When should you sell your company?
- First, and more importantly, bear in mind good acquisition offers are rare. Most start-ups never get a decent one. So the idea you can wake up one day and decide to sell your company is a bit of a delusion. Odds are you will never get a strong offer. Assume that going in and you’ll be happier. A little more on the odds here: Should I Sell for $50m … Or Push On And Try to Build a Unicorn? – SaaStr
- Second, you’ll be in a unique position to understand risk/reward. Your experience, the company’s momentum, and your gut will know better than any outsider.
- Liquidity is rare. But so is lightning-in-a-bottle. If you sell now, that’s probably smart. But what the odds you can do it again? Maybe lower than you think. Are you OK if the company you started is shut down 2 years after the acquisition? That’s fairly common.
- Finally, think about other options if you have something good. Decent priced acquisition offers tend, by their nature, to come for good start-ups. Especially in SaaS. These days, you can often instead sell some of your shares in “secondary liquidity” instead. The need to de-risk our financial lives sometimes pushes us into choices here that are too conservative.
Ask yourself: Would you push on, if you just had a few more nickels in the bank? Then I say, push on. And see if you can just get those nickels to destress your life and tide you over. Sell 5%–10% of your shares instead, if you can. If that’s enough money (selling 5%-10% of your stake) so that your experience, momentum and gut then say “don’t sell” — then maybe don’t sell.
A discussion on a $1b M&A exit here from SaaStrAnnual.com:
Hear how Dave Yarnold, CEO of ServiceMax, in partnership with Jason Green, General Partner and Founder at Emergence Capital, navigated the challenges that every CEO faces when building a billion dollar business.