Most companies don't IPO, so here's how to plan for your likely exit
The most important day of an entrepreneur's journey might be the one when it ends. The big question: Will it end on your terms?
That's the dilemma behind most startup exits, whether they take place through a merger, acquisition or an initial public offering (IPO). Experts put that distinction front and center during the 2025 Technical.ly Builders Conference session titled 'M&A or IPO: What is Your Company's Destination?'
Moderated by Mike Ravenscroft of the University System of Maryland's Maryland Momentum Fund, the conversation featured attorney Kim Klayman of Ballard Spahr and Alexis Grant, founder of the M&A-focused newsletter They Got Acquired.
Together, they laid out a candid, often under-explored roadmap of what founders really need to know about exiting — and why waiting until it's too late to plan is a mistake.
'Think about it early,' Grant said. 'Gives you more options.'
The numbers are clear, Ravenscroft noted: Only a tiny fraction of companies ever go public, and even among VC-backed firms, IPOs are rare. The vast majority of exits happen via mergers and acquisitions (M&A).
The panelists agreed that the perception gap around what makes an exit 'successful' can obscure the reality of its true impact. A $7 million sale might be life-changing for a bootstrapped founder with majority ownership. But if that same company had raised venture capital at a high valuation, the founder might walk away with little or nothing.
'If someone raises $5 million and they sell for $5 million, they probably didn't get any money,' Grant said.
That disconnect is even more stark during economic downturns or slower capital markets. Klayman pointed to the increase in smaller companies acquiring other small firms — sometimes simply to pad revenue, not gain technology. But these all-stock or acqui-hire (in which a company gets acquired for their talent) deals can mask another story: Sometimes, the best-case scenario is simply survival.
'The reality is most companies end up in an M&A situation, even if it's a multi-generational business,' Klayman said. 'It does end up a lot of times in an M&A transaction if there is no succession plan.'
The hardest parts that too few talk about
Asked what founders need to prepare for, both panelists were unequivocal: The due diligence process is brutal.
'For many [founders], due diligence ends up being a second job,' Grant said, adding: 'You also have to keep running the business, and you want to run it in a way that performance does not drop, because that's the worst thing that can happen when you're going through a deal.'
That's why both she and Klayman emphasized the need to 'get your house in order' — and do so early. From knowing who owns the IP to having clean cap tables and documented promises of equity shares, small oversights can kill a deal late in the game.
'I have actually seen one deal die because the whole company was built on this one piece of software, and that's what the buyer wanted,' Klayman said. 'And it was like, a software developer did it 25 years earlier, and they didn't paper it because it wasn't that important. And the deal just died.'
She advised founders to use tools like Carta or diligence-prep software to identify red flags before a transaction is even on the table. Attorneys can help, but so can platforms that flag missing consents or unsigned option grants.
'Being organized is like 95% of the battle,' Klayman said.
The stories behind the headlines
Of course, learning these details can be difficult when many companies don't discuss them soon after an M&A takes place. The panel also pulled back the curtain on how mergers and acquisitions are framed in public — and how different the internal reality can be. Grant, whose company profiles founder-led exits, said PR statements often overhype vague synergies and downplay job losses or underwhelming returns.
She added that sellers are often far more candid a year or two post-sale.
'Most of the stories we write, they're usually at least six months after the acquisition has taken place,' Grant said. 'The seller is more open to sharing real details at that point.'
Klayman agreed: Sometimes the announcements make it seem like someone got a bunch of money, when usually the investors, even if they're paid first, 'are getting like 10 cents on the dollar,' she said.
'I don't think that people want those types of transactions to happen,' she said, 'but when they do happen, it takes effort and, I think, actually responsible founders to make it happen.'
All emphasized that outcomes must be evaluated in context. Founders may sell to give their team stability, find a new role or offload a company responsibly instead of shutting down. What matters, they said, is alignment between a founder's goals and their investors' expectations.
The closing message to founders was clear: Plan for your endgame from the beginning. Think through potential paths — and not just the flashy ones. Ask investors what their expectations are. Build a network that includes not just mentors and peers, but service providers who understand exits and won't charge you just to ask questions.
'If you don't know what success looks like, you're going to be poor no matter what,' Ravenscroft said, 'because you won't know it if you get it.'
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Technical.ly
08-06-2025
- Technical.ly
Most companies don't IPO, so here's how to plan for your likely exit
The most important day of an entrepreneur's journey might be the one when it ends. The big question: Will it end on your terms? That's the dilemma behind most startup exits, whether they take place through a merger, acquisition or an initial public offering (IPO). Experts put that distinction front and center during the 2025 Builders Conference session titled 'M&A or IPO: What is Your Company's Destination?' Moderated by Mike Ravenscroft of the University System of Maryland's Maryland Momentum Fund, the conversation featured attorney Kim Klayman of Ballard Spahr and Alexis Grant, founder of the M&A-focused newsletter They Got Acquired. Together, they laid out a candid, often under-explored roadmap of what founders really need to know about exiting — and why waiting until it's too late to plan is a mistake. 'Think about it early,' Grant said. 'Gives you more options.' The numbers are clear, Ravenscroft noted: Only a tiny fraction of companies ever go public, and even among VC-backed firms, IPOs are rare. The vast majority of exits happen via mergers and acquisitions (M&A). The panelists agreed that the perception gap around what makes an exit 'successful' can obscure the reality of its true impact. A $7 million sale might be life-changing for a bootstrapped founder with majority ownership. But if that same company had raised venture capital at a high valuation, the founder might walk away with little or nothing. 'If someone raises $5 million and they sell for $5 million, they probably didn't get any money,' Grant said. That disconnect is even more stark during economic downturns or slower capital markets. Klayman pointed to the increase in smaller companies acquiring other small firms — sometimes simply to pad revenue, not gain technology. But these all-stock or acqui-hire (in which a company gets acquired for their talent) deals can mask another story: Sometimes, the best-case scenario is simply survival. 'The reality is most companies end up in an M&A situation, even if it's a multi-generational business,' Klayman said. 'It does end up a lot of times in an M&A transaction if there is no succession plan.' The hardest parts that too few talk about Asked what founders need to prepare for, both panelists were unequivocal: The due diligence process is brutal. 'For many [founders], due diligence ends up being a second job,' Grant said, adding: 'You also have to keep running the business, and you want to run it in a way that performance does not drop, because that's the worst thing that can happen when you're going through a deal.' That's why both she and Klayman emphasized the need to 'get your house in order' — and do so early. From knowing who owns the IP to having clean cap tables and documented promises of equity shares, small oversights can kill a deal late in the game. 'I have actually seen one deal die because the whole company was built on this one piece of software, and that's what the buyer wanted,' Klayman said. 'And it was like, a software developer did it 25 years earlier, and they didn't paper it because it wasn't that important. And the deal just died.' She advised founders to use tools like Carta or diligence-prep software to identify red flags before a transaction is even on the table. Attorneys can help, but so can platforms that flag missing consents or unsigned option grants. 'Being organized is like 95% of the battle,' Klayman said. The stories behind the headlines Of course, learning these details can be difficult when many companies don't discuss them soon after an M&A takes place. The panel also pulled back the curtain on how mergers and acquisitions are framed in public — and how different the internal reality can be. Grant, whose company profiles founder-led exits, said PR statements often overhype vague synergies and downplay job losses or underwhelming returns. She added that sellers are often far more candid a year or two post-sale. 'Most of the stories we write, they're usually at least six months after the acquisition has taken place,' Grant said. 'The seller is more open to sharing real details at that point.' Klayman agreed: Sometimes the announcements make it seem like someone got a bunch of money, when usually the investors, even if they're paid first, 'are getting like 10 cents on the dollar,' she said. 'I don't think that people want those types of transactions to happen,' she said, 'but when they do happen, it takes effort and, I think, actually responsible founders to make it happen.' All emphasized that outcomes must be evaluated in context. Founders may sell to give their team stability, find a new role or offload a company responsibly instead of shutting down. What matters, they said, is alignment between a founder's goals and their investors' expectations. The closing message to founders was clear: Plan for your endgame from the beginning. Think through potential paths — and not just the flashy ones. Ask investors what their expectations are. Build a network that includes not just mentors and peers, but service providers who understand exits and won't charge you just to ask questions. 'If you don't know what success looks like, you're going to be poor no matter what,' Ravenscroft said, 'because you won't know it if you get it.'
Technical.ly
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Audigent's cookie-free journey to adtech success
Startup profile: Audigent Founded by: Shelton Mercer, Jon Gosier, Brian Brater, Elizabeth Hitchcock and Drew Stein Year founded: 2016 in Philadelphia Headquarters: New York, NY Sector: Advertising services Funding and valuation: Acquired by Experian in December 2024 Key ecosystem partners: Time Warner, Ben Franklin Technology Partners In 2016, Shelton Mercer and his co-founders crammed into a tiny office in a Philly brownstone — 10 developers, hackers and software engineers sharing 500 square feet — to create an advertising technology under the name Audigent. A dozen years later, the startup, which specializes in online advertising without cookie tracking, would be acquired by global data analytics company Experian, with a reported valuation of between $200 million and $250 million, after raising millions in funding along the way. 'I have the privilege of having Audigent be my fourth exit from a company,' Mercer said at the 2025 Builders Conference during the panel 'Case Studies on Entrepreneurship Access.' Even with Mercer's experience, Audigent's rise took time, hard work and a lot of due diligence. No cookies, no problem Audigent's framework for advertisers and publishers allows customers to target their key demographics, as all adtech tools do. The difference with Audigent, now headquartered in NYC, is that it prioritizes the privacy of its potential customers by never using cookies (those small files that websites use to track users' online behavior). Instead, it uses data from partners, like music streamers, media companies and sports sites. In 2019, Warner Music Group (WMG) invested in Audigent during its Series A funding round, alongside Raised In Space and Gao Xiaosong. It was a strategic investment totaling $4 million, aimed at improving digital advertising within the music industry. 'We need to see, as a value for society, entrepreneurship as a way to get people to the next level and the next strata of wealth generation for their families.' Shelton Mercer, Audigent To get there, Audigent underwent the long due diligence process with investor and economic development organization Ben Franklin Technology Partners of Southeastern Pennsylvania (BFTP), something Mercer discussed at the Builders Conference with co-panelist Scott Nissenbaum, BFTP's president and CEO. 'Our process at Ben Franklin is designed like boot camp,' Nissenbaum said. 'No one says, 'That sergeant at boot camp was so nice.' That's not our job.' Mercer admitted he was initially hesitant about going through BFTP's 6-month process of intense scrutiny. But those six months of 'kicking, clawing, scratching, screaming,' as Mercer put it, led to that successful 60-minute meeting with WMG, on top of a $1 million investment from BFTP itself. Wealth-building through entrepreneurship Both Mercer and Nissenbaum share a vision for Philadelphia, and regions like it, where people from all kinds of backgrounds and walks of life can turn entrepreneurship into generational wealth. 'It doesn't just have to be the Silicon Valley, the New York, the Chicago, the LA founders or even founders who are fortunate to have partners like Scott and Ben Franklin to accelerate our company and the many other investors that helped us,' Mercer said. 'We need to see, as a value for society, entrepreneurship as a way to get people to the next level and the next strata of wealth generation for their families.' BFTP, Nissenbaum said, continues to value entrepreneurship as a driver for social change and advancement for groups underrepresented in tech. 'I think 46% of our portfolio has racial diversity in the C-suite, 56% has gender diversity,' he said. Key strategies for engaging with economic development investors Here are a few key things up-and-coming startups can learn from Audigent's journey: Be prepared for the grind: Ben Franklin's process is thorough. It's not a quick check-in; it's a deep dive. See that as a good thing — it forces you to solidify your plan and address potential weaknesses while building a bridge to other investors. Surround yourself with talent: Mercer credits Audigent's success to its strong team, with each bringing unique skill sets to the table. As Nissenbaum pointed out, most entrepreneurs are good at one thing. You need to fill in the gaps with people who excel in other areas. Embrace the ecosystem: Don't try to do it alone. Organizations like Ben Franklin and other ecosystem orgs exist to support startups. They provide resources, connections, and, sometimes, tough love. Don't be afraid of due diligence: While long, it helps you prepare for major deals. Have patience: If an exit is your goal, don't expect it to happen right away. Audigent's story shows what can happen when vision, the right support system and a lot of patience come together. As Nissenbaum said, 'Nine years later, we're celebrating an overnight success.'
Technical.ly
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'I think you can totally build relationships with VCs and investors as an introvert,' said Bednar, adding that he found success in online networking and email outreach when he was a founder. Brown said that the depth of a relationship matters more than how much a founder puts themself out there. 'You don't necessarily have to be a conference junkie,' he said. 'You can find one-on-one ways to interact. It also goes back to the idea of time: I find that I have introverted tendencies myself, and I find that over time, the more time you spend with someone, the more extroverted you become with that specific individual.' That said, the panelists also believed in the worth of a pitch that can hook someone in on the first interaction. 'The last half-a-dozen deals we've done, almost all of those were where the pitch didn't happen over Zoom or on Powerpoint,' Brown explained. 'The pitch happened in person, talking to them, meeting them for the first time. That was the real pitch.' For bootstrapping founders — especially those building in hard tech or from cities outside the usual VC hotspots — the advice was practical. Conserve cash. Do your research. Find the right kind of capital for your business model. And don't assume geography is a limitation. 'You can also build relationships out in Silicon Valley,' Bednar said. 'I don't think you should limit yourself to a particular geographic area.' What (not) to do Building relationships that lead to investment may not be a perfect science, but the investors still had actionable tips for what every founder can do (and should avoid) when seeking venture capital. While entrepreneurs often conflate story with pitch, panelists drew a line between the two. The story is personal, emotional and evolving. A pitch is structured, strategic and designed to answer key questions like who you are, what you're doing and why. But one needn't be fully separate from the other, and the panelists also shared tactical advice for making that story stick. For instance, George of BFTP suggested founders create a 90-second pitch video to share with funders, especially if they can't meet a VC firm's principal immediately and need to give something representative to that firm's associate or analyst. That video could incorporate the story, which must be unique to the founder's particular journey. Either way, 'don't copy it out of a book,' he warned. Asked about the 'wrong' way to build investor relationships, panelists agreed: pushiness and rigidity are quick turnoffs. A founder who can't pivot raises red flags. The speakers also advised against flooding pitch meetings with more than one team member and pitching ideas that don't fit an investor's stated interests. 'We are a bit generalist,' he said. 'But when I say, like, 'Listen, we don't do life sciences' … they typically get the message.' George also said that founders too often skip a critical piece of their story: not just why they're building a company, but why now. Context matters, he said, because timing — from technological readiness to macroeconomic tailwinds — can make or break an investment. Through all of these themes and the many audience questions that guided the discussion, the investors revolved around one primary consideration: authenticity. 'This sounds trite, but be yourself,' Brown said. 'If the end result of this is … potentially a 10-year-long relationship, you can't fake it for 10 years.'
