Selling a startup is one of the biggest decisions you’ll make as a founder. Get the preparation right and you maximise the value of everything you’ve built. Get it wrong and you leave money on the table, or worse, walk into a deal that unravels during due diligence.

These eight questions will help you think through the sale process clearly, before you approach a single buyer.

1. Why are you selling?

Start with the honest answer. The most common reasons founders sell are:

• Financial pressure – a distressed sale, where speed matters more than price
• Founder fatigue – the business is viable but you’ve run out of runway emotionally; a partial sale or acqui-hire might suit better than a full exit
• Planned exit – you’ve built something profitable and you and your investors are ready to realise the value

Your reason shapes everything: the type of buyer you target, the timeline you set and the structure you negotiate.

2. Why would a buyer want your business?

Buyers generally want one or more of four things: your team, your technology, your traffic or your IP. Each comes with its own preparation checklist.

If it’s your team, employment contracts need to be clean and current. If it’s your tech, you need a clear chain of ownership – reliance on licensed third-party components reduces your price. If it’s traffic, buyers will scrutinise where it comes from and what it costs to maintain. If it’s your IP, patents matter but so does the development shortcut your codebase provides.

The more honestly you assess this before going to market, the smoother your due diligence process will be – and the harder it is for buyers to negotiate you down.

3. Who are your potential buyers?

Most startup sales involve either a strategic buyer (a larger company in your sector looking for capability or market share) or a financial buyer (a private equity firm looking for portfolio returns).

A broker or M&A adviser can help you identify and approach both. Before you engage one, make sure your financials and due diligence documentation are in shape. You don’t want to create buyer interest and then scramble to pull the numbers together.

4. Asset sale or share sale?

There are two main structures and the difference matters.

An asset sale means the buyer acquires specific assets – your tech, IP or customer contracts – while you retain the company entity. It’s often simpler to execute but if your company previously held ESIC (Early Stage Innovation Company) status, an asset sale means your investors may lose access to the CGT concessions that would otherwise have applied on a share sale. Check the current ATO rules on ESIC eligibility before choosing a structure.

A share sale transfers the whole company. The buyer takes on everything including any unresolved tax issues or disputes. You’ll typically need to sign warranties and indemnities, which can create future liability. The upside is that ESIC CGT concessions remain available to eligible investors.

Get tax advice early – the structure you choose has a direct impact on how much of your exit price you actually keep.

5. What valuation do you need to make the deal worthwhile?

There are several methods used to value a business at exit stage:

• Strategic value – what the buyer believes your business is worth to their specific situation
• Net present value – your projected cash flows discounted to today’s value, accounting for risk
• Price-to-earnings (PE) multiple – your earnings relative to comparable listed companies

Startup valuations are rarely precise. The goal is to establish a defensible range to negotiate from, not a single number you’re locked into. An experienced adviser makes a real difference here – this is not the stage to wing it.

6. What if you’re raising capital at the same time as selling?

It happens. If you’re in this position, be upfront with both investors and potential buyers.

A convertible note can work well in this scenario – it allows investors to come in without requiring a fixed valuation now, with the note converting to equity at the sale valuation. A SAFE note works similarly but typically includes a discount of around 15-20% on the next priced round, along with a valuation cap.

On the buyer side, expect some to propose an earn-out structure – part of the purchase price is paid upfront and the remainder is tied to business performance over a set period, often 12 months. This can work in your favour if you’re confident in the trajectory.

7. When and how do you tell your team?

Early is better than late. If the buyer wants your team to stay on, they’ll want to see stability – not a group who found out about the sale last week.

If team members hold share options, make sure they understand how vesting works on a change of control. In most cases, unvested options accelerate and convert to shares at the point of sale, allowing team members to participate in the exit proceeds. Give people enough lead time to take their own financial advice if they need to.

8. What are the main tax considerations?

There are several worth working through well before you sign anything:

• Whether a family trust structure could provide more flexibility on how proceeds are distributed
• ESIC eligibility and the associated CGT concessions, including the minimum holding period requirements
• The possibility of a scrip-for-scrip rollover, which lets you defer CGT by taking shares in the acquirer rather than cash

Tax outcomes on a business sale can vary significantly depending on your structure and timing. Get your tax adviser involved early – ideally at the same time as you start preparing your financials for sale.

Ready to take the next step? Standard Ledger works with founders at every stage of the exit process – from getting your financials in order to financial modelling, startup valuations and acting as your CFO through negotiations. Talk to us about selling your business.