If you founded a startup, you’ve probably had the same dream that every other startup owner has. Some rich businessperson from out of town stumbles in and offers to buy your company for billions of dollars.
Unfortunately, this rarely happens in reality. While you might get offers, it’s unlikely that the offers will be so gracious that you’ll accept them with the same eagerness you’d accept a winning lottery ticket. It’s a little tricky, and you need to prepare yourself for the real-world version of this scenario.
1. Is The Offer Fair?
The offer you receive should be fair at the very least. Check out similar businesses for sale. If the offer you receive is close to the asking price of those businesses, it’s worth considering. If it’s substantially above average, it’s even better.
It’s important to note that what a business lists for isn’t always what it sells at – some people are selling to get out of a financial bind, and they’re asking much less than what the business is worth. Other people have lofty ideas and price absurdly high. The truth is somewhere in the middle.
2. Where Do You See Yourself in Five Years?
Your startup is your baby. You probably want to see it grow up. If its meeting its milestones early, you probably have a bright future rolling in. If you sell your company now, that bright future will belong to someone else. If sticking it out can drastically multiply what you’ll be profiting, hold out a little longer.
Alternatively, you may not be so proud of your startup. If you’re pulling your hair out and you want to see yourself anywhere else, doing anything else in the next five years, a buyer might feel like the best thing that ever happened to you.
3. Is There Something You’d Rather Be Doing?
Some people start companies, sell them off, and start more. If you’re full of excellent ideas, selling your startup and using the profits to create another sellable startup is absolutely a career path. It involves a little luck, but skill makes it easier. Maybe you’re looking to completely change your lifestyle. If you had a huge change of heart and decided you’d rather ditch the business life and become a philosophy professor, selling your startup can fund your education.
4. Would Selling Solve a Problem?
If you really need the money, or if your life circumstances drastically changed in a way that reprioritizes your time commitments, selling might help you get things back in order. If you need to move to a location that’s a 12 hour drive away from your startup office and you can’t take your job with you, selling will make your efforts in establishing that startup worthwhile. You won’t feel like you have nothing to show for it.
5. What Does Your Gut Say?
Your gut got you to where you are today. Your business instincts, your innovative mind, and your ability to recognize a great opportunity when you see one helped you build your micro-empire. If your gut says selling is the right option for you and the numbers seem to agree with your gut, move forward. If you have a bad feeling about selling and you understand the potential future outcomes of your startup, hold onto it. You can always independently sell it later if you change your mind, but you can’t get it back once it’s gone.
Remember that you can take a reasonable amount of time to come to a decision – a buyer will understand that you want to explore all of your options before coming to a final decision. You can also negotiate if the deal seems like it needs a little work. Don’t let yourself feel pressure – keep a clear head and proceed wisely.
Sienna Walker is a business blogger, interested in all things that make one’s company grow and develop. She is also a part of the team behind Aubiz, an Australian business directory. In her free time, Sienna enjoys surfing and hot coffee, not necessarily at the same time.