Why Exit Planning Matters From Day One
- Helps align with investors’ goals
- Shapes business model and growth approach
- Affects tax, legal, and equity structuring
- Enables long-term personal wealth planning
Most investors fund startups with liquidity in mind — typically via acquisition or IPO. Not having an exit plan can reduce credibility.
Common Exit Strategies
1. Acquisition (M&A)
Most common startup exit. A larger company acquires yours for strategic reasons — IP, team, tech, market share.
- Types: Asset purchase, stock purchase, acqui-hire
- Best for: Mid-scale SaaS, niche tech, B2B
- Stats: ~80% of all VC-backed exits are acquisitions
2. IPO (Initial Public Offering)
Going public via stock exchange (e.g. NASDAQ).
- Pros: Large capital raise, prestige
- Cons: Expensive, regulatory burden
- Best for: Late-stage companies with strong metrics and governance
3. Secondary Sales
Founders or early investors sell equity to new investors during a funding round.
- Offers partial liquidity before formal exit
- More common in Series B+ rounds or with “unicorn” momentum
4. Management Buyout (MBO)
Company bought by existing team or private equity. Rare for early-stage startups but viable in niche or cash-flow positive companies.
Choosing the Right Exit Strategy
Start with your business model and market:
| Business Model | Typical Exit Path |
|---|---|
| Enterprise SaaS | Acquisition or IPO |
| D2C E-commerce | Acquisition (brand roll-up) |
| Deep Tech | Strategic acquisition |
| Marketplaces | IPO or acquisition |
How to Attract Acquisition Offers
- Build defensible IP or unique data
- Develop strong partnerships
- Track competitor acquisitions
- Attend M&A-focused events
- aintain a clean cap table and documentation
📈 Tip: Make your startup “acquirable” even if you’re not looking to sell.
When to Discuss Exit with Investors
Early-stage investors often ask:
- “What’s your long-term vision?”
- “Do you see a clear exit path?”
- “Are there logical acquirers in the space?”
You don’t need a fixed plan — but having plausible options shows maturity.