Strategic Exiting

Mastering the Art of Startup Acquisitions

Startups -> In a market where M&A activity is contracting, Series B-Z rounds are drying-up, and anyone with an AWS account can launch a startup or an "AI" company, it's time to start approaching your exit strategy more pragmatically.

Both startups that I bootstrapped from $0 to exiting to Fortune 100 companies had a couple of things in common:

• We had a product that solved a real problem for the acquirers' customer base. We solved that problem better than any of our competitors.

• We had an existing strategic alignment and relationship with the buyer and their partners. These developed over the course of years (there are no shortcuts here).

• We had mutual customers that raved about us to the buyer. Don't underestimate this. It sends a signal that you have mutual alignment and product-market fit.

• We solved a problem that was core to the acquirer, and did it in a way that they couldn't build in house - and also accelerated their time to market.

• The numbers penciled out. Once you get through the steps above, you need to demonstrate how your startup is going to add value and revenue to the acquiring company. In today's market, speculation won't cut it. This looks like either a material contribution to cash flow, increased conversion rates for them against their competitors (where are you helping them win today?), or demonstrated pull-through revenue of their core product.
  
  Note - If the idea of you getting acquired by one of their competitors gives them cold sweats, that's a pretty good place to be as well.
  
  Moral of the story, you need to buckle-up, do-the-work and get comfortable with the idea that you're flying through turbulence for the next couple of years.