Getting good companies bought not sold.
This saying has been passed down through generations of entrepreneurs as conventional wisdom, but it doesn’t tell the whole story. While the IPO has been characterized as the pinnacle for venture-backed startups, many more companies see successful exits through a merger and acquisition process than going public. Being bought by the best seller for you requires thoughtful planning and, yes, selling.
As an entrepreneur, you probably started your business because you wanted to make a big impact. You are building something that you truly believe will change the world in a positive direction. And yes, there is also an implicit financial outcome. People – perhaps your investors, the media, your team – will often focus on the exit strategy in the context of a financial result.
Any investor or mentor will tell you that when a company says they want to buy you, the correct answer is, “We’re not for sale.”
In my experience, many founders are more motivated by the potential for impact. For founders like this, my advice is to always consider acquisition as an option. It may not be obvious at first, but an acquisition could be your best path to large-scale scale.
Before becoming a fledgling investor at DTC, I led business development and mergers and acquisitions for Microsoft in Europe and Israel. I was on the other side of the negotiations when Microsoft was looking for innovative teams and technologies to deploy. The founders who benefited the most from the acquisition process were the ones who planned it from day one.
Planning a potential takeover is not a defeatist attitude
Companies are 10x more likely to be sold than to go public.