I sold my first company three years after founding it and just four years out of undergrad. It was such an exciting time to watch the small company we tirelessly built out of a one-room apartment become a valuable asset that led to a financial transaction that changed my life. I had gone from barely being able to pay my bills to being a millionaire. More importantly though, that sale gave me the freedom to pursue the things I was passionate about. In that sense, that single exit laid a solid, strong foundation for a life of entrepreneurship.

That reward at the end of what has probably been years of blood, sweat, and tears feels like the right ending, so that’s often an entrepreneur’s dream – to sell his/her company.

If you seek gold at the end of your startup journey, there are two approaches you can take:  

  1. You can hope for the best, see what happens, lean heavy on luck.
  2. You can make it happen. Grind it out, live it, breathe it, work hard.

I’m a strong proponent for that second option – making it happen. I believe you can get lucky, but you should proactively go after the outcomes you want.

Here’s how to get started:

First, selling your business is no different than any of the others things you have or hope to achieve – it has to be declared as a goal with timeframes, specific outcomes, desires, and expectations. All of this should be documented with incredible detail. (There’s more on how to create a vision around goals here). Setting this as a specific goal is THE critical step and will not become truly actional or intentional until this is done.

Second, you have to actively build your business around this goal. This requires specific tactics such as understanding the marketplace of potential buyers as well as studying “if” and then “how” they acquire companies. Then, focus on the “why”: Why do they choose to buy companies versus build things on their own?

You will want to study how they assign value to the companies they acquire. Is it offensive (gain new products and services) or defensive (keeping their competitors from buying it)? Do they have a formulaic approach to acquisitions? Are industry multiples known? Research and learn. Then, research some more.

When we first started to think about selling Mountain Khakis we were looking at the obvious potential acquirers. The larger outdoor oriented brands or the public and private companies that had a portfolio of apparel companies. The more we researched and talked to people about our goals, the more new avenues opened up, including the group that ultimately acquired MK. They were looking to enter the outdoor market for the first time. If we hadn’t done our homework and starting research, asking questions, networking, they never would have been on our list.

Third, take the information and formulas you learn about the marketplace and develop strategies to build value in your company in the areas that are most valuable and important to acquirers. These need to be broken down into specific goals and tied to Critical Success Factors in your company. Weave them into the fabric and culture so they will happen.

In 1999 when we launched internetsoccer.com to “connect the soccer world” as a massive content site we knew that a lot of the value ascribed to startups that were being acquired by big media was “exclusive content”. So our business model included the development and acquisition of very unique, exclusive content. We made sure our deals were always exclusive to us. After six months, we were the largest producer of this content in the world. Ultimately, a bidding war ensued between public media companies trying to get our powerful content base. 

Fourth, the world needs to know what you’re up to and how you’re growing. There are lots of tactics to consider here, but as you begin to build value, the market and specific acquirers in many cases need to see you progressing towards these goals. In some cases, you will want to market broadly; in other cases, perhaps if you are worried about your competitors being able to copy you, you may want to take a rifle shot approach of reaching out to just a small set of companies and individuals. You often see this broad marketing from high tech companies in Silicon Valley.

For example – when Cruise Automation launched and shared their vision with the world, it caught the attention of Detroit and led to a massive acquisition by GM. Being on the radar ensured they were being tracked and generating interest. When my most recent business (KYCK) started considering a next round of capital or an exit, I proactively reached out to the CEOs of companies I respected and appeared to be getting scale. I wanted to know them, and wanted them to know us. Two years after meeting one of the CEOs for the first time, they acquired our company.

Driving to an exit can be a rewarding experience psychologically, financially and strategically.  It’s a powerful, perhaps overwhelming, outcome for a founder in that are so many things to consider that you don’t necessarily think of when you’re just driven to sell – critical components like how to fuse together different company cultures, how your employees will be handled or what the outcome will be for investors. Driving to an exit is something that’s not for the faint of heart – it requires tremendous effort, time, attention, planning and strategy to execute well. So if your goal is to exit in a few years, get started now.