What they don’t tell you about exiting a startup

Most entrepreneurs I meet have one of two business objectives. Goal one is to generate a sustainable and consistent income. Goal two is to get to the exit.

In the early days of founding PushFar, I can’t lie, I had visions of grandeur. I imagined myself running an office with 500+ employees and a global client base. But as time went on, I realised these were bigger challenges than I wanted. 

As you grow as a founder, your role becomes less about doing everything yourself, and more about managing people and processes. As born entrepreneurs, myself and my co-founders missed the art of creating and breathing life into a new venture. 

We decided we had two options. Either we could look at an additional funding round for our fast-growing and highly profitable company. Or, we could look at an exit. 

We opted for the exit route.

This is my journey to exit, told in five stages, the important steps and considerations in the process if you are planning an exit, and how you can go about it.

Stage 1. Decision to leave

The first thing to consider when going through a sale and exit process is whether it’s really right for you. Once you sign and sell, there’s no going back. 

You will no longer have any control over the company (assuming it’s a full exit) and that is something you need to ensure you are ready for. Don’t rush this part. Take time, with your co-founder, your investors, and your board, to ensure it feels right.

Once you’re in the mindset that you’re happy to wave goodbye to any control or ownership, then it’s about ensuring you have clarity over what you might want to do after your exit. 

Many founders flounder after they exit. They think they want an exit but realise that they may have lots of money, but they lose purpose or a sense of direction in their life. Have a plan – what are you going to do next? 

Stage 2. Looking for a buyer

Once you get to a certain stage or level in your business, proactively looking for an exit isn’t as tough as I thought it might be. 

If you’re scaling well, have a seven-figure turnover (or projection of that in the next 12-24 months), and are well-established (3-4+ years), then the chances are that you’ll be able to enlist the support of an M&A advisory firm.

If you’re unsure whether or not they will be interested, it is worth approaching them to find out what the thresholds are for their interest and working towards those. These could be revenue thresholds, profit thresholds, or product thresholds. 

Different M&A advisory firms will charge different percentage rates of the sale or deal amount for their work. That said, the good news is that generally if they agree to take you on there will be little to no payment upfront or unless they get you a sale. 

The firm we used went out to the market and found a number of good potential buyers – both trade and industry – who made offers for us to review and eventually go with. Of course, you can try approaching potential competitors or buyers without an M&A advisory firm but it can be a lot harder.

Stage 3. The sale

Selling a business is hard work. Exhausting work, in fact. The process can take several months – often up to a year or more, from beginning to look for a buyer, through to signing contracts and completing the process. 

The negotiations can take a long time, so it’s important that as a founder you know what you’re looking for from the deal. Decide on some non-negotiable points early on, such as the price, length of your stay post-sale, and deal terms. 

These can often involve thinking through what the outcome will look like for your investors, if you have any, too, so bear this in mind. Then, once the deal terms are fundamentally agreed, you’ll move to due diligence.

The due diligence process can take a long time and be very painful but understandable. The buyer will likely scrutinise every contract and financial record from the past five years. That includes employee agreements, team structure, client relationships, product details, and technology. 

Once they are happy with this – or, in parallel – you can work with your lawyers’ and the buyer’s lawyers to draft an SPA (Share Purchase Agreement). It’s often 100+ pages, and filled with the technical details of the purchase of the company. 

Expect back and forth here until the final day of signing! We were still negotiating clauses in our SPA until the final day, questioning if the deal would ever go through..

Stage 4. The exit?

You may think that once you’ve signed the SPA that this is your exit and it sometimes is. But more often than not, there’s a deferred payment or earn-out payment – meaning you won’t receive the full amount for the business until you’ve stayed on as an employee for a set period of time. 

This could be 12 months, two years, three years or possibly even longer. Again, understandably, the buyer will want a long handover period where you stay with the business, and they will want to tie it to performance terms or conditions. 

Be careful in the negotiations here. Once you sell there are going to be some things out of your control. Ensuring water-tight “earn-out protections” in the SPA is vital.

Step 5. What next?

Once you get to exit, if you’ve taken the above into consideration and the deal is structured the way you want it, the feeling is truly amazing. I have no regrets. It’s been life changing.

That said, I can’t stress enough how much work the process of a sale and exit can be. It’s exhausting! Negotiations, due diligence, legal, finances; it is all a huge strain and the pressure is on. I probably worked 14–15-hour days some weeks during the sale process, and it was knackering.

But for me, the final stage was always going to be starting another venture. I’ve already thrown myself, only four weeks post-exit into uRoutine, a new business and a new challenge in creating things.

Yet, some founders have had the opposite experiences and had sellers’ remorse, with deep regret. So, don’t rush it. Get ready for a lot of hard work, then go for it.

Ed Johnson, CEO of PushFar

Ed Johnson is the CEO & Co-Founder of uRoutine, a social accountability, routine, and motivation-tracking platform set to launch in spring 2025. Previously, he co-founded PushFar, a leading software company, which was acquired in 2023. Named to Forbes 30 Under 30 for Social Impact in 2022, he has a background in digital marketing and entrepreneurship. Ed also writes, mentors startups, and speaks on tech and business.

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