It's important to know what the end goal for your company is – you can think of it like going on vacation: you need a dream destination before you can make the right plans. At Fidelity, we’ve spoken with industry experts and put together a playbook of the best practices you can implement to cultivate potential M&A options down the road to ensure your company is on the right path to exit or IPO, and beyond.


  • Step 1: Create Your Plan of Action
  • Step 2: Establish Connections
  • Step 3: Prepare In Advance for Due Diligence
  • Step 4: Reengage With Other Companies & Tell Your Story
  • Step 5: Play The Game
  • Lastly: Avoid This Common Pitfalls


Step One: Create Your Plan of Action

Before your company begins to think about mergers, acquisitions, and exits, you’ll need to consider the type of exit that is preferred. This brings us to step one, establishing long-term company goals.

A few questions you’ll want to better understand are about your organization:

  • To what extent (if any) do the founders want to continue managing the business (if they still are)?
  • How much “skin in the game” are they interested in? In other words, are they looking for a complete buyout or rollover equity?

This will help determine which path is the right one for exit: an IPO (initial public offering), SPAC (private equity acquisition vehicles), PE buyouts, or strategic acquisition.


Step Two: Establish Connections

After your company has a desired exit plan, you should begin to establish connections with the key players in your industry. You’ll want to do anything and everything you can, from increasing your online connections to joining messaging groups with founders. Warm leads are always, of course, the best way to get an introduction to someone. Forming friendships with strategic companies or key individuals will help later down the line as this will allow you to build trust with people who might pitch your company at a later date or who might have crucial insight into your potential buyers or partners once those become clear.


Step Three: Prepare In Advance for Due Diligence

Things move fast at startups - but keeping an organized set of documents and data will really smooth things out when it comes time to make serious decisions with the bigger players in the market. Investors are data-driven, and making sure that you have a historical track record of your business’ data will not only move deals along more quickly, it will also impress your investors. Any buyer will have a ton of questions during the due diligence process, so you’ll want at least two years of audited financial statements before considering and moving forward with acquisition. As far as key performance indicators go, the last 24-36 months of metrics is typically the most important, so it’s never too early to start thinking about building up these dashboards of data. Now is also a good time to determine whether your industry is valued on revenue, growth, EBITDA, or another indicator, and prioritize focusing on this indicator.

Managing your company’s data and making sure you’re prepared for the due diligence process is much easier and less stressful if you use Fidelity. The information stored in your data room automatically populates your company's corporate reports (like the cap table) and keeps track of the information that an investor or buyer would want to see so you can present all the data in a clear, organized way. Fidelity can make your company even more attractive to potential buyers and make you even better prepared for whatever path your company may take.


Step Four: Reengage With Other Companies & Tell Your Story

It’s your time to get your company’s name out there and shine! Investing in marketing, making sure clients have a pleasant experience, and a bit of media coverage will go a long way towards getting on your potential buyer’s radar. When you do go out and approach these folks, make sure you have a personalized story for each strategic alliance you seek.

Of equal importance as telling your story is seeking out others who have interacted with your desired buyers in the past (here’s where your trusted connections come into play!) to hear their stories. This will help you gain a better understanding of who is sitting on the other side of the deal and what life-beyond-closing-date will look like. During these conversations, it is helpful to uncover any skeletons in the closet and also ask about the competitive advantage each of these would provide.


Step Five: Play The Game

A diligence process can come in many forms (such as technology, financial, and legal diligence), but they are the business equivalent of a game of tennis. For legal diligence in particular, being prepared is a lot like arriving at a court with the right sneakers, racket, and a killer serve: having your documents organized and at the ready will allow you to stand out when “playing the game.”

Usually, during a diligence exercise, the buyer will ask the seller (that’s you!) several questions, to which the seller responds and provides the correct documents as evidence. Then the buyer asks more questions and the process repeats itself (just like tennis - back and forth). This whole game typically takes 45 to 60 days, but if you’re not organized there can be delays and time is of the essence in these transactions (more time = more risk = fewer chances of a deal).


Avoid These Common Pitfalls:

  • If your company is organized and the process is taking significantly longer than 60 days, you might want to reconsider the deal, as the potential buyer could simply be on a “fishing expedition” (meaning that they’re looking for your secret sauce or star employees to steal away, and have no intention of actually buying you out).
  • If your company has an attorney who is dragging their feet on issuing stock and option grants or completing standard business paperwork (waiting to take these actions once they know you’re a sure bet), you’ll have a huge backlog of work before the diligence process even begins.

The good news is that Fidelity can curb these issues before they even start: our platform organizes all of your company’s paperwork as you take corporate actions. Imagine every entry on your cap table automatically synchronizing with the underlying documentation and applicable board actions. Everything you, your attorney, or your potential investors and buyers could need will all be available in one platform and we will be with you throughout the process from incorporation to exit, and beyond, whatever that journey may look like for you.

In Fidelity software, every detail is stored, enabling you to confidently report back to investors and buyers with information and documents at any point in time. Sign up for Fidelity and everyone’s time can be saved, all actions are stored, and you are one step closer to being deal-ready every day.


Third parties mentioned and Fidelity are not affiliated.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.



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