Dr. Thomas J. Powell says the one thing you can't skip when selling a company is getting founder, investors, and buyer aligned on timing, not just price. He uses a house-sale story to show why turning down offers shifts risk onto you. Investors want exits that are fast and certain.
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Hey, Tom Powell here with the Founder's office. And we are talking about the non negotiables when it comes to exiting. And although it's a very large subject and there could be several non negotiables, the number one non negotiable is alignment. Alignment needs to be between the buyer, the seller, of course, the founder for their best interest, and the investors for their best interest. And what that oftentimes means is it's not a price question, it's a timing question. And that's much more difficult to answer. A story that I often use is that if you have a house and you are selling the house and a buyer makes an offer for it at let's say 300, $400,000. So it's $400,000 and you believe it's worth 425. When you don't accept that buyer's offer at 400,000, you just bought the house for 400,000. And then that could make the timing go through another cycle. It could be a terrible downturn. It could, it's a taking a look at it that it really wasn't about the price, it's about when does that go and does it align? Does it have clarity with what the investors were expecting? Investors would rather have a shorter timeline and a more assured exit in most cases. Sometimes they truly are betting on black. But it's up to the founder and the founder's team to know that. We do that at the founder's office. It's where we are the founder's advocate and we help work through those, ideally on the upfront. But before you ever get into thinking about the exit and that way you can align the exit better with the capital alignment method, join us@thefoundersoffice.com and you can run your decks through. You can ask us questions there. You can also join us for our Wednesday's lunch and learns. Have a great day.
