Most startup advice focuses on building and growing. But understanding exit options early helps you make better strategic decisions along the way: what markets to enter, how to structure your cap table, and when to accelerate or be patient.
Types of Exits
Acquisition (most common): Another company buys yours for cash, stock, or a combination. Acqui-hire: A company acquires your team more than your product. IPO: Going public on a stock exchange (extremely rare -- fewer than 1% of startups). Secondary sale: Founders or early investors sell their shares to later-stage investors. Merger: Combining with another company to create a larger entity.
What Makes a Company Acquirable
Strategic acquirers look for: technology that is hard to build internally, a team with deep domain expertise, a customer base that complements their existing business, revenue or traction that validates the market, and cultural fit with their organization. Build your company to be valuable to potential acquirers, even if acquisition is not your primary goal.
Valuation in M&A
Acquisition valuations are based on: revenue multiples (typically 5-15x ARR for SaaS), strategic premium (acquirers pay more when the acquisition solves a strategic problem), competitive dynamics (are other acquirers interested?), and team value (in acqui-hires, this is the primary driver).
The Acquisition Process
A typical acquisition takes 3-6 months: LOI (Letter of Intent) with high-level terms, due diligence (financial, legal, technical, HR), final negotiation of definitive agreements, regulatory approval (if required), and closing. Keep running your business throughout -- deals fall apart frequently.
Planning for a Great Exit
The best exits come to companies that are not trying to exit. Focus on building a great business with strong fundamentals: growing revenue, loyal customers, a talented team, and clean legal and financial records. These fundamentals make you attractive to acquirers and give you negotiating leverage when opportunities arise.
