As entrepreneurs thinking about selling, you and your partners must be crystal clear about why you want to do that.
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As the CEO of a public company, your job is twofold: ensuring profitability and protecting shareholders. That’s likely a big reason why the board of Silicon Valley darling Snowflake Computing recently named Frank Slootman its new CEO. The ex-Greylock Partners VC has already taken two tech companies public, and his appointment as CEO of Snowflake Computing suggests an IPO may be just around tthe corner.That shake-up at the data storage firm provides yet another example of why startup founders considering selling or even taking on additional shareholders should think carefully about what they’re trying to accomplish. All entrepreneurs must understand that a company’s goals will change after an acquisition or the sale of a large portion of equity. And when goals change, people frequently change.Traditionally, it hasn’t been easy for entrepreneurs to retain the startup mentality while becoming a more established corporate organization. Many entrepreneurs don’t understand that an acquisition means they’re suddenly a small division within the parent organization. That’s why it’s common for the executive team of the acquired business to leave or be absorbed into the parent company’s management team. Moreover, about 30 percent of employees perform overlapping functions if both companies involved in an acquisition operate in the same industry. So, layoffs are the logical conclusion.Related: 5 Tips to a Successful Merger and AcquisitionThat said, large organizations are beginning to see the value of bringing on entrepreneurial teams to serve as internal disruptors. This was the case when my company, Schmidt’s Naturals, was acquired by Unilever in 2017. That transition taught me a number of valuable lessons about how entrepreneurs can maximize returns before and after a buyout.Why stick around after a buyout?I co-founded Schmidt’s Naturals in 2015, and my biggest priority leading up to the acquisition was making sure all stakeholder goals were aligned. For any entrepreneur thin
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