exiting-company v1.0.0A

Immutable. This exact content is served forever at /api/v1/blob/ed4afefeb4869f31.

---
name: exiting-company
description: >-
  Prepare a SaaS company for acquisition or exit — valuation drivers, due
  diligence readiness, financial preparation, legal structuring, and exit
  timeline. Use when planning an exit, preparing for acquisition, or maximizing
  company value for a future sale. Triggers on: "exit strategy", "sell company",
  "acquisition prep", "M&A", "due diligence", "company valuation", "exit
  planning", or any request about selling a business.
license: MIT
compatibility: Claude Code, Cursor, Codex, Hermes, Windsurf, OpenCode, Gemini CLI, Copilot, Zed, VS Code, Goose
metadata:
  version: "1.0.0"
  author: LeadMagic
  category: founder-led
  tags: [exit, acquisition, m-and-a, valuation, due-diligence]
  related_skills: [saas-metrics-calculator, building-saas, soc2-compliance, investor-updates]
  frameworks: [SaaS Valuation Multiples, David Skok Unit Economics, KeyBanc SaaS Survey]
---

# Exiting a Company

## Overview

Companies are bought, not sold. The best exits happen when a strategic acquirer
identifies you as the solution to their problem — not when you decide to sell.
This skill covers preparation: the valuation drivers that matter, the due
diligence package that speeds deals, and the 12-24 month runway most exits
require.

## Frameworks Referenced

This skill is grounded in public frameworks and source material relevant to the task:

- **SaaS Valuation Multiples.** Use the relevant method or published guidance where it improves the requested deliverable; do not cite it as decoration.
- **David Skok Unit Economics.** Use the relevant method or published guidance where it improves the requested deliverable; do not cite it as decoration.
- **KeyBanc SaaS Survey.** Use the relevant method or published guidance where it improves the requested deliverable; do not cite it as decoration.

## When to Use

- "How do I prepare my company for acquisition?"
- "What's my company worth?"
- "Build an exit strategy"
- "Prepare for due diligence"
- "Maximize acquisition value"
- "Sell my SaaS business"

## Step-by-Step Process

### Phase 1: Valuation Drivers

SaaS companies are valued on revenue multiples. The multiple depends on:

**Growth rate:** Primary driver. 100%+ YoY commands premium. <20% YoY is a
distress signal. Rule of 40 (growth rate + profit margin > 40%) is the
standard filter.

**Scale:** ARR thresholds matter. $1M ARR: acqui-hire territory. $5M ARR:
strategic interest begins. $10M ARR: serious acquisition conversations.
$20M+ ARR: IPO-track or premium acquisition.

**Efficiency:** CAC payback under 12 months. LTV:CAC above 3:1. Gross margin
above 70%. NRR above 100% (enterprise expects 120%+).

**Moat:** Proprietary data, network effects, switching costs. "Better features"
is not a moat — anyone can build features.

**Team:** Can the business run without the founder? If the answer is no, the
acquirer is buying a job, not a company.

### Phase 2: Due Diligence Package

Prepare before anyone asks. Acquirers will request:

**Financial:**
- 3 years of P&L, balance sheet, cash flow
- Revenue by customer, cohort retention, churn data
- CAC by channel, LTV by cohort
- All contracts, especially enterprise agreements with change-of-control clauses

**Legal:**
- Cap table (clean, no disputes)
- IP assignment from all employees and contractors (critical — missing IP
  assignment kills deals)
- Commercial contracts (customer, vendor, partner)
- Any litigation, past or pending
- Data processing agreements and privacy compliance

**Technical:**
- Architecture documentation
- SOC2 report (or equivalent security documentation)
- IP inventory (code, patents, trademarks)
- Third-party dependency inventory
- Disaster recovery and business continuity plans

**Commercial:**
- Customer concentration (no single customer >15-20% of revenue)
- Channel mix and CAC by channel
- Sales playbook and documented processes
- Market analysis and competitive positioning

### Phase 3: The 12-24 Month Runway

Exits don't happen on your timeline. Start preparing 12-24 months before you
want to exit:

**Months 1-6:** Clean up. Fix cap table issues. Get IP assignments from everyone.
Resolve any customer disputes. Get financials audit-ready.

**Months 7-12:** Build relationships. Strategic acquirers don't buy strangers.
Attend industry events. Build partnership relationships. Let potential acquirers
see your momentum over time.

**Months 13-18:** Market signals. Strong growth, industry recognition, strategic
partnerships. This is when inbound interest typically starts.

**Months 19-24:** Negotiation and close. Due diligence takes 60-90 days. Legal
takes 30-60 days. Expect 4-6 months from term sheet to close.

### Phase 4: Exit Options

**Strategic Acquisition (most common SaaS exit):**
A larger company buys you for your product, team, customers, or market position.
Valuation: 5-15x ARR depending on growth rate and strategic fit. Timeline:
6-12 months from serious conversation to close.

**Private Equity Acquisition:**
PE firm buys majority stake. You may stay on as CEO or transition. Valuation:
3-8x ARR. PE needs: $2M+ EBITDA or clear path to it, growing ARR, sticky
revenue. Timeline: 4-8 months.

**Acqui-Hire:**
Company buys you primarily for the team. Valuation: $1-3M per engineer.
Relevant at <$2M ARR. Timeline: 2-4 months.

**IPO (rare for most SaaS):**
$100M+ ARR, predictable growth, public-company-ready financials and governance.
Timeline: 12-18 months from decision to listing.

## Output Format

Exit readiness assessment with: valuation estimate (ARR multiple range), due
diligence checklist with gaps identified, 24-month preparation timeline, and
exit option recommendation.


## Quality Check

Before delivering, verify:
- [ ] All required sections are complete
- [ ] Output matches the user's stated need
- [ ] Named frameworks are cited for key recommendations
- [ ] No vague claims — every recommendation has a specific action
- [ ] Deliverable is ready for operational use, not just conceptual

## Common Pitfalls

1. **Missing IP assignments.** A contractor who built core IP without signing
   an assignment agreement can kill a deal. Fix this now.

2. **Customer concentration.** One customer at 30% of revenue makes the
   business un-acquirable. Diversify before you need to sell.

3. **Founder dependency.** If every deal requires you, the acquirer is buying
   a key-person risk. Build a team that operates without you.

4. **Waiting too long to prepare.** Due diligence exposes everything. The time
   to fix problems is 12 months before the process starts, not during it.

5. **Shopping the company.** Telling the market "we're for sale" signals
   weakness. Inbound interest from relationships beats outbound pitches.



## ⚠️ Disclaimer

This skill provides general informational guidance based on publicly available frameworks and operator experience. It is NOT legal advice, accounting advice, tax advice, financial advice, insurance advice, or professional services advice.

Consult qualified professionals for your specific situation — attorneys for legal/equity matters, CPAs for tax and accounting, licensed brokers for insurance, and certified security assessors for compliance. This skill does not create a professional-client relationship. Use it as a starting point for research and preparation.

## Related Skills

- **saas-metrics-calculator**: Valuation inputs and benchmarks
- **soc2-compliance**: Compliance as acquisition readiness
- **investor-updates**: Clean investor communication
- **building-saas**: Building what acquirers want