📖 Playbook: How to sell your Startup? (M&A)
Our startup was acquired by a unicorn in 2023. Looking back, there are so many lessons I wish I’d known earlier—so I decided to write them all down.
Our startup was acquired by a unicorn in 2023. Looking back, there are so many lessons I wish I’d known earlier—so I decided to write them all down, hoping it helps someone else.
Selling your startup (M&A) is actually a structured process.
The good news? That means you can prepare and optimize (even years before it happens).
The bad news? Most founders only realize this when it’s already too late.
This guide is broken it into two parts:
How to maximize your chances of getting acquired — before you need or want it.
How to navigate the acquisition process once it starts.
How to Maximize Your Chances of Getting Acquired
Start doing this two things now:
⛰️ The key
The foundation of any acquisition is this: build something truly valuable. That means a product people love, a great team, and a business model that works. Nothing can compensate for a weak core. Focus obsessively on delivering real value to real users — everything else flows from that.
⛹ Relationships matter
Acquisitions are not just financial transactions — they’re deeply human decisions built on trust, timing, and alignment. Founders often don’t care about the people behind the companies that might one day buy them. Until its the moment to sell.
Start building real professional relationships with potential acquirers early on — ideally years before you're even thinking about selling. Build connections with the CEO, CPO, etc— the people who will advocate for your acquisition internally.
📣 Be visible.
If you’re building something great and no one sees it, it’s like painting the Mona Lisa in your garage.
You need to show the world what you’re building. Share your process. Your passion
How to Navigate the M&A Process
Expect the full acquisition process to take 5–6 months from initial conversations to signed deal. It’s not a sprint — it’s a marathon of trust-building, alignment, and mutual due diligence.
Before we dive into tactics—remember this first principle: Do not be dishonest in any way. No matter how tempting it may be to exaggerate traction or name-drop soft interest, it’s a trap. “As long as you stay on the territory of truth, you're strong.”
Step 1️⃣: Make a list of potential buyers:
Before you start making a list, you need to understand why companies acquire startups.
🔍 Why Companies Acquire Startups: The 3 Core Drivers
It always comes down to one — or a combination — of three drivers:
Tech/Product
They want what you’ve built — its faster or cheaper than building it themselves.
Your product accelerates their roadmap internally.
Example: A company planning to launch a product you’ve already built and validated.
Team
They want your team’s expertise or unique know-how.
Example: A company expanding into your market and needing a team with proven execution in that market
Customers/Revenue
They want your user base, revenue, or market share.
Often driven by revenue growth goals (through inorganic growth), cross-sell potential, or geographic expansion.
Example: a company looking to grow via acquisition or cross-sell.
Sometimes, the buyer is only interested in one of those factors. For example, they may only want the team—this is commonly referred to as an acquihire in the industry. Other times, they may be interested in all three.
🗂️ How to Identify Potential Buyers for Your List
So, who should we include in your spreadsheet (you can find the template we used in our M&A deal at the bottom of the page in the 🧰 Tools section) and ask yourself three key questions:
Who benefits from my product or tech
Who benefits from my talent?
Who benefits from my clients?
Even one of these factors could be enough to receive a strong offer. But if you believe that a company would be interested in all three, that could be a great lead to prioritize.
🎯 Why You Should Always Try to Have Multiple Buyers in Play
Finding multiple potential buyers when selling your business offers key advantages:
Stronger Negotiation Position (“bidding war”): Competing offers can drive up the sale price and lead to more favorable terms for you.
Reduced Risk: Relying on a single buyer is risky; if that deal falls through, having alternatives helps maintain momentum.
Better Terms Selection: Different buyers may propose varying deal structures, allowing you to choose the one that best aligns with your goals
Step 2️⃣: Reach out to potential buyers
Once you're clear on who might benefit from acquiring your company, it's time to start outreach (mail, Linkedin, meetings in person, etc.).
⭐️ Two important general ideas:
Move quickly — momentum is everything.
We discrete. Only tell about this M&A to the people who ABSOLUTELY need to know, and make sure everyone is aligned on messaging and confidentiality.
🔍 Who to Reach Out To
When reaching out to potential acquirers, prioritize executives with strategic decision-making power — such as the CEO, CPO, etc.— rather than starting with the corporate M&A team.
🔥 Use Warm Intros Whenever Possible
Leverage your network — investors, advisors, former colleagues, mutual contacts — to find a credible path in. Personal intros lend trust and increase the odds of a serious conversation.
💡 We’ve included a “Who Can Intro?” column in the outreach spreadsheet.
Share it with your investors and advisors, and ask them to fill in which companies they can help connect you with. This turns your network into a tactical asset and helps prioritize outreach based on real access.
📧 About the Message
You’re not starting due diligence — you’re just starting a conversation. Think of it like asking someone out. You don’t hand them a resume on the first date.
Keep it simple, personal, and intriguing. Your goal is to get a reply, not close the deal.
Here’s what your message should briefly communicate:
Sense of Opportunity: Your company is suddenly in an M&A process. For example, you were not actively selling, but the board is open to the right fi after some recent inbound interest.
Strong alignment: That you believe there could be strong alignment between their company and yours — whether that’s in terms of tech, talent, or customers. And why.
Urgency: That there's some time sensitivity to the conversation, as there is interest from other parties, and you’re in an active process.
Discretion: That you're open to a discreet exploratory conversation to see if there’s a mutual fit worth pursuing.
This approach keeps the tone professional, calm, and in control — while creating the sense of opportunity and urgency that’s often needed to get serious conversations started.
Step 3️⃣: The Meetings
䷿ Before the meeting:
Study the company & key decision makers thoroughly.
🙌 During the meeting:
As explained before relationships matter more than anything. Your primary goal is to build the relationship. If you can, meet in person. It makes a real difference. Start the meeting by listening more than talking. Aim to understand:
What’s driving their interest — Why now? Why you?
Their long-term vision — What are they building toward?
Their company culture — How do they operate and make decisions?
Who the internal champion is — Who could be pushing for this and why?
The better you understand their internal dynamics, the more effectively you can position the deal — and the more likely you are to gain an advocate on the inside
Why this four things? According to the Harvard Business Review, between 70% and 90% of acquisitions fail to deliver the expected value, with integration issues often cited as a primary cause. Additionally, cultural misalignment and lack of strategic fit are frequently identified as significant factors contributing to these failures.
Once you have a feel for these, shift the conversation toward building the relation and painting a vision of the future together. Help them see the story of what you could build together — and why it would actually work.
⏭️ End with clarity:
Wrap up with clear next steps and agree on who else should be involved moving forward.
Step 4️⃣: Initial analysis (before due diligence)
They’ll begin to analyze your product (KPIs, roadmap, features, etc.), key team members interviews, business (processes, org, etc.) and financials.
A few tips for this stage:
Sign an NDA before sharing anything (find our NDA template at the bottom of the page in the 🧰 Tools section). This template is standard, so they will sign it pretty quickly. If you want, you can include non-solicitation clauses. A non-solicitation clause is a common provision in contracts designed to prevent one party from poaching employees, clients, or partners from the other party.
Before you even reach advanced conversations, set up a clean, well-organized Virtual Data Room (a.k.a. a Google Drive folder). It signals professionalism, and saves everyone time during due diligence.
Avoid sharing sensitive details like your asking price, months of runway, etc. These can weaken your position and limit your ability to create competitive tension. If a potential acquirer insists on knowing these details upfront, politely push back:
“We prefer to explore mutual interest first with each company and keep things unbiased.”
“It depends — each buyer have different needs (aka the combination of team, revenue & tech)”
Leaks kill deals. Use code names and limit access.
Lastly, if they request forecasts ( “MRR in 3,6,9,12 months ”), its better to underpromise and overdeliver. This is explained below.
🎯 Why You Should Be Cautious with Forecasts Pre-LOI:
💸 Anchoring Earnouts to Projections: If you’re aggressive with projections, they might bake them into earnout milestones — making you fight to hit numbers you casually mentioned.
🪓 Price Reduction Ammo: Missing even short-term forecasts (e.g. 3-month MRR) gives them a reason to retrade the deal mid-negotiation:
“Your numbers don’t align with expectations — we need to adjust the offer.”🫳 Shift in Power: Once they have your forward numbers, they gain asymmetric information and can test your assumptions, poke holes, or steer deal terms unfairly.
🧠 Better Responses When Asked for Forecasts
Here are some tactful ways to push back or soften projections:
Focus on Historical Trends: “We prefer to anchor discussions around historical performance. Forward projections vary depending on strategic support and growth levers post-acquisition.”
Contextualize Forecasts (Underpromise): “We have internal estimates, but we take a conservative approach.”
Share Ranges, Not Target: If you must give something, share wide ranges with clear disclaimers: “Depending on factors like [market, resource allocation, team growth], we estimate MRR could be in the range of $X–$Y in 12 months — but it’s directional, not a commitment.”
Step 5️⃣: Negotiating the Letter of Intent (LoI)
This is where the deal starts to take real shape. The Letter of Intent (LoI) is typically a few pages, non-binding document that outlines the key terms of the proposed acquisition.
⚠️ But don’t let its simplicity fool you — this is the most critical moment. Your leverage is highest before signing the LOI. After this moment the bidding war is over.
The Letter of Intent (LoI) may look simple — just a few pages — but it’s where the buyer and seller align on the core structure of the deal. Once it’s signed, you’re usually locked into exclusivity, meaning: You can’t talk to other potential buyers.
⏳ Typical Exclusivity Timelines
30–45 days → Common for smaller, fast-moving deals.
60–90 days → More typical for larger or more complex acquisitions.
From the buyer’s side, exclusivity makes sense because:
They’re about to invest time, money, and resources
They’ll conduct due diligence, involve tech, legal and finance teams.
Without exclusivity, they risk doing all that work — only for you to sell to someone else.
They need a clear signal that you’re serious
It de-risks the deal for them.
It helps justify internal alignment and resource commitment.
⚖️ Bring in Expert M&A Counsel (Not Just Any Lawyer)
Your regular corporate lawyer is not enough. You need someone who lives and breathes M&A — because:
The LoI sets the tone for the entire deal.
An experienced M&A lawyer can help you negotiate from strength and avoid common traps that could cost you later.
📄 Key Terms to Include in the LoI:
Deal structure: Stock deal? Asset deal? Hybrid?
Purchase price: Total amount + breakdown (cash vs. equity).
Payment structure: % at closing, % in escrow, % as earnout, etc.
Plan for Key Employee: Outline key employee agreements early — don’t leave this vague.
Due diligence calendar: Set expectations and keep momentum.
Exclusivity window: The time period when you agree not to engage other buyers.
Representations and warranties: Consider a representations & warranties insurance — it can reduce escrow and limit your post-close liability.
Step 6️⃣: Due diligence
Now it’s about execution. They will analyze that everything you said and shared is precise. Audit Your Own House Before Due Diligence. Find our Due Diligence Checklist template at the bottom of the page in the 🧰 Tools section. It includes two versions: one simplified for smaller startups, and another more detailed version for larger businesses.
Step 7️⃣: Preparing and signing the final agreement
This is the final legal contract. Ours was over 100 pages. Every line mattered.
The legal team takes over, and timelines slow down. Stay involved.
Push for momentum.
Pick your battles. You don’t need to win every point — and that’s okay. As a great lawyer told me during our process: “A good deal is when both sides are equally unhappy.”
🧰 Tool: Templates for your M&A Deal
If you're selling your startup, don’t start from scratch. These are the docs founders wish they had before their first deal. This toolkit includes the exact templates are battle tested by founders and investors to close real deals:
✅ A ready-to-use M&A Spreadsheet to track potential buyers
🔒 A M&A NDA Template to protect sensitive info
📋 A Due Diligence Checklist—with a light version for early-stage startups and a detailed one for larger acquisitions
💡 Frequently Asked Questions
Do I need a banker to get acquired?
Not always. If you already have strong relationships or inbound interest, you might not need one. But a banker can help run a tight process, drive competition, and maximize price — especially for larger deals.
How much should I share early on?
Share just enough to spark interest. Keep your deck high-level, and don’t disclose sensitive financials or IP until under NDA. Use early meetings to assess fit, not to pitch hard.
How do I keep the team focused during M&A?
Limit who knows. Founders often keep it to co-founders and a few trusted advisors. A distracted team or leaks can kill morale — and the deal.
What’s the risk of telling acquirers we’re in conversations with others?
Handled well, it creates urgency. Its positive.
What if the deal falls through?
It happens — often. Stay calm, and keep building a great business. Many founders go through multiple near-deals before landing the right one.
Can I negotiate multiple LOIs at once?
Use the pre-LOI window to run a competitive process. Once you sign, you’re usually locked for the exclusivity period.
How should I talk to investors during M&A?
Loop in key investors early — especially those with board seats or veto rights. Align on messaging and strategy. They can help with intros and negotiation if fully bought in.
When should I hire M&A counsel?
As soon as LOIs are on the table. Earlier if possible. The right lawyer can make or break your outcome. This is not the time to DIY or use your general corporate firm.
Any other interesting resources?
Garry Tan Video: Link
