Good companies get bought not sold.
This saying has been passed down as conventional wisdom through generations of entrepreneurs, but it doesn’t tell the entire story. While the IPO is characterized as the pinnacle for venture-backed startups, far more companies see successful exits via an M&A process than by going public. Being bought by the best acquirer for you takes thoughtful planning, and, yes, selling.
As an entrepreneur, you probably started your company because you wanted to make a big impact. You’re building something that you truly believe will shift the world in a positive direction. And yes, there’s also an implied financial outcome there. People — maybe your investors, the media, your team — will often focus on the exit strategy in the context of a financial outcome.
Any investor or mentor will tell you that when a company says they want to buy you, the right answer is, “We are not for sale.”
In my experience, many founders are more motivated by the potential for impact. For these kinds of founders, my advice is to always consider acquisition as an option. It might not be obvious at first, but an acquisition can be your best path to massive scale.
Prior to becoming an early-stage investor at DTC, I ran business development and M&A for Microsoft across Europe and Israel. I was on the other side of the negotiations as Microsoft looked for innovative teams and technologies to bring into its fold. The founders who were able to capitalize the most on the acquisition process were those who’d planned for it from day one.
Planning for a potential acquisition is not a defeatist attitude
Companies are 10x more likely to be sold than to go public.