The ultimate goal of most founders is to grow a successful startup, attract buyers, and eventually, sell the company for a profit. But what is you don't want to leave your startup after exit?

As a founder, it’s crucial that you understand what options are available and know how to plan an effective startup exit from day one. You need to ask yourself important questions such as ‘what do you want from the sale?’ and ‘do you want to stay at the company after selling?’

In this blog, we’ll explore the key factors to consider when planning a startup exit, including the pros and cons of staying with your company post-sale. Additionally, we’ll offer expert tips to help you maximize your exit strategy and make the transition as smooth as possible.

Why Do Founders Sell Their Businesses?

There are many reasons why a founder might decide to sell their business:

• Wealth: A successful, profitable business attracts acquisition offers, allowing founders to cash in on years of hard work.

• New ventures: Some founders are serial entrepreneurs who are eager to launch new startups or pursue other business opportunities.

• Retirement: For founders ready to retire, sell their business, travel, or spend more time with family, an exit allows them to step back from the stresses of daily operations.

Acquisition is the most common exit strategy for startups, and the global M&A market has seen unprecedented growth. In 2021, the value of M&A transactions reached nearly £4.9 trillion, highlighting the surge in dealmaking.

Do founders have to leave after selling?

Founders have the option to leave after the business is acquired, but many founders choose to stay on for several months or even years. There is often a minimal period of transition when founders must agree to assist with the handover of the business operations.

According to a Master Class series held by Tech Crunch: “Buyers said they generally hoped the founders would stay with them for many years.” They add that buyers often use earn-outs or shares of the company they are acquiring to incentivise founders to stay after a startup exit.

Pros of staying at your startup after exit

• Staying on after the acquisition will give you leverage in negotiations and could help you secure a higher purchase price and other favourable terms.

• Buyers will often offer earn-outs, shares, or re-vesting agreements to motivate founders to stay on after the acquisition.

• According to Entrepreneur, many founders experience a loss of self and identity after selling their businesses. By staying on, you’ll have the opportunity to remain involved with your startup and help it scale to new heights.

Suggested reading: How does life change after the startup acquisition process?

Cons of staying at your startup after exit

• You might find it difficult working with a new team or having someone telling you how to run the business you’ve built.

• You might find it difficult to adapt to a new brand image or company culture.

• You may not have the time or freedom to start a new business.

• You may not be able to enjoy your new-found wealth to the fullest.

Key takeaways

Staying on after acquisition will give you leverage in negotiations and could help you secure a higher purchase price, along with other benefits such as re-vesting agreements.

That said, founders become founders because they want to lead. It’s natural for founders to find it difficult to follow a new management team and be told how to run the business they’ve spent years building.

Whether you decide to stay on after exit will depend on your individual goals and the terms agreed upon during the sale.

3 tips to get the most out of your startup exit

1. Get your business acquisition ready. If an acquisition is your goal, you should start planning from day one. Prepare your startup for acquisition by getting your business records in order, maintaining good finances, and creating effective SOPs (Standard Operating Procedures).

2. Join a startup marketplace. Selling platforms like Foundy have revolutionised the M&A market and made exiting a startup quicker, smoother, and more economical.

3. Seek advice from an M&A expert. Working with an M&A broker, business broker, or investment bank ensures you have step-by-step expert support throughout the exit process. From business transfer agents to legal counsel, the right advisory team can help you avoid pitfalls, secure the best possible deal, and ensure post exit integration.

Suggested reading: Everything you need to do to sell your startup

Start planning your startup exit with Foundy!

Whether you’re looking to sell your startup quickly or maximize its value, Foundy offers a suite of digital tools and M&A advisory services designed to make your exit smoother and more successful. By joining Foundy, you can connect with hundreds of credible buyers and start the sale process with ease.

Foundy additionally offers specialised M&A advisory services across a wide variety of industries. It all starts with a free business valuation. This will help you and our M&A advisors understand your company's current position and the necessary steps to position yourself for a successful sale. Foundy factors in over 29 key elements that contribute to your business valuation, ensuring a comprehensive and accurate assessment. Similarly, if you're a buyer, Foundy's M&A advisors can help you find your next acquisition and streamline your end to end process via an all in one portal.

If you have any questions, reach out to our friendly team today. We’re always happy to help!

Ready to discover your business's value?

Running a business while preparing to sell or acquire another can be overwhelming—it’s like having two full-time jobs. While some entrepreneurs thrive on the independence of doing it all themselves, others prefer collaborating with M&A advisors who bring industry-specific experience and guidance.

That’s why Foundy developed the Find An Advisor programme, which offers the education, resources, and step-by-step support you need to navigate the M&A process with confidence.

Take a moment to check out the free calculator on our pricing page, where you can see how Foundy can add six to seven figures in additional value to your business. No matter where you are on your entrepreneurial journey, Foundy is here to provide the tools and support needed for a smoother, faster acquisition or exit process.

No matter where you are on your business journey, connect with Foundy to access the resources needed for a smoother acquisition or sale process.