I started the Startup Stack in 2020 to help founders survive the COVID pandemic through deals on the software and services they use to run their business. I was one of three co-founders, and the only one to begin to work on the company full-time in May 2023 at what seemed like the right time. Fast forward to summer 2024, and I was stuck. The business wasn’t where I needed it to be. I was bootstrapping to stay flexible, juggling too much solo, and running into hard growth ceilings. I joined the Master of Business Creation (MBC) program at the University of Utah’s David Eccles School of Business to find a path forward.
Offered in partnership with the Lassonde Entrepreneur Institute, the MBC was the perfect program to get things moving again. I needed help figuring out how to get unstuck. Everyone in the program was in my ideal customer profile. Getting nine months of face time with them, as well as all the education and frequent feedback, helped me tremendously. The first semester proved I was not on the right path. I was blocked by 38% dead equity on my cap table. I couldn’t make the decisive moves necessary to pivot towards a better future. I had to make a hard choice that no one else could make for me. The second semester was about moving on. What started out as a desire to move on turned into an amazing acquisition experience.
We signed the acquisition paperwork the day before my MBC graduation. In this article, I’ll share 10 lessons I learned through my first acquisition process so you can have an unforgettable week like I did then.
1. Tear Band-Aids Off Early
My first semester in the MBC program made it clear that I had to move on, but no one told me to sell. Most people still validated me and believed in the company. But no one knew my business better than me.
My two co-founders collectively owned a large minority stake in the company. Neither co-founder had been active in years, and one still had a board seat. I had full discretion over day-to-day operations, but I couldn’t remake our cap table to align with fresh, engaged talent. Our operating agreement didn’t allow for equity claw-backs. It boxed me in.
Many things could’ve helped avoid this situation, which founders need to consider before signing operating agreements. I know it feels like a waste of time in the moment when you’re getting started, but I promise you that an operating agreement will have consequences years down the road. I pushed for vesting schedules when we formalized our cap table, but I did hold my ground. If we had implemented them when I went full-time, I would’ve retained far more equity and control. We should have included buyback provisions with clearly defined valuation methods and triggering events, such as voluntarily leaving company operations. We could have linked board seats to active involvement so disengaged stakeholders can’t bottleneck critical decisions.
There are many ways to structure an operating agreement. Frontload the tough conversations at that moment in time, or someone is guaranteed to be unhappy later. These early governance mistakes misalign incentives, punishing performers and rewarding disengagement. My ideal outcome was to honor their early contributions with some equity, retain more equity in the business to recruit further talent, and leave board seats for those actively involved. I know it sucks to spend money to do this the right way upfront, but do it.
If you already know you’ve messed up here, don’t delay. Tear the band-aid off. It won’t get better by ignoring it.
2. Know Your Startup’s Value
Startups aren’t always valued by clean financials and neat multiples—especially in the early revenue stages. Traditional financial metrics create a myopic way of viewing your business valuation that limits your creativity and problem-solving skills. These metrics make more sense as your business grows into millions in revenue. Your small business can still be valuable, but financial metric-based valuation methods often skew early founders into overvaluing their business and therefore missing out on great wins. It at least misallocates the mechanism of value in a transaction, which encourages poor deal-making.
Think about your company’s valuation by the outcomes delivered to the stakeholders involved. What does buying your company enable for the acquirer? What motivates them? How can you quantify the value you will create for them based on their motives? When I understood that, it was much easier for me to identify the structure and valuation of the company across various forms of compensation. This will help you structure a deal with the acquirer that works for everyone.
Your goal is to get to good enough.
3. Build the Right Relationships
Founders hear “network” and picture awkward cocktail mixers. It really means frequently investing in relationships with your customers, competitors, vendors, advisors, and other acquaintances as you build your business. These relationships are immediately valuable and will only compound as you grow. It also says a lot about who you are by the way you treat the people you meet along your startup journey. Never burn bridges, and don’t hesitate to show unexpected kindness.
I was loosely connected with the CEO of our recent acquirer for 3-4 years. He was actually our very first contact form submission when we turned our website on. For years, I emailed him in my sales sequences with no reply. About a year before he bought my company, we finally spoke and connected on a deep level, from one founder to another.
That authentic connection made him one of the first people I texted about our sale. That relationship took years to form, and now he’s become a great friend. And he paid me one of the greatest compliments you can pay an entrepreneur by buying my business.
4. Embrace Creative Deal Structures
Everyone wants to know what dollar value I sold my business for. I don’t have a short answer because I embraced creative deal making. Most founders imagine selling their company as a stockholder purchase, in which case there is usually one set acquisition price. The acquirer buys out the shareholders of their equity and takes over governance of the entity. You walk away with a clean number. It’s a common structure, especially in mature or venture-backed businesses, but it’s not the only way to exit.
I sold Startup Stack through an asset purchase. The buyer identified which assets they wanted to buy, like our IP, customer lists, product, and brand. We retained the entity which I then dissolved. It’s fast to execute, the terms are simple, and the compensation structure was very flexible. But it requires more logistical cleanup. I was responsible for closing state accounts, canceling services, and shutting down systems that no longer serve a purpose. It’s a lot of work post-sale, but it gave us creative freedom through its simplicity.
There’s truth to the saying that “Time kills all deals.” Don’t let preexisting ideas of what an acquisition is get in the way of getting your deal done.
You could describe part of our acquisition as an acqui-hire since I decided to join the company that bought mine. Acqui-hires are a specific type of asset purchase where the primary value being acquired is the team and product. These are incredibly common in tech and often misunderstood by founders. Acqui-hires allow you to create a compensation structure that rewards the seller over time — especially if you’re going to work for the acquirer. In my case, this structure gave me massive upside potential, let me maintain ownership and pride in my work, and it aligned incentives across both parties. It helped me go from stuck to a fresh chapter in a business that I love.
5. Manage Your Entrepreneurship Career Risk Cycle Wisely
It takes a unique mentality to be a lifelong entrepreneur. Playing the long game means managing your career’s risk cycle. I remember a founder-turned- VC’s comment about his career. One third of his career he made less than $75,000, one-third he made $75,000- $250,000, and one-third he made $250,000. During those poorer times, his creativity still shined through so he could live lean and keep playing the game.
Play the game so you never have to quit. Most entrepreneurs don’t meet escape velocity financially because they over-index on low income, high commitment phases in their career too frequently. Pace yourself so you can keep getting reps in.
It took me ten years of entrepreneurship to get to my first acquisition. That decade overnight success was only possible because I played the game long enough to learn. My first five years were way too risky. My second five years were more balanced, and I achieved far more. Desperation will kill your creativity.
There are seasons for high-risk, high-reward. There are seasons for earning a paycheck and rebuilding. Do not burn the boats unless you have a good reason to.
6. Know Your Compensation Psychology
Every form of compensation hits differently. Cash meets short-term needs. Equity builds long-term wealth, but if it becomes liquid at a future date. Performance based compensation reinforces behavior loops and keep you engaged on specific metrics. All forms of compensation have their place in a founder’s life. Take a personal inventory of how the way you’re compensated motivates you and be realistic about where you’re at now.
I started the acquisition process entirely cash focused. It took me a while to value equity and performance-based compensation. I had to get to know the acquirer, their mission, their traction, and the people behind their work. That opened me up to the acquihire structure and its forms of compensation.
If you don’t understand how different types of compensation impact your psychology, you’ll make a deal that looks good on paper but doesn’t work in real life. Know what you need and project into the future. Once that future vision excites you, you’ve defined what success looks like right now.
7. Due Diligence Differences: Fundraising vs. Acquisition
Fundraising gets all the media attention and most of the thought leadership. This is why most due diligence discussions are fundraising focused. Remember that investors are future-oriented. They care about your team, your direction, and your story. In the early stages, they’re betting on your potential.
Acquirers are past- and present-oriented. They care about what you’ve already built, what systems are in place, and what risks they’re inheriting. Their job is to understand your actual capabilities so they can decide what direction to take it next.
Here’s one clear example: with fundraising, you might get away with a polished product demo and a roadmap. That’s enough to inspire confidence. With an acquisition, especially of a software product, they’ll want access to the codebase, infrastructure, documentation, and much more. I had to show them not just what the product looked like—but how it worked, how I managed it, how support was handled, and how customers engaged with it. Even if you’re a non-technical founder, you need to talk about it competently.
They didn’t care about my future-oriented financial model. They’ll do their own financial modeling for the acquisition. Focus on presenting your business accurately and understandably. Confusion also kills deals. Don’t let it kill yours.
8. Due Diligence Acquisition Essentials
It’s crucial to stay organized as you build. It’s easy to mess that up. At a minimum, be disciplined about these three things: password and access management, documentation, and bookkeeping. You will be prompt and professional, ready for any conversation that comes up… they can happen fast!
Password management is easy with something like 1Password. It’s easy to export your list of accounts and then make a plan for them when you have one source of truth. Access management gets out of hand with sharing settings on Google Docs, etc. Rein it in by limiting access strictly to your company’s domain in your admin settings on a regular basis. Never accept having messy books. The first asset an acquirer will ask for are your past financial statements.
Build these habits from day one of your startup. You can move fast and not be sloppy.
9. The Outcome of Due Diligence is Trust
The point of due diligence isn’t perfection — it’s trust. Be honest about your flaws. Startups are messy. It’s torture for us perfectionists. There are never enough hours in the day for everything to be how we’d like it. Commit to being open and honest upfront. You’ll earn trust and avoid surprises along the way.
Acquirers don’t buy flawless companies, but they need to understand what they’re buying. Again, confusion slows due diligence down and then time kills your deal. Be prompt, organized, and transparent.
10. Know Your Industry, Know Your Users
Founders are trained to know their users. This is progress! However, we need to master the macro environment we play in as well. One of the main reasons I fell in love with Startup Science as an acquirer was the CEO’s mature vision for the industry.
You need to master the micro and the macro in entrepreneurship. A great product will still struggle in a retracting industry. Don’t neglect strategy. Your ability to zoom in and out will help you as you execute and as you sell. You’ll identify who will buy your business and why before they know they want to buy you.
Conclusion: A Rebirth Through Sale
Selling Startup Stack was a rebirth for my startup. It gave new life to a mission I’ve pursued for five years. The MBC helped me see it through, and I couldn’t have asked for a better ending — or beginning.
The day before graduation, I signed the deal. They joked that you’re supposed to graduate with a company. I did — just not in the way they meant. But honestly? I think it was the best capstone I could’ve asked for.
