7 reasons to resign as CEO after selling your startup

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Am I sorry to remain CEO after our acquisition?

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Photo Tima Miroshnichenko. By

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You have proved to the world that you can generate so much value that no one else wants your entire company – including you, to be.

Champagne, parties, and the brand new Lambo Huracan are just a signature away.

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Still, as I negotiated our acquisition, our buyer insisted on his own terms: “Stay as CEO, or there’s no deal.”

Leading a company that is no longer yours is jumping into cold water. After the acquisition, your company’s culture, people and momentum will change. Like me, you too can fall prey to an emotional “founder’s crisis” if you remain CEO without a single share.

Selling a company is a major milestone in your entrepreneurial journey. A potential buyer may knock on your door tomorrow. They will ask for answers about whether you will continue to be CEO.

So here are some reasons why you might want to say no.

Usually, when you sign a deal, buyers don’t put you a paycheck on the table: “Here’s ten million dollars, sir.”

It happens in Hollywood movies, but not inside the office of an M&A attorney who handles a typical startup takeover.

Founders have a huge amount of information in their minds. They know their company from the inside out and it produces and sells great products.

The buyer wants what’s on your mind.

So the buyer will typically vest his payment for your company’s shares over a period of one or more years. She will associate you with the company until she takes away all of your founder’s knowledge.

But there are other ways to skin a cat. Becoming an advisory board member or part-time co-CEO are secondary roles that let you support the buyer with their new toy—without you having to run the show wearing handcuffs.

That way, you can negotiate a payout plan that gives you enough time to pursue your next goals.

But what is your next goal?

Why did you start your company in the first place?

I started mine because I love tinkering and making widgets. I could stay in my workshop for nights in electronic board soldering (I still do). Plus, I had nightmares about someday being a dictatorial boss who would make me do silly things. So I became my own boss. Even if it means making mistakes. I didn’t care.

I also wanted to be rich. That’s right: I was one of the 8% of entrepreneurs whose motivation when they started their companies was to earn loads of cash (I’m sure that’s over 8%). Maybe my parents hurt me by paying me too little for lunch at school.

Why you became an entrepreneur would be the same question you would have to ask yourself when selling your company.

Does the buyer give you creative freedom, the ability to grow your wealth, and immunity from pea-minded or narcissistic supervisors who call the shots above you?

Every founder is an investor.

If I solve a technical problem, I’ll have a better product, which will generate more revenue and ultimately increase the value of my company. Every minute I spent for my company was an investment in my (hopefully) prosperous future.

When I signed the deal, I sold all my shares to the new owner.

My scribbled signature at the bottom of endless acquisition paperwork ended ten years of entrepreneurship and turned me into a hired CEO – an employee.

Today, I get paid at the end of every month (unless I’m fired). The annual bonus adds some entrepreneurial flavor to your endeavors, but it doesn’t replace the thrill of the astronomical payoff for your exceptional performance that the free market can provide. The biggest paycheck always goes to the shareholder.

My transition from founder to employee resulted in months of emotional ups and downs, what I call my “founder’s crisis” that robbed me of the entrepreneurial fires of when I founded my company.

Being an employee has its benefits. It seems like a safe harbor after years of storms and conflicts. But the rewards of the great future, much greater than the amount of time you have spent today, will no longer be with you.

The merger of two companies makes it appear that one family is marrying into the other.

Every company has its own culture and it considers it wonderful. Companies develop their cultures over the years: into complex organisms with their own DNA. One culture is not better or worse than another – they are simply different.

Large companies have complex, complex processes and a large bureaucratic system. Founders, who are accustomed to destroying speed and simple decisions, hate it.

After the acquisition of our company, I rolled my eyes during my first meeting with a team from the parent company. As someone obsessed with productivity, I hate meetings in general. I want to make them short and effective. But your parent company may complement your efforts to improve things with a canned answer: “That’s what we’ve always done, and it works.”

Gargantuan International corporations complicate things even more. Political intrigue between departments, non-transparent decisions, and a formal tight-necked hierarchy aren’t every founder’s cup of tea. Consider yourself lucky if they don’t have narcissistic management consultants on your team.

As a startup, you learn to keep things simple. But will they stay that way?

Who in the world would invest all his savings and spend it in a venture with a 10% chance of succeeding, eating frozen pizza and pie?

Entrepreneurs have a distorted perception of risk. Our belief in our success makes us think that we will overcome all obstacles. And sometimes it really works.

Large companies evaluate risks differently from us.

When we developed a new product together with our parent company, we spent countless hours discussing the product’s features. As a startup, we used to make decisions like this quickly, build a prototype, and deliver a product. But the big guys want tough decisions, wanting to minimize their risks to whatever extent possible.

I am not saying that it is wrong to make careful and sound decisions. But the time it takes you to create a product may change with the time it takes to create an Excel sheet. Decisions will take weeks instead of days.

Entrepreneurs will miss out on the thrill of speed and risk once they enter the corporate world.

When you become acquired, the people around you will change.

The companions you love can be pushed out. New people arrive, including your new boss.

I am in very lucky position. The board members of our parent company are incredibly friendly, intelligent and understanding human beings. We share similar values ​​and get on well (well, who doesn’t) despite disagreeing on many things.

But things weren’t always like this for me.

One of my former investors was a surprisingly intelligent and helpful business angel. I am grateful for their advice and empathy during the turmoil of our startup. But another investor was someone I never wished to be stuck alone on an island.

So my advice is to know about people before sleeping with them.

There are many reasons why someone might want to buy your company: the good and the bad.

The most common is access to your customers. With your customer base, the buyer will artificially increase their sales overnight and can push their products to your customers. Others will want to take your technology. Maybe you own the patent, or they just don’t want to bother and spend the time and money on R&D – so they take the shortcut: money can really buy time.

But other buyers will crave your baby for diabolical reasons.

I know a company that bought a startup and a few weeks later shut them down immediately, fired all employees and saved their assets. The startup was a competitor to the company’s customers and jeopardized their business if kept alive.

Give your child to someone else and watch them slit their throats in public. If you’re on edge, you can blame them for calling them tech-killers in your next blog post. But if you stay CEO, they’ll make you do the dirty work: “Here’s the knife, do it.”

So be clear with your future boss: What will happen to your startup? They may not tell you the whole truth, but with ten pounds on your neck, you can figure it out yourself.

Staying CEO after an acquisition can be extremely exciting and frustrating at the same time.

Some founders hold some shares and voting rights to stay motivated to increase their future wealth. Some hired CEOs view their employment as a “break” from their entrepreneurial journey, enjoying corporate perks like flying business class. Others will quit without wasting time on “corporate crap” and start a new venture because that’s what they are.

Now, two years after our acquisition, do I regret remaining CEO?

I wanted a safe harbor, and I am happy to continue working with my team without the fear that I may not pay their salaries tomorrow. I spend more time with my family; My mental and physical health improved. I have hobbies

But I am paying the price of this security every day: the incentive, thrill and speed of risk for the rewards of astronomical futures.

Some say that all entrepreneurs want the same things. this is wrong. We all have our own goals, ambitions, longings and desires.

You built a company that someone wants to buy – it’s an incredible achievement – and you can pat yourself on the shoulder with full pride. You’ve proven that you can achieve tough goals and create real value.

So ask yourself as you negotiate your deal with the buyer: Will your employment as CEO help you achieve your next goals?

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