Investment to Exit: What Moves The Dial For Investors & Acquirers

Successfully exiting a business isn't a sudden event; it's the culmination of processes you put in place from day one. Our recent panel, "Investment to Exit: What Moves The Dial For Investors & Acquirers," brought together perspectives from a serial acquirer (Sage), a VC/PE fund (Foresight), and an exit strategist (The Grafter).

Here are the key things founders need to get right to make their business attractive to both investors and acquirers.

1. Don't Build Two Systems: Get Ready for Both Investment and Sale

The biggest mistake is treating fundraising and preparing for a company sale as separate jobs. They should be one continuous process.

• Good Housekeeping: The detailed financial reporting and internal controls required by a VC for a major funding round (like a Series A or B) are exactly what an acquirer checks during due diligence. Put these systems in place early.

• Show the End Goal: When pitching investors, don't just talk about growth. You must have a clear Exit Plan. Tell them who is likely to buy you, when it might happen, and what the potential return looks like. This shows them how they will make their money back.

2. Know Who You're Selling To: Strategic vs. Financial Buyers

Acquirers have very different priorities. You need to know if you're targeting a Strategic Buyer (like Sage) or a Financial Buyer (like a private equity fund).

Strategic Buyers (Corporate Acquirers)

These buyers want the business to fit into their existing company. They look for:

• Familiarity Takes Time: Strategic deals are slow. The time from the first talk to the deal closing can take 16 months or more. Start building relationships early with larger companies that are already in your ecosystem (e.g., have shared customers).

• The Technology Edge: They will pay a premium for technology and talent that fills a gap in their products or helps them reach new customers.

Financial Buyers (Private Equity/Funds)

These buyers focus on predictable profit and want to sell the company for a high price in 3-7 years.

• Focus on Profitability: They need to see money invested going straight into growing the business, not into setting up basic functions.

• Clear Numbers: While forecasts are tough, a founder must have a clear, current, and detailed understanding of the company's financials. Not knowing your current numbers is a major red flag that suggests a lack of control.

Regardless of whether your next step is an acquisition or an institutional raise, financial clarity is key. Having the right tools in place helps significantly. This is why Sage is a partner of VenturePath, helping scaling companies with solutions like Sage Intacct. Learn more here.

3. The Human Factor: Define Your Role After the Sale

The success of an acquisition often depends on the people and culture. Founders must look beyond the price and understand their life after the deal.

• Do Your Own Research: You must do your own checks on the acquirer. Talk to founders they have previously bought (especially ones not on their official reference list) to understand the real culture and pace inside the new, larger company.

• Be Clear About Your Future: Define your job upfront. Are you committed to a long-term executive role, or are you staying for a fixed 12-24 month earn-out period just to ensure a smooth handover? 

• Be Honest: Investors and acquirers know no business is perfect. Be transparent about any technical debt or weaknesses. Hyperbole or over-promising will lead to bad relationships and a failed integration.

Ready to dive deeper?

VenturePath members can access the full recording of this event via our platform to hear the complete discussion on the investment to exit playbook. 

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