teclo networks

Startup Exits

We often get worried questions from entrepreneurs about exits.

This description is meant to give a rough idea about what happens in an exit. We've exited a number of times, most recently selling Teclo Networks to Sandvine in March 2016. 

Another company decides they want your product, your employees (or most of them), and your customers as part of their company. They buy your intellectual property, your customer contracts, and contract the employees they want to stay so that those employees will themselves want to stay through the sometimes bumpy integration process. 

You decide to sell the company. Either the shares of the company ("share deal"), or "just" what is in the company: employees, intellectual property, customer contracts, etc. but not the shares of the company itself ("asset deal"). The difference is mostly in the taxation effects.  

The following section pretty much holds for both share and asset deals:   

You promise: ( "warrant")

  • you had the right to sell it
  • you owned the shares you said you owned
  • you haven't violated anyone else's intellectual property
  • you aren't in serious breach of contract
  • the company is not in legal trouble

You get money and shares in the purchasing company. 

  • proportions of money and shares vary
  • sometimes, the amount of money paid is partly dependent on the purchasing company's sales of the product ("earn out"). The more of your former product they sell, the more money the company sellers get, up to some limit. 
  • the purchasing price is deposited with a third party ("in escrow"), and is released over time as the contract terms are fulfilled. 
    • so the purchasing company can be sure your promises are true
    • so key employees stay employed by the purchasing company


This very complex subject changes often, is a subject for heated debate, and is just too much detail to cover in this blog post. Taxation of entrepreneurial companies is scheduled to change again next year. 

Just make %&/&%€!!! sure you talk to a tax lawyer before you sign that Letter of Intent.  


  • will sign an employment contract with the purchasing company. Sometimes these contracts are onerous, including draconic non-poaching and non-compete clauses not commonly seen in Sweden. 
  • will get payment of their part of the purchase price over time, often four years nowadays. At least two years ("vesting"). This period of working in the purchasing company in order to get the full value of your sales price is also known as "Golden Handcuffs".
  • will sometimes get extra money/options/ earn out for staying with the purchasing company, over and above the payment to shareholders.


  • Their employment contracts will be terminated if legally possible, often on the closing date.  
  • Employment contracts that can't be legally terminated on the closing date will be handled by the purchasing company. 


  • Mostly, the purchasing company wants to keep your contracts.  They'll do what's necessary formally to transfer them, either sending notices of contract transfer or waiting for a passive accept. Passive accept means a customer doesn't object when the usual service is delivered by the purchasing company. 
  • Key contacts with suppliers, customers, prospects ... are "handed over". 
  • One of the old employees visits the key contact together with the new company representatives, if they're really very important. Or you can teleconference, call, or write... 

To make sure that the hand over is smooth and the purchasing company can continue to sell  and supply your product.  


It's not bad, not bad at all. 
You usually continue to work with the people and technology you know and love for a few years ("vesting period", at least), you have many new customers and many new colleagues, the bigger scale of the purchasing company is exhilarating, and things do get a bit bumpy. 

Have some patience, the purchasing company does want you and your technology. 
Plus you have money and a salary you can depend on.  


Nowadays, it seems that companies do what they can to keep people happy and motivated and working, but...not always.

A good integration will designate a head office "fixer" who makes integration problems go away. When your company credit card suddenly doesn't work, or the new sales person stands you and the customer up, or prospects call about products you were once planning to make but no longer, or whatever, this is the person to call.

You'll be expected to get your contact network working in the new company, as fast as possible. Work on it, that contact net is key to a happy life in the new constellation.  

A good integration will have made clear to the employees who are staying that they will have jobs and be very welcome to contribute to the company, who they report to, who they work with, a road map going forward, and have regular integration meetings. The purchasing company will do everything reasonable to make people comfortable. 

You will sometimes report to managers who are jealous of your successful exit and can make life pretty miserable for you, just because they can. 

I once had a manager, based in California, nine hours ahead of us, who scheduled direct report meetings four days a week from 14 to 16 in the afternoon. I called in, my time 23 to 1AM. FOUR DAYS A WEEK. I started coming in to work a bit late, and soon realised that wasn't a good idea; the others at the office started coming in late as well. I was short on sleep for years.


Jane Walerud sells Teclo Networks – frees up capital for investments

15 years ago, Jane Walerud and her co-founder sold their tech company Blue Tail for $185 million (1.5 billion SEK). She then became one of Sweden’s most successful angel investors with early investments in companies like Klarna and Lensway. She has had an average return on investment of 60 percent per year.

But in 2010 Jane Walerud started her second company with a new team. Teclo Networks and developed a technology that radically increases the speed of mobile broadband.

Article in Swedish Startup Space