Buyer for a startup

Start by making a list of companies for whom your product, customers or team would be strategic, and build relationships with their corporate development and product leaders before you need a deal. When you are ready, many founders hire a banker or M&A advisor for larger deals and run a structured process to create competition. Prepare clean financials, a data room and a clear story about why you are worth more inside the buyer. Deals take months, so start before runway is short.

Valuation in an acquisition depends on what the buyer gets and how badly it wants it. Buyers look at revenue and growth multiples for comparable deals, the cost and time it would take to build the product themselves, the value of the team, and strategic value such as blocking a competitor. Competition between buyers is the biggest driver of price. Deal structure matters as much as the headline number: cash versus stock, earnouts, retention packages and escrow change what founders and investors actually receive.

For larger deals and competitive processes, an experienced advisor usually earns their fee by reaching more buyers, running a tight timeline and negotiating terms. For small deals or an acquisition initiated by one known buyer, founders often run the process with a strong M&A lawyer and their board. Advisors typically charge a success fee, sometimes with a retainer. Choose one with recent deals in your sector and at your size, and a lawyer with M&A experience either way.

A typical sale takes several months from first serious conversation to closing, and a structured process with multiple buyers often runs longer. Diligence, negotiating the purchase agreement, employee arrangements and any regulatory approvals all take time. Deals also fall apart late. Start conversations while you still have runway, because selling under time pressure weakens your negotiating position.