The Tough Part Of Selling A Startup: Management And Investor Agreement

By on April 20, 2015

marktluszczWhile conventional wisdom says great companies are bought not sold, that hides a larger truth. Selling a company is difficult and often requires long hours of internal discussions – and even arm-twisting – among company management and investors to actually get a deal done.

While the hottest tech companies such as WhatsApp, Oculus and the like are bought for billions of dollars, the vast majority of startups will be bought for just fractions of that.

For a handful of elite companies, they don’t have to search for buyers because they are highly sought after by buyers with deep pockets. But the vast majority of startups are sold rather than bought, according to Mark Tluszcz, founder of Mangrove Capital. “With 99% of all venture backed companies, you have to go out and sell the business,” Tluszcz says. “The point of the startup ecosystem is not, let’s build a company for 20 years. (At some point) you have to sell it.”

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