Today on The Startup Chat, Steli and Hiten talk about mistakes to avoid when trying to sell your startup.
In the startup world, it’s very common for founders to sell their startups at some stage. While this can be an exciting time for the founders, it’s important that you avoid certain mistakes so that things go as smooth as possible.
In today’s episode of the show, Steli and Hiten talk about common mistakes to avoid when selling your startup, why companies buy other companies, how not to negotiate a deal and much more.
Time Stamped Show Notes:
00:00 About today’s topic
00:14 Why this topic was chosen.
01:18 On really big mistake to avoid.
01:33 Why you should think about the reason people buy companies.
02:54 Why you need to know what you’re bring to the table.
03:31 How not to negotiate a deal.
05:29 Why you need to know what you want to optimise for and what position you’re are in.
06:00 The importance of prioritising.
06:45 How emotions can get in the way of getting a deal.
08:15 Why you should learn to disconnect your emotions.
3 Key Points:
Companies are bought not soldBuys are strategic.You need to know what you’re bringing to the table
Steli Efti: Hey everybody, this is Steli Efti.
Hiten Shah: And this is Hiten Shah.
Steli Efti: And today on The Startup Chat we're going to talk about mistakes to avoid when trying to sell your startup. So here's the reason why I want to talk to you about this, Hiton. Well one, I think it's compelling content and people are going to be interested in this. Lots of people that are running a startup might want to sell it one day. And currently it's kind of part of my world because I have some friends that are in the process of selling their startup, and I've been very much involved in that and observing from the sidelines their approach and their strategies. And also, from my perspective, I've been observing a bunch of mistakes they're making or have made. So I thought, and I know that you've helped a ton of people sell their startup, so I thought that we could provide some value to our listeners out there. So, let me start with asking you, if you think about the more recent examples, or maybe there's just a top-of-mind. This is a big mistake most people make when they're trying to sell their startup, and if there's somebody that's listening to us that's going to be in this situation, this is the one mistake I'd like them to avoid. What comes to your mind immediately on this topic?
Hiten Shah: Yeah, the typical thing is that companies are bought, not sold. So, you got to think about, why would someone need your company, why would they buy it? Even if you're going through a banker or one of the firms that helps with that sort of opportunity of selling your company, you still need a reason why someone would buy it. And I think that's my number one tip is, if you know that and you're going to sell your company either way, whether people are coming to you or you have to use third party and go to them, you have to think about this idea that companies are bought, they're not sold. So why would someone buy it? What impact are you and your business going to have for them? And that's often not thought about enough in the right ways. Because the best buys are strategic, not because they're going to buy you and acquihire you as they say, and then shut down whatever you're working on.
Steli Efti: That makes a ton of sense and that's killer advice. I think the thing that's top of mind for me when it comes to mistake to avoid what you're trying to sell your startup, is ... I mean, this is true in many different situations, but in this situation it's very important. You need to know what your line in the sand is, and you need to know what you bring to the negotiation.