An exit can be a major career and business milestone, but it’s one that founders tend to underestimate. Mark Longo, Brice Scheschuk, and Adam Zimmer know this firsthand—from navigating funding paths to orchestrating post-acquisition transitions. They shared their perspectives and some practical guidance on how founders can prepare mentally, strategically, and operationally for an exit.
Key takeaways:
- Understand if you’re truly ready – Emotionally and practically, founders need to be honest about whether they can let go, and what that means for the future: of the company and themselves.
- Don’t underestimate the paperwork – Documentation and due diligence are critical aspects that can make or break a deal’s success.
- There’s more than one path to exit – A growth equity bridge, full acquisition, or simply shoring up profitability before selling can all be valid options, depending on your goals.
Exiting the business is one of the most consequential decisions a startup founder can make. Whether driven by financial necessity, market conditions, or personal goals, a successful exit requires a blend of strategic planning, emotional readiness, and adaptability.
Today, we’re sharing some takeaways on the exit journey from past TechExit.io speakers Mark Longo (Vancouver Managing Partner, Osler), Brice Scheschuk, (Managing Partner at Globalive Capital) and Adam Zimmer (President of Gemini Portfolio and Perseus Group).
1. Be Realistic About The Ability To Scale
For many startup founders, the initial dream is to achieve venture capital (VC)-scale growth. But what happens when it becomes clear that your business model isn’t VC-scalable? Brice Scheschuk, a seasoned investor, emphasizes the importance of facing this reality head-on:
“I would go to my insiders and I would say, ‘Do you want to continue funding this? It looks like it’s not venture scale—I need to lean down this company and get rid of burn. Then I need to do a raise to get me to profitability.’” said Brice.
Recognizing that VC funding may not be the right path for you doesn’t signal failure. Instead, it presents an opportunity to recalibrate. Brice advises founders to focus on driving profitability and maintaining open communication to manage expectations with investors. This pivot can lead to a more sustainable business model and position the company for an eventual exit that aligns with its actual growth trajectory.
2. Prepare Yourself Emotionally & Strategically
The decision to exit isn’t just a financial one; it’s deeply personal. Adam Zimmer, a founder turned acquirer, reflects on the importance of emotional readiness, noting that selling before you’re ready could be a recipe for disaster. It’s about the founder making the often-emotional decision that they can let go of the company.
Adam also emphasizes the necessity for founders to define their objectives early on in the exit process. Are you aiming for a complete exit, or do you envision staying on in a leadership role post-acquisition? Answering these questions will ensure better alignment with potential buyers. “Sellers need to understand what they are looking for [and] consider a huge variety of factors including employees, customers as well as their own goals,” he said. “Once they have a view as to what they are looking for they can make the decision on what acquirer would be the best fit.”
3. Don’t Underestimate The Administrative Aspects
The technical and administrative work involved in an exit often surprises founders. “If I were to do it again, I would have more appreciation for the paperwork involved; it was a big lift and required a lot of work,” Adam noted.
Diligent preparation of financial records, legal documents, and operational data will not only help streamline the transaction but also build trust with prospective buyers.
When it comes to seeking a private equity or growth partner, Mark Longo, a managing partner at Osler business law firm, also recommends proactively creating a data room with relevant metrics. In addition, he suggests identifying and addressing any due diligence “skeletons” such as intellectual property protections, patent litigation, cap table issues, or incoherent corporate documentation.
4. Consider A Middle Ground Option
For startups on the cusp of scaling, selling outright isn’t the only option. In this situation, Mark emphasizes the benefits of growth equity: “Growth equity enables the company to get to the next level of growth so that a subsequent exit, which could be an IPO or an acquisition a number of years hence, can occur when the company is at a further stage of growth.”
One benefit of growth equity is that it provides founders with resources to expand while allowing them to retain significant ownership. This middle ground between maintaining control and accessing capital can help set the stage for a more lucrative exit down the road.
What To Keep In Mind As A Founder
Exiting a startup is a journey that requires a combination of self-awareness, preparation, and strategic thinking. Ultimately, being realistic about where you and your business are at should be your north star for navigating the exit process.
TechExit.io is the M&A ready event for tech entrepreneurs. Learn from the biggest acquisition success stories and connect with the players that made them happen at TechExit.io.