences
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