A timeline for startup M&A processes: Key steps and factors to consider

M&A can be a great outcome for all parties, especially for startup founders and their team. Founders may have conflicting emotions when thinking about selling their company. That is perfectly understandable; in the beginning, many founders hope to build an enduring company.

Not all companies are best positioned to go it alone, and that’s okay.

However, it’s important to acknowledge that there are plenty of good reasons to sell: You can join a “larger rocketship” where 1+1=3; there could be a strong match with an acquirer; burn-out in the startup team; the team or investor wants liquidity; and so on. Further, myriad long-term, standalone companies have been founded by founders who sold or exited their prior companies.

During downturns, think of M&A as a game of musical chairs. The companies that test the market earlier in the cycle (before things have gotten particularly bleak) tend to see better outcomes.

In markets where incumbents are playing catch-up, there is a window when a few companies will get bought. By the time those deals settle, the rest will likely decide to build instead of buying.