Entrepreneurship · Startup

When should startups consider selling themselves?

shakoya mclaurin I am an ambitious young women that works hard.

April 11th, 2017

I started thinking about this question when I read this week that TaskRabbit is exploring a sale.

Now, many of us would glibly answer this question by saying “Whenever someone would want to buy me.” But put yourself in a situation where the company is growing and it’s not a matter of “if” but “when.” What conditions need to be in place for you to sell? What traps do you have to watch out for?

Anonymous Looking for a partner to share the profit

April 11th, 2017

I beg to differ. “Whenever someone would want to buy me.” is nothing less than a fool statement IMHO. Every single great company you can think of or name received many many offers on its route to greatness.... Yet they resisted those offers for various reasons, till it was the right time ... That is why it is absolutely important to have a full discussion and debate in the board on whether this is the right time. Full financial reports about past, present, potential and expected growth should be thoroughly discussed and challenged. The decision to sell and not to sell must both be challenged in every possible way.

If the board believes that your current income and potential growth over the next five years would allow you to reach a net worth of 1M, would you even consider an offer for 0.5M? I would not.

My answer to your question is: the board must discuss, challenge, debate and agree on a decision that a two third majority approves.

Pennant Potential startup looking for the right people

April 11th, 2017

I am not fortunate enough to be in this position, so am not really qualified to answer however my instinct tells me that a knee jerk decissision of "whenever someone wants it" would be regrettable, I would say that an exit strategy should be put in place very early even as early as the earliest of business plans, based on how far you can and want to take the business.

Mark Temperley ex-X Commerce finance, ex-management consultant

April 14th, 2017

The answer is "it depends". Let's look at why people sell: 1. they want to exit - and it was part of the original plan. 2. an offer comes along that is tempting enough 3. people tire of their creation and want to create something new and not run something old. 4. they believe it will eventually reach the end of its cycle and get out while the market is hot 5. they need the money 6. Another reason is that the business may not be generating cash, but selling does. You don't have to sell all of your company. One strategy is to sell parts of it so you can take some profit but retain control. This frees up cash to incest in other things such as real estate and other projects, or just to enjoy the fruits of your labour. Practical issues include tax and control.