Should You Sell Your Startup?
Investors are always looking for a big exit. Should entrepreneurs oblige and sell their businesses?
Imagine, for a moment, what would have happened if Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) or Google (NASDAQ: GOOG) had been sold to another entity before they released software, services or products that changed the world.
Even Facebook (NASDAQ: FB), the world's largest social network, could have been swallowed by a larger firm.
Would these companies have achieved the same level of success under the direction of an existing empire?
On the other hand, Google has acquired many startups (such as YouTube) and turned them into multi-billion-dollar empires.
No matter what entrepreneurs decide, they are taking a risk. Those who sell will lose their independence and eliminate the chance for an IPO. Those who don't may not have enough success to justify their independence.
Related Link: Five Startup Tips From an Expert Hustler
Moses Lee, co-founder and CEO of Seelio (an educational service and technology company), faced this dilemma head-on when PlattForm offered to acquire the firm this year.
"It's all about growth for us," said Lee. "PlattForm is a natural partner and helped us fuel our growth and leverage our network and expand as quickly and as fast and furiously as possible."
"We know them, we know their leadership team," he continued, "they're very experienced in the education industry. We felt like a partnership with them would allow us to do that."
Seelio will be allowed to maintain its brand and its presence within the education space, but not all startups are that lucky.
"Everything is case-by-case," Lee said of other startups that may consider a buyout. "It depends on what industry you are [in], what you're trying to do, what your business model is. I think everyone [has] got to evaluate [their] options."
Lee said entrepreneurs need to examine the leadership team that is asking to buy them out.
"You have to understand who's buying you and their strategy and how you plan to work together," Lee insisted. "It's really important."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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