Selling Your Startup: Crafting the Perfect Exit, Selling Your Business, and Everything Else Entrepreneurs Need to Know

Cover
Title Page
Copyright Page
Contents
Acknowledgments
Foreword by Bhavin Turakhia
Chapter 1 Seeding What Would Grow into Panthera Advisors
	Accelerated Growth through Acquisitions
	Inbound Interest and a Path Forward
	Choosing My Wingman
	Our M&A Journey
	Launching Panthera Advisors
	My Unwavering Commitment to Entrepreneurs
Chapter 2 Getting Your Company Acquired
	M&A Is Harder Than Fundraising
	The Acquisition Process
	Media versus Your Business: What You See in the Press versus Reality
	Acquirer Expectations
		The Process
		Accounting
		Investment of Time
		Sharing Risk
		A Commitment to Making the Most of the Company
		Make Them Look Good
	Why Most Acquisitions Fail
		That Was the Plan
		It Wasn’t What They Expected
		Incompetence
		Integration
		Changing Markets and Circumstances
Chapter 3 The Role of Investment Bankers
	What Is an Investment Banker?
	Good Cop, Bad Cop
	Why Bankers Add Value
		They Are Experts at Pitching
		They Can Run Valuations
		They See the Maximum Potential Value of Your Startup
		They Handle the Paperwork
		They Know the Players
		They Know How to Stretch to Help Get Deals Done
	Getting the Right Advice
		Trusted Referrals
		Long-Term Experience
		Domain Experience
		Not Just What You Want to Hear
	Breaking Down the Fees
		Retainers and Up-Front Fees
		Reimbursement
		Success Fees
		Breakup Fees
		Average Fee Levels
Chapter 4 How to Plan Ahead
	Consider the Reasons Why You Want to Sell
		Getting to the Next Level of Scale and Customers
		Efficient Growth
		Advancing the Mission
		The Value Has Peaked
		You Get an Offer Too Good to Refuse
		You Get an Opportunity to Advance Your Learning
		Fundraising Challenges
		Creating a Great Outcome for Your Team
		Personal Reasons
		Moving On to the Next Thing
	Tying Up Loose Ends
		Cleaning Up Legal
		Paying Off the Debt
	The Importance of Making Yourself Expendable
		The Ability to Sell Your Business
		Price
		Not Being Stuck Staying On for Years
	How to Make Yourself Expendable
		Branding
		Hire Great People
		Set Yourself in the Right Role from the Beginning
Chapter 5 Preparing the Company’s Pitchbook
	Packaging the Message
	What Makes Your Company Unique?
	Nailing the Value Proposition for Potential Acquirers
	Defining Transition Plans for Potential Buyers
	Crafting the Marketing Plan
	Identifying a Powerful Flow and Structure
	Acquisition Memorandum Template
		Cover Slide
		Disclosures
		Table of Contents
		Executive Summary
		Market Opportunity
		Solution
		Target Market
		Competition and Advantages
		Market Traction
		Financial Results and Projections
		Executive Team
		Technology Platform
		Marketing and Sales
		Business History
		Reason for the Sale
		Buyer Qualifications
		Directions for the LOI
Chapter 6 Putting Your Finances in Order
	Understanding Financials
	The Importance of Key Metrics
		Burn Rate
		Hard Costs
		EBITDA
		Gross Revenues
		Gross Profit Margins
		Sales Units
		Customer Acquisition Costs
		Growth Rate
		Debt to Equity
	Why Growth and Operating Assumptions Are Critical
		Assumptions Are the Basis for All of Your Other Financials
		Credibility
		Earnouts
	Modeling Out a Powerful Five-Year Projection
	Anticipating Questions on Numbers
Chapter 7 Understanding Your Valuation
	Variables Affecting Your Startup’s Value
	Common Methods of Business Valuation
		Your Number
		Earnings Multiples
		The Comparables Approach
		Cost to Replicate
		Discounted Cash Flow Method
		Additional Valuation Methods
	How to Value Pre-revenue Startups
		The Berkus Method
		Venture Capital Method
		The Scorecard Method
		Risk Factor Summation
		First Chicago Method
	How to Increase Your Valuation Faster
		Improve Your Pitch
		Get Those Revenues In
		Get Your Prototype or Minimum Viable Product Done Today
		Build Out Your Team
		Position Your Startup in the Right Way
	Valuation versus Terms
	Why You Never Want to Disclose Your Valuation
	Avoiding High Valuations with No Rationale
Chapter 8 Building the Target List
	The Importance of Building the Target List
		Not Alienating Ideal Buyers
		Saving Time
		Maximizing the Price
		Achieving the Best Terms
		Optimal Outcome for Your Team
		Best Future for Your Mission and Product
		Efficiency in the M&A Process
		ROI on Your Deal-Making Efforts
	Ways to Identify Potential Buyers
		Why Are You Selling?
		What Type of Buyer Is the Right Fit?
		Culture Fit
		Ability to Buy
		Motivation
		Competence in M&A
		Trust and Alignment of Values
	Vetting Buyers for the Right Fit
		Research
		M&A Professionals
		Interview Others
		Build Personal Relationships
		Become a Customer or Vendor
		Partner Up
	Using Partnerships to Trigger Acquisitions
	How to Make Contact with Interested Parties
		Introductions and Referrals
		Networking
		Cold Emails
		Be So Good They Can’t Ignore You
		Move Up the List in Reverse Order
		Use Brokers
		The Golden Rule in Making Contact
Chapter 9 The Communication Process with Buyers
	Liabilities and Responsibilities
	How to Handle Communications
	Gauging Initial Interest
	Nailing the Follow-Up
		Awareness and Discovery
		Learning
		Consideration
		Comparison Shopping
		Trust
		Due Diligence
		Negotiation
	Finding the Decision-Maker
		C-Suite Executives
		Corporate Development
		Advisors
		Transaction Leads
		Business Unit Leaders
Chapter 10 Preparing for a Successful First Meeting
	Finding Out the Strategic Road Map of the Buyer
		You Have to Understand the Buyer
		The Importance of the Buyer’s Strategic Road Map
		How Do You Learn More about the Buyer’s Strategic Road Map?
	Agreeing On the Meeting Location
		Who Is Going to Be Part of the Meeting?
		Home Games versus Intelligence Gathering
		In-Person versus Virtual Meetings
	Setting Up the Agenda for the Meeting
	Follow Up with Emails to Keep Them Warm
	Understanding How to Address Concerns
	Questions Potential Acquirers May Ask You
		Market
		Traction
		Team
		Competition
		Financials
		Intellectual Property
		Business Model
		Corporate Structure
		Existing M&A Process
Chapter 11 Getting to a Letter of Intent (LOI)
	Why an LOI Is So Important
	Breaking Down the LOI
		Who
		Overview of the Transaction
		Due Diligence
		Confidentiality
		The Exclusivity Period
	Comparing Valuations
	Measuring Suitability of the Potential Buyer
		Can the Company Buy You?
		Will the Company Buy You?
		What Will It Be Like?
		How Does It Compare?
	Hostile versus Friendly Buyers
	Considerations before Signing
	The LOI Template
Chapter 12 Communication with Stakeholders
	The Role of the Board of Directors
		Weighing All Options
		Guiding Valuation and Fit
		Being the Voice of Objectivity
		Post-merger Integration
	Keeping Investors Updated in the M&A Process
	The Dos and Don’ts with Employees
Chapter 13 Negotiating the Price Tag
	Price versus Terms
	Communicating Outcomes
	Pushing for a Deadline
	Increasing Price with a Bidding War
	Maximizing Value on the Buyer and Seller Sides
	Thinking Like a Buyer
		Give and Take
		Price Thresholds
		Appearing Smart
		Paranoia
		Where Is the Value for the Buyer?
		Will You Move?
Chapter 14 The Due Diligence Stage
	Putting Together the Deal Room
		Physical versus Virtual Deal Rooms
		Deal Room Software
		Who Should Have Access to Your VDR?
		What Information Should Be Uploaded to Your Deal Room?
		When Should All of This Data Be Uploaded to the Deal Room?
	Validating Your Claims
	The Dos and Don’ts During Meetings
	Managing the Flow of Information
	What to Look for in the Potential Buyer
		What Information Is The Buyer Asking For?
		What Data Are the Buyer Looking At and When?
		Making Excuses
		Efficiency and Honesty
Chapter 15 The Purchase Agreement
	How to Review the Purchase Agreement
		The Definitions
		Purchase Price and Payment Execution
		Warranties and Representations
		Indemnification
		Termination Provisions and Breakup Fees
		Closing Conditions
		Covenants
	Terms and Clauses to Watch
		Jurisdiction
		Stock Exchange Ratio
		Asset Purchases
		Earnouts
		Express Nonreliance
		No-Shop versus Go-Shop Clauses
		Pandemic and Epidemic Carve-Outs
	Typical Purchase Agreement Outline
	Lawyers and the Purchase Agreement
	Choosing the Right M&A Lawyer
		Experience Fit
		Global versus Local
		Value for the Money
		Alignment
		Bandwidth and Priority
	Dealing with Legal Counsel
Chapter 16 Strategic versus Financial Acquisitions
	Different Types of Acquisitions
		Financial Acquisitions
		Strategic Acquisitions
	Reasons for Strategic Acquisitions
		Growth
		Roll-Ups
		Strength in Competition
		Extending Control over the Supply Chain
		Legal and Regulations
		Entering New Geographic Markets
		Buying versus Building New Products and Tech
		Economies of Scale
		Branding
		Acquihires
		Removing the Competition
	How to Know What Drives the Buyer’s Motivation
		Consider What Type of Organization the Buyer Is
		Ask
		What They’re Asking and Focusing On
		Their Track Record
		What’s Happening with Its Business
	Why Revenues Take a Back Seat on Strategic Deals
Chapter 17 Ways to Kill a Deal
	Not Respecting the Buyer
	Making Changes and New Demands
	Lack of Commitment from the Team
		The Board: Voting Power
		Cofounders and the Executive Team
	How You Communicate with Employees and Customers
	Withholding Information
		Debts
		Ownership
		Accounting Issues
		Legal Issues
		Liabilities
		People and Customers
Chapter 18 Legal Considerations
	Regulations and Regulators
	Due Diligence and Assumed Liability
	Intellectual Property
	Working Capital
	Escrows
	Contracts
	Warranties and Indemnifications
	Stockholder Approval
	Noncompete and Non-solicitation Agreements
	Stock versus Asset Sales
		Cash Deals
		Stock Purchases
		Asset Purchases
		Fixed Value versus Fixed Shares
		Performance-Based Payments Post-closing
		M&A Trends
		Taxes
		Post-closing Company Performance
	Buying Companies That Are Not Incorporated
		Not Having Incorporated the Business
		Incorporating Less-Desirable Destinations
		Not Issuing Founders’ Stock
		Other Issues
	Liens and Encumbrances
Chapter 19 Closing the Deal
	The Anatomy of an M&A Deal Closing
	Closing Preparations
	Closing Times and Locations
	Speed to Closing
	Accounting and Taxes
		Understanding the Difference among Types of Sales
		Rights to Pre-closing Tax Prep and Filings
		Tax Indemnifications
		Tax Reform and Changes
		Understanding Personal Tax Liabilities
		Post-closing Financial Adjustments
	Closing Checklist
	Wrapping Things Up
Chapter 20 Transitioning to a New Phase
	Vesting and Revesting
		Earnouts
		Revesting
	Post-acquisition Integration
		Start Early
		Leading the Integration
		Create a Time Line
		Create a Detailed Action Plan
		Document a System
		Culture
	Looking Forward
Chapter 21 The Emotional Roller Coaster during Acquisitions
	Anxiety
	Understanding the Process
		The Terms and Conditions
		Due Diligence
		Renegotiations
		The Sprints
		The Silence
		Anticipation
		The Calm after the Storm
		Sharing the News with Employees
	Depression
	Acceptance
	Happiness
Glossary
About the Author
Index
EULA