HyperExits Launch Event — three takeaways from two expert company sellers
The HyperExits Launch Event brought together Europe’s top minds on company sales, featuring insights from Husayn Kassai and Fred Destin. Husayn, known for his $650M sale of Onfido, and Fred, with over $7B in exits, shared actionable strategies for building startups towards successful exits.
Top Takeaways from the HyperExits Launch Event for Startup Founders
Husayn — who’s now building AI education platform Quench.AI — sold his ID verification business Onfido in April to US-based Entrust Corp for $650m, the largest trade sale for a UK company in three years. Fred, founder of London-based seed-stage firm Stride.VC and formely partner at Accel, has 25 years in VC and 14 exits (“$7bn plus, some of them awful, some of them beautiful) under his belt.
So, if you’re looking to build a startup towards a successful sale, you could have done worse than being at the HyperExit launch event on 23rd October at Cecconi’s Shoreditch, where these two sat down to share what they’ve learnt.
Why the HyperExits Launch Event Is a Must-Attend for Entrepreneurs
40 guests, Exited Founders like Zeena Qureishi from Sonantic (acquired by Spotify) as well as next generation startup founders and Venture Capitalists got the inside track on long-term planning for an exit, how growth rates impact your final sale price, and why it’s important to iron out any kinks in the fabric of your business, before you’re paying a lawyer to do it for you.
Amongst the attendees was Tim Jackson, who knows a thing or two about securing a successful exit. After founding online auction platform QXL.com in 1997, he listed the company on the Nasdaq and the London Stock Exchange in 1999. Fast forward to 2008, where it was acquired by South African multinational Naspers for just shy of $2 billion.
Tim shared his three top takeaways from the day, which we’ve summarised for you here:
1. Plan ahead
With the best will in the world, exits are notoriously dicey territory for startups, and even seasoned founders can start feeling the heat at crunch time. But there’s one way to drop the temperature dial: time.
A list of potential acquirers is a great start, but taking the time to learn who they are and what they want as you build your company is what will really move the needle.
“Yes, you’ve made a hit list of potential acquirers, plus a detailed case for why your company is a must-have acquisition for each. But Fred advises that the time to do this is *three years* before you want to put cash in your shareholders’ pockets,” Tim reflects. “That makes sense: the price buyers pay is heavily influenced by the relationship and why they want you.”
Getting to know who you’re potentially selling to means you’re better placed to adapt to their unique set of needs, or as Tim put it, “to figure out how to build your company into the answer to their prayers”.
2. Balance growth and profitability
Investors might now be prioritising profitability more than they have in recent times, but growth still really matters. “If you’re not just profitable but also growing fast, the price is waaay higher,” says Tim, pointing to one anecdote shared on stage at the event.
“One exited founder first started negotiating a sale at a time when the business was growing at 70% a year. By the time the deal got done, growth had slowed to 5%. Result: the price fell by half.”
3. Expect to pay for your sins
Every acquisition starts with an appreciation of the product, and then comes the closer inspection. Building a great engine isn’t enough if you haven’t kept on top of servicing it, and much like a mechanic, buyers will be getting into the nuts, bolts and granularities of your business.
“Because your shareholders are walking away after the deal (unlike in with VC rounds where existing and future shareholders are in the same boat), the buyers will take great care in doing their DD,” Tim points out.
“That means any contractual, legal or accounting irregularities *will* come out. So fix them well in advance and cheaply, rather than half-way through an acquisition when everyone’s lawyers have the meter running.”
This was the first in a series of physical events from HyperExits, the publication built to cut through the noise and provide you with no-nonsense information on the process of building a company towards a healthy and successful exit.
