When to sell your company — Jason Lemkin

From Jason Lemkin:

When a start-up should get acquired:

1. Before you fail / run out of money / etc. If you are slightly hot but with few revenues, or have something but not enough, sell while you still have time. Don’t wait until you have 30 days of cash. Way, way too many start-ups wait too long in this scenario.

2. When the team isn’t good enough. Even if you are growing nicely and even cash-flow positive, and all the quantitative metrics look good … if the team isn’t good enough, and can’t fix itself — sell if and when you can. Bad teams kill start-ups. Every day. Sell before then if you can’t fix it. Sometimes great individuals just don’t make great teams, and it can’t be fixed. It’s sad. But not uncommon.

3. When the economics, to everyone, exceed your magic number. I don’t know what your Magic Number is. But you will. It may be $19 billion. It may be $1 million. The Magic Number isn’t rational, really, and can’t be 100% explained on a spreadsheet. It is something that makes it all right. Sometimes, there is No Magic Number. Which is great, too.

Notes:
(1) Re. “if the team isn’t good enough, and can’t fix itself”: Under what circumstances can’t you fix the team? From my experience at Seeking Alpha, fixing the team is painful and may take longer than you’d like. But it’s doable.
(2) Cf. When to sell your company — Ev Williams and When to sell your company — Ben Horowitz.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s