When to sell the company or at least some shares:

Trade Sale:

  • The market window for your product is getting measurably shorter, your kind of product is getting hyped, and you don't have the sales channels to take advantage of your opportunity.

    Sell to someone who does have the sales channels and complementary products. 

Your first alternative as a purchaser is probably someone you're already working with; you know and like each other, the trust is already there, and a deal can be rather quick and painless. They're also often willing to pay a bit more than others, since your products are already integrated in their business, and if you're sold to a competitor, they'll have to replace you in their product portfolio.  

Since a trade sale is often plan B in most techie startups, you'll want to develop those relationships with possible purchasers (OEM deals, co-marketing, what have you) so that they're ready to purchase you and make a fast decision if and when the time is ripe. 

  • Your targeted customers do NOT want to purchase your kind of product from a startup; it's too key to their business. A startup is too likely to fail or the good people disappear. Buying from you is not unlikely to damage the decision makers career. 

In this situation, you'll want to close a very few sales (they're tough to close!) to demonstrate customer pull, and then arrange bidding among the companies who have the right sales channels and whose product portfolios have a hole where you are. 

  • Your company cannot close enough sales to sustain itself and the trend is not your friend. Consider an Acquihire, or an acquisition which is focused mostly on getting the technical group to join a new company. The technology is interesting, but not that valuable. In 2016, acquihires often give *shareholders* up to 1MUSD/excellent engineer. The engineers themselves are often given further incentives to stay in the purchasing company. This is not a great exit, but it certainly beats bankruptcy.


  • If you are stronger than these scenarios, and still want or need to sell in a trade sale, then get several companies to compete to buy you. Figure out which companies are likely to want you, and get help to arrange bidding, a data room, etc. There are specialists; ask around. 

Shareholder liquidity

Shareholders who want to sell parts of their holdings are often employees or former employees and really need the cash. 

In order to avoid being pressured into listing the company while it's small, make sure that employee shares are vested over a fair amount of time, like maybe 4 or even 5 years. Then, perhaps, arrange for an investor to buy all the available former employee shares in one transaction every now and then.

The pressure from shareholders can be intense, and will distract you from actually doing your job and growing the company.  


Make sure that the company documents and the shareholders agreement allow share sales. You  probably have signed restrictions on share sales like tag along, drag along and right of first refusal. Follow those rules. 

  • Share placement:

If you have a reasonable sized chunk of shares to sell, or a group of you together has a reasonable sized chunk of shares to sell, then there are people in the financial industry who specialise in selling those shares to their large and well tended contact net of investors. They take something like 6-7% of the money.

  • Sell to a bigger investor who wants in: 

Sometimes, it's possible to circumvent those share placement people and their fee by finding investors who want shares in your company, possibly because they've made the fact that they recently bought shares public. You can offer them more shares for the same price they recently paid. They will generally not want to do the paperwork for less than a decent sized chunk of the company, so you may have to get several shareholders together and sell a chunk. 

  • Share markets:

Please do check any and all alternatives. Once you're listed and small, very few investors will notice you, you will not have analysts following the stock and you're still bound by all the rules and regulations around listed companies. Been there, done that. Avoid it.

On the positive side, there is a well known procedure to get more money from new investors. It's still not easy, mind you, but possible. You issue new shares into the stock market.
In order of increasing size: 

  • There are markets for shares in promising startups and small companies; for instance Aktietorget in Sweden. There, you can get your shares unofficially "listed" and the stock becomes at least somewhat liquid. Prices are often volatile and not many shares are traded daily. But still, it works. 
  • If you fit the requirements for First North, then there is more capital available, your company has a better stamp of approval, and the rules are somewhat more onerous to follow.
  • If you fit the requirements for NASDAQ, why the HELL are you reading this blog post?

If you're listed and big, then you will get the necessary analyst attention to tend your stock.

Nowadays companies can grow very large indeed before listing. Facebook was HUGE before it listed.