For business owners, 2025 may prove to be a big year for selling out, at least according to the experts. A number of factors-including bullish public markets, stabilizing valuations, and the specter of deregulationcould lead to a boom in M&A activity after a prolonged slump. "The markets are flashing the all-clear sign after the most severe boom-bust cycle since the global financial crisis," notes research firm PitchBook in its 2024 report on global M&A, suggesting a "prosperous course in the coming year" during which different sectors of the economy could see a burst of dealmaking.
Among the industries that seem ripe for consolidation are energy, biotech, and finance, says Gregory Ho, president of the investment firm Spring Mountain Capital. "You look at the regulatory bodies that are going to be changing and you project out: What did they restrain?" he says. "What M&A activities might have been precluded?"
Cybersecurity, where much of the innovation happens at the startup level, is also poised to see M&A activity, says Rob Ackerman, managing director at the seed-stage cybersecurity venture firm Data Tribe. In recent years, dealmaking in the sector slowed thanks to a frothy venture capital market (which allowed companies to stay private for longer), as well as to heightened startup valuations and increased interest rates that made deals costlier. But Ackerman anticipates this will shift within the next two years.
"There are still going to be companies that were struggling and haven't had financing in a couple of years that are looking for a home," he says. "Now we're finally going to be able to match them with acquirers who are seeing their cost of capital come down."
Dan Ives, managing director and global head of technology research at Wedbush Securities, thinks there could also be consolidation in the electric vehicle industry, which he says "has gone through pain," pointing to fluctuating consumer demand, supply chain issues, and regulatory concerns.
Besides straight M&A, experts anticipate a surge in private equity deals, which increased in quantity and value in 2024, with $838.5 billion in total deal value across an estimated 8,473 deals, according to PitchBook, largely thanks to the Federal Reserve's interest-rate cuts.
"Private equity generally sees Trump administration policies-at least what it has signaled so far-as very good for dealmaking," says Sunaina Sinha Haldea, the global head of private capital advisory at Raymond James. "Because of the rollback of regulation, getting deals through competition checks will be much easier."
If the IPO market comes back in a significant way, that too can drive dealmaking. An IPO resurgence, which analysts anticipate, could help PE firms' partners get a return on their investments to reinvest liquidity into new ventures. Companies flush with cash could also start to snap up smaller rivals.
Whether you imagine selling your company to a competitor, to a private equity firm, or to an individual looking to buy a business, there are steps you should take now to ensure you're poised to explore and potentially close a sale, now or in the future. On the following pages, you'll find your guide on how to get started.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/9717474344.jpg]
READY TO SELL? HERE'S HOW TO CET STARTED
1 Estimate Your Valuation
For private companies that haven't issued equity, estimating a valuation is rarely straightforward. When Inc. spoke with experts ranging from business valuation professionals to founders who've successfully bought or sold companies, the consensus was that valuation is as much an art as a science. Still, that doesn't mean there's no roadmap. Here's how our panel of pros suggests gauging your company's worth before an exit.
Get prepped. First, you need to have all your ducks in a row, says CPA and business valuation expert Mark Gottlieb. Make sure your tax filings are compliant, reconcile those bank accounts, and prep a file outlining your vendors, key customers, leases, insurance policies, licenses, permits, and employees.
Ask for help. Most founders aren't experts on corporate valuations. You might want to consult someone who is, says Jason Lee, a repeat founder who recently sold his New York City-based company Salt Labs. But not all do, including Lee himself, who has experience in finance and opted to handle the process internally.
Choose your methodology. Ask 10 people how to value a business and you'll get 10 different answers. But there are some bigpicture approaches to consider, says Gottlieb.
The asset approach is ideal for holding companies and those with no real operating income. This involves taking the fair-market value of all assets and subtracting any liabilities.
The market approach uses databases that show past sales of comparable businesses, so you can gauge what the going market rate is in a particular sector.
The income approach can assess corporate risk and cash flow using either a single-period capitalization of earnings method (based on the historical performance of a company) or a discounted cash flow method (geared toward small businesses likely to grow in the future).
Looking for something simpler? Try a formula. Many insiders recommend a calculation that adjusts your company's EBITDA or earnings before interest, taxes, depreciation, and amortization, a common measure of profitability by an industryspecific multiple.
For instance, when founder Jason Hendren was considering selling his Sanford, Floridabased light manufacturing company to a private equity firm, he and his adviser tried to gauge the multiple by which other lighting companies were being valued, although the market information was limited.
You can also find lists of industry-specific EBITDA multiples online. Either way, this calculation creates a baseline that can then be adjusted to account for other sources of value, such as unique IP or pre-existing client contracts, says corporate lawyer David Bain.
Mix and match. There are other methodologies, too, says Bain, and valuation experts sometimes combine more than one strategy to generate a range of reasonable values.
Remember that, like any asset, a firm is ultimately worth only what someone will pay for it-which means the market in which you sell matters. Your valuation ultimately exists at a single moment in time, says Hendren: "When somebody's sitting at the table ready to write you a check." -B.C.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/8471718484.jpg]
2 Build Your Team
It might sound counterintuitive, but founders who have sold companies told Inc. the golden rule for building strong exit teams is hiring like you're never going to exit. That means building out a management team and board with a proven track record in M&A. If you can't afford a full-time CFO, invest in financial help on a fractional basis. Here are the other players you'll want to bring on board.
Don't sleep on your CTO. Tech startup founders say chief technology officers play a crucial role in the deal process. Carsten Brinkschulte, who has exited multiple times, including Twilio for $13.2 million and BlackBerry for $32.5 million, says his CTOS were much more involved than his CFOs, because his businesses were being acquired for their technology and team, not for their revenue.
Get the right counsel. From negotiations through term sheets, you'll need the right legal assistance. Founders advise securing a law firm with relevant industry and M&A experience early on and sticking with that representation as consistently as possible. To keep costs in check, Heather Harmon, who sold her digital-first mortgage brokerage company Red Door to Opendoor in 2021, tapped her Y Combinator network for recommendations and hired a boutique firm with Silicon Valley experience. Shalom McKenzie, who founded sports betting software provider SBTech, which merged with DraftKings through a SPAC deal in 2020, says don't be afraid to negotiate. Pitch your potential legal team like investors. Explain what you can pay now, and why that discount will pay off in the future.
Consider outside help. Entrepreneurs are decidedly split on how much value investment bankers and brokers bring to a deal. Both function as intermediaries, sourcing potential acquisition offers and managing the process. Brokers work with smaller, less complicated companies, like family-run businesses, and will likely be cheaper. Investment bankers manage more complex deals, like startups that have raised funding.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/X6EF1Sv5D1741264114017.jpg]
Critics say bringing in hired guns can backfire, making your startup reek of desperation, but true believers swear good bankers more than pay for themselves by raising the sale price.
Bill Smith, who has scaled and sold multiple companies, including his online grocery delivery service, Shipt, to Target for $550 million in 2018, started hiring bankers after his first exit. They will act as your coaches, he says, helping you resolve any problems. For entrepreneurs wary about costs, he says: Remember, you don't sell businesses every day. Bankers do.
Offer Yehudai has gone both ways. His first acquisition was founder to founder. But when he sold his mobile ad company, Fyber, for over $700 million in 2021, Yehudai hired the investment bank Jefferies. His rule: For deals under $100 million, it doesn't make sense to use a banker. If you do need one, he advises pushing for a successbased compensation structure, instead of a retainer.
Sonny Sultani used a broker when he sold his previous company, the Chicagoland-based design communication agency Sonny + Ash, in 2019. Sultani said Lighthouse Business Brokers provided vital support during what was an emotional time for him as an entrepreneur, holding his hand throughout the process, keeping him calm and feeling encouraged.
-Ali Donaldson
3 Find Your Buyer
The ideal acquirer depends on what you want to get out of selling your business and where you plan to go next-whether you want to stay on board or pursue your next venture. But no matter who's buying, there's one guarantee: Every sale will look a little different.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/1443119717.jpg]
Kim and Vanessa Pham, co-founders of Omsom
OMSOM
The sale that started with a cold DM
Vanessa and Kim Phạm, the co-founders of Asianflavored meal kit company Omsom, knew that DayDayCook founder Norma Chu aspired to build a "General Mills for Asian food," as she told the food publication Nosh-and they wanted to chat.
A cold LinkedIn message led to an in-person meeting, more conversations, and months of due diligence. After less than a year, DayDayCook announced in July 2024 it was acquiring Omsom, for an undisclosed sum.
The Pham sisters, who are daughters of refugees from Vietnam, launched ...
Among the industries that seem ripe for consolidation are energy, biotech, and finance, says Gregory Ho, president of the investment firm Spring Mountain Capital. "You look at the regulatory bodies that are going to be changing and you project out: What did they restrain?" he says. "What M&A activities might have been precluded?"
Cybersecurity, where much of the innovation happens at the startup level, is also poised to see M&A activity, says Rob Ackerman, managing director at the seed-stage cybersecurity venture firm Data Tribe. In recent years, dealmaking in the sector slowed thanks to a frothy venture capital market (which allowed companies to stay private for longer), as well as to heightened startup valuations and increased interest rates that made deals costlier. But Ackerman anticipates this will shift within the next two years.
"There are still going to be companies that were struggling and haven't had financing in a couple of years that are looking for a home," he says. "Now we're finally going to be able to match them with acquirers who are seeing their cost of capital come down."
Dan Ives, managing director and global head of technology research at Wedbush Securities, thinks there could also be consolidation in the electric vehicle industry, which he says "has gone through pain," pointing to fluctuating consumer demand, supply chain issues, and regulatory concerns.
Besides straight M&A, experts anticipate a surge in private equity deals, which increased in quantity and value in 2024, with $838.5 billion in total deal value across an estimated 8,473 deals, according to PitchBook, largely thanks to the Federal Reserve's interest-rate cuts.
"Private equity generally sees Trump administration policies-at least what it has signaled so far-as very good for dealmaking," says Sunaina Sinha Haldea, the global head of private capital advisory at Raymond James. "Because of the rollback of regulation, getting deals through competition checks will be much easier."
If the IPO market comes back in a significant way, that too can drive dealmaking. An IPO resurgence, which analysts anticipate, could help PE firms' partners get a return on their investments to reinvest liquidity into new ventures. Companies flush with cash could also start to snap up smaller rivals.
Whether you imagine selling your company to a competitor, to a private equity firm, or to an individual looking to buy a business, there are steps you should take now to ensure you're poised to explore and potentially close a sale, now or in the future. On the following pages, you'll find your guide on how to get started.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/9717474344.jpg]
READY TO SELL? HERE'S HOW TO CET STARTED
1 Estimate Your Valuation
For private companies that haven't issued equity, estimating a valuation is rarely straightforward. When Inc. spoke with experts ranging from business valuation professionals to founders who've successfully bought or sold companies, the consensus was that valuation is as much an art as a science. Still, that doesn't mean there's no roadmap. Here's how our panel of pros suggests gauging your company's worth before an exit.
Get prepped. First, you need to have all your ducks in a row, says CPA and business valuation expert Mark Gottlieb. Make sure your tax filings are compliant, reconcile those bank accounts, and prep a file outlining your vendors, key customers, leases, insurance policies, licenses, permits, and employees.
Ask for help. Most founders aren't experts on corporate valuations. You might want to consult someone who is, says Jason Lee, a repeat founder who recently sold his New York City-based company Salt Labs. But not all do, including Lee himself, who has experience in finance and opted to handle the process internally.
Choose your methodology. Ask 10 people how to value a business and you'll get 10 different answers. But there are some bigpicture approaches to consider, says Gottlieb.
The asset approach is ideal for holding companies and those with no real operating income. This involves taking the fair-market value of all assets and subtracting any liabilities.
The market approach uses databases that show past sales of comparable businesses, so you can gauge what the going market rate is in a particular sector.
The income approach can assess corporate risk and cash flow using either a single-period capitalization of earnings method (based on the historical performance of a company) or a discounted cash flow method (geared toward small businesses likely to grow in the future).
Looking for something simpler? Try a formula. Many insiders recommend a calculation that adjusts your company's EBITDA or earnings before interest, taxes, depreciation, and amortization, a common measure of profitability by an industryspecific multiple.
For instance, when founder Jason Hendren was considering selling his Sanford, Floridabased light manufacturing company to a private equity firm, he and his adviser tried to gauge the multiple by which other lighting companies were being valued, although the market information was limited.
You can also find lists of industry-specific EBITDA multiples online. Either way, this calculation creates a baseline that can then be adjusted to account for other sources of value, such as unique IP or pre-existing client contracts, says corporate lawyer David Bain.
Mix and match. There are other methodologies, too, says Bain, and valuation experts sometimes combine more than one strategy to generate a range of reasonable values.
Remember that, like any asset, a firm is ultimately worth only what someone will pay for it-which means the market in which you sell matters. Your valuation ultimately exists at a single moment in time, says Hendren: "When somebody's sitting at the table ready to write you a check." -B.C.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/8471718484.jpg]
2 Build Your Team
It might sound counterintuitive, but founders who have sold companies told Inc. the golden rule for building strong exit teams is hiring like you're never going to exit. That means building out a management team and board with a proven track record in M&A. If you can't afford a full-time CFO, invest in financial help on a fractional basis. Here are the other players you'll want to bring on board.
Don't sleep on your CTO. Tech startup founders say chief technology officers play a crucial role in the deal process. Carsten Brinkschulte, who has exited multiple times, including Twilio for $13.2 million and BlackBerry for $32.5 million, says his CTOS were much more involved than his CFOs, because his businesses were being acquired for their technology and team, not for their revenue.
Get the right counsel. From negotiations through term sheets, you'll need the right legal assistance. Founders advise securing a law firm with relevant industry and M&A experience early on and sticking with that representation as consistently as possible. To keep costs in check, Heather Harmon, who sold her digital-first mortgage brokerage company Red Door to Opendoor in 2021, tapped her Y Combinator network for recommendations and hired a boutique firm with Silicon Valley experience. Shalom McKenzie, who founded sports betting software provider SBTech, which merged with DraftKings through a SPAC deal in 2020, says don't be afraid to negotiate. Pitch your potential legal team like investors. Explain what you can pay now, and why that discount will pay off in the future.
Consider outside help. Entrepreneurs are decidedly split on how much value investment bankers and brokers bring to a deal. Both function as intermediaries, sourcing potential acquisition offers and managing the process. Brokers work with smaller, less complicated companies, like family-run businesses, and will likely be cheaper. Investment bankers manage more complex deals, like startups that have raised funding.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/X6EF1Sv5D1741264114017.jpg]
Critics say bringing in hired guns can backfire, making your startup reek of desperation, but true believers swear good bankers more than pay for themselves by raising the sale price.
Bill Smith, who has scaled and sold multiple companies, including his online grocery delivery service, Shipt, to Target for $550 million in 2018, started hiring bankers after his first exit. They will act as your coaches, he says, helping you resolve any problems. For entrepreneurs wary about costs, he says: Remember, you don't sell businesses every day. Bankers do.
Offer Yehudai has gone both ways. His first acquisition was founder to founder. But when he sold his mobile ad company, Fyber, for over $700 million in 2021, Yehudai hired the investment bank Jefferies. His rule: For deals under $100 million, it doesn't make sense to use a banker. If you do need one, he advises pushing for a successbased compensation structure, instead of a retainer.
Sonny Sultani used a broker when he sold his previous company, the Chicagoland-based design communication agency Sonny + Ash, in 2019. Sultani said Lighthouse Business Brokers provided vital support during what was an emotional time for him as an entrepreneur, holding his hand throughout the process, keeping him calm and feeling encouraged.
-Ali Donaldson
3 Find Your Buyer
The ideal acquirer depends on what you want to get out of selling your business and where you plan to go next-whether you want to stay on board or pursue your next venture. But no matter who's buying, there's one guarantee: Every sale will look a little different.
image [https://cdn.magzter.com/1363631886/1741170363/articles/0tMaHa7DU1741263880330/1443119717.jpg]
Kim and Vanessa Pham, co-founders of Omsom
OMSOM
The sale that started with a cold DM
Vanessa and Kim Phạm, the co-founders of Asianflavored meal kit company Omsom, knew that DayDayCook founder Norma Chu aspired to build a "General Mills for Asian food," as she told the food publication Nosh-and they wanted to chat.
A cold LinkedIn message led to an in-person meeting, more conversations, and months of due diligence. After less than a year, DayDayCook announced in July 2024 it was acquiring Omsom, for an undisclosed sum.
The Pham sisters, who are daughters of refugees from Vietnam, launched ...
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Inc. (Digital) - 1 Issue, Spring 2025