Choosing to sell is only the first of many complicated decisions founders make when considering an exit. Founders face countless challenges at this crucial turning point for their company. At the 2015 FOLEYTech Summit, Susan Pravda, Foley’s Boston Office Managing Partner, led panelists David Friend, Co-Founder and Executive Chairman of Carbonite, Inc.; Ron Gruner, Co-Founder and Chairman of SkyAnalytics, Inc.; Jay Steinfeld, Founder and Chief Executive Officer of; and Robert Brown, Managing Director and Co-President North America of Lincoln International, in a discussion about their successful sale experiences, the paths they chose, and the challenges they faced in doing so.

Choosing to Sell

There are a number of factors to include when considering whether to sell your company.

First, can you achieve your objectives with your current capital structure? Do you need outside capital and experience to push the company towards better governance or management to help grow your long term vision? A growth partner could be one that recognizes the value of your team and your vision but is willing to pay less. The question becomes do you want capital, or capital plus more.

Second, is it the right time to exit? Consider what is going on in the capital markets (is there capital available?), what is going on in your market (are there headwinds or tailwinds?), and where you are in executing your personal goals. If all three point in the same direction, then go for it – if not, consider what is important to you and whether you will have a chance again in the future if you miss this window.

Choosing the Right Path

Once you’ve decided that the time is right, will you choose an IPO or a sale transaction? Will you use a banker?

When choosing between an IPO or a sale transaction, think about your liquidity goals and the characteristics of your company and industry. Are you a small fish in a large market with a high growth rate that deserves to be public and keeping growing? Or, are you a big fish in a small pond; are you looking for cash now, or a long term partner to move the company to its next phase?

Founders must also decide if they will use an investment banker. It isn’t always necessary, especially if you’ve already been approached by a potential buyer. With two motivated entities and the right advisors, a successful sale can happen relatively quickly – your lawyers can make a huge difference in finding that extra 10%. On the other hand, many founders follow their instinct that if one has approached, others may be interested, and choose to work with an investment banker to see what else is out there. A banker can also work with you today to address what a buyer may want to see down the road. Whichever choice you make, develop a strategy from the onset, and be clear and honest with your advisors. If your banker or lawyer doesn’t understand your objective, or if you develop new objectives down the line, there can be practical issues and management credibility can be hurt – this can detract from value and the likelihood of success.


What will happen to your employees and company culture if you sell? You should take active steps from the beginning to see that employees’ past loyalty is rewarded – you’ve surrounded yourself with talented people who’ve made the company more attractive to the buyer and will be looking to step up. Preserving the culture you love can be particularly challenging, and the buyer may intentionally or unintentionally interfere with that. Take steps with the buyer before and after the sale to create a healthy synthesis that meets the buyer’s expectations and still maintains your vision of an innovative and evolving company.

Finally, founders are often challenged with the question of what happens to the company and what do they do after they sell. This fear often leads founders to postpone a sale of a business that really should be sold. Think of it like the house your children grew up in – once all the people and emotions are gone, it’s just a building. You need to move on with the lessons learned and look forward to the next adventure.