Everyone should understand what a great exit looks like
Customer wins and financing rounds are important measures of startup success worthy of extensive discussion and celebration with the team.
But it’s also important to discuss and celebrate the other steps you make toward the ultimate goal: The exit. Your team will be happier and more effective if they understand, see and contribute to this progress.
That progress might take the form of meetings with long-term buyer prospects. It might mean sharing your list of potential buyers, and how the founders view different possible combinations.
Don’t get stuck on the idea that your team will be distracted or demotivated by the idea that the founders have anything but an IPO on their minds. To the contrary, think about how important an acquisition outcome might be to them:
Being acquired is a major validating event in their career.
It will expose their great work to more users.
Larger companies have better benefits and lower risk.
Living from fundraise to fundraise is stressful.
They love the team, but might also like to work with more people.
They want to learn new things.
To your team, the acquisition means change, both positive and negative, that they need to assess. Understanding those changes early on — and the need to stay after a deal closes — gives you the best chance of success.
Rather than distracting them, understanding the exit strategy gives them focus exactly where you want it. If they can understand the factors that will drive the exit, that can flow through everything they do. Acquisition is the natural consequence of our hard work, and just a stop along the way to making our mark with a great product.
When you do talk about the exit, keep these things in mind:
Share your list of potential buyers, and ask for suggestions.
Talk about their goals in an exit, financially, personally and in terms of professional development.
Avoid talking timeframes. It’s better to say that it’s impossible to predict if or when anything will come to pass.
Make sure they understand the metrics and other deliverables that are most important to a successful exit.
Find the right level of detail. Recounting every message or call with partner isn’t really actionable for the team.
If you have returning relationships with buyer candidates, define success in those deals as it relates to acquisition potential.
Be open about how financing rounds and acquisitions interact in terms of valuation expectations and investor control in an exit.