OPUS Peer-led: M&A Readiness for Startups
Understanding the Buyer Mindset Improves Chances of Successful Exit
Founder: We are looking at selling our business but we're told we can't sell now as our revenue isn't high enough and profit margin is still too low.
Me: What's your current annual revenue & profit?
Founder: Last year we made a profit of £2m on revenue of £1.8 million.
Me: That's B.S!
This conversation with a client and experienced founder who has built his business for about 14 years is an insight as to the reason why 23mile and OPUS partnered to run an M&A readiness session.
Held on June 12 at OPUS’ new dedicated co-working space near London Bridge, the session was an opportunity for founders to glean insights as to how decision-makers in larger companies think about acquisitions.
Peer-led discussion on M&A readiness for startups
Here are the top 7 takeaways from the discussion on exit strategy, how to sell your startup and the startup acquisition process:
Be clear on your objectives
The very first step in working towards a successful exit is for founders to be crystal clear on their own objectives.
Are you selling because you need more firepower to continue to compete?
Are you tired of the VC hyper-growth pressure, endless fundraising and pressure from the board and so want to swap out your cap table?
Are you running out of runway and not able to raise from VCs because you no longer fit their priorities?
Is your objective to sell and immediately sail off into the sunset?
These are all wildly different objectives influencing very different potential buyers & paths.
Without clarity, you risk chasing deals that don’t serve your interests or failing to negotiate for what matters most. Ideally, the management team should start the M&A journey with a clear internal compass, making it easier to filter buyers, set expectations, and negotiate from a position of strength.
2. Acquisitions happen when seller and buyer objectives overlap
The phrase "startups are bought, not sold" is a well worn cliche in the world of venture capital and entrepreneurship. Here’s the thing, it means different things to different people. Some take it to mean there’s no point trying to sell your company because a deal will only happen when a buyer is ready. That’s true but a low agency approach to the topic.
A better, more proactive approach is to understand that great exits happen when a buyer sees your company as the answer to their strategic problem. That means your job is to understand what they need, and then position your startup as the best solution.
Which brings us to the very important next point around identifying buyer objectives.
3. Value is not limited to financial metrics ONLY
The broker that advised my client we read about earlier was dead wrong. Revenue & profits aren't the ONLY drivers of acquisitions. Just a month ago, OpenAI announced the $6.4 billion acquisition of io, a one-year old startup founded by Jony Ive - the famed designer of the iPhone. io is just a year old, has not launched a product and is best known for the desire to “make something beautiful eventually.” As there were almost no financial metrics, it is obvious OpenAI paid top dollar for Ive & his team - an acquihire.
Instagram is today one of the most ubiquitous social media sites with over 2 billion monthly active users and a reported $50 billion in annual revenue. Back in 2012, it was a small, pre-revenue company and yet Mark Zuckerberg and Facebook recognised the product’s potential which influenced a $1 billion acquisition.
In short, revenue is great but that’s not the only value to bring to a large company. Founders need to understand what unique value, at least one of financial, capabilities or talent they bring to the table and then identify which companies would find these most valuable.
One question that came up during the session was: how do you identify buyer objectives? We touched on a few options: public communications, studying corporate strategy and leveraging human connections. Is this a topic we should run a session on next? Have your say below
4. Value occurs at two levels - organisation and individual
Value from an M&A at two levels
Picture this: you're the founder of a £20 million company negotiating a sale to a listed acquirer. At your first meeting with senior executives, you ask what they are trying to achieve so you can better understand their motivations. Most likely, the answers will be polished phrases about admiring your progress in a strategic area or how your business aligns with their future plans.
These responses are usually genuine, but they rarely tell the whole story. Beneath the surface, there are often personal drivers at play. Someone may be pushing for the deal to secure a promotion, while another person might quietly oppose it due to private interests or internal politics.
We spent time exploring this during the session. It was one of those topics that raised more questions than answers, but it gave participants a lot to reflect on. Because when it comes to M&A, understanding personal agendas within the acquiring organisation can be just as important as understanding the business case.
5. The buyer is thinking… Buy vs. Build
Once an established player decides they need a new capability (or need to get stronger within an existing area), the next question is, should we buy or build?
At face value, building seems obvious. Big companies have the talent, capital, and reach. But that overlooks a few critical reasons why acquisition often wins.
Take Strava’s recent acquisition of Runna. They could have built a training app. Instead, they bought a ready-made product with a loyal user base, a coaching-focused team, and a brand that already resonated with runners. The deal wasn’t just about features. It was about speed, certainty, and strategic fit.
Here are the top three factors that tip the scales toward buying:
Speed to market: building takes time - acquiring gets you there faster, especially when timing matters.
Lower execution risk: even with top teams, new products can miss the mark. Buying a proven solution significantly reduces uncertainty.
Customer adoption: acquisition targets (life runna) already have the audience, traction, and brand you want. Buying gives instant access and unlocks synergy you can’t build from scratch. That’s why Instagram has retained it’s brand till date and was not called Facebook Videos.
In short, big companies don’t buy because they can’t build. They buy because the right deal is faster, safer, and more effective.
6. Top-down or bottoms-up engagement
One of the most practical questions founders face when positioning for acquisition is: what level in the organisation should engagement focus on?
Should you focus on building relationships with the board, CEO, and corporate development team, hoping they’ll champion the deal internally? Or is it better to start with the operational teams (the people who would use or integrate your product) and leave them to push the deal?
Top-down engagement gives you strategic alignment and decision-making power early on. If a CEO or Head of Strategy believes in your business, they can move quickly and mobilise the right internal teams. But without support from product, tech, or business unit leads, even a well-intentioned exec can face resistance during integration planning or due diligence.
On the other hand, bottoms-up engagement creates operational momentum. When internal champions see your product solving real problems, they can become powerful advocates. But deals can stall without senior buy-in, especially if there’s no clear link to corporate goals or budgets.
In reality, successful M&A positioning rarely follows a clean top-down or bottom-up path. The most effective founders build parallel relationships. Winning over strategic sponsors while earning credibility with operational users. Both are absolutely essential.
7. The 3Vs: effective acquisition equation
The three Vs that make up the acquisition equation for startups
The ideal outcome for founders is an acquisitions that delivers a great financial outcome for investors, management team and other stakeholders. There’s a very simple way to achieve this - create value and be visible to potential acquirers.
To create value, you need to build something that solves a real, pressing problem. Ideally one that a larger player would struggle to solve quickly or cost-effectively on their own. This could mean a differentiated product, loyal user base, unique data, or specialised team.
To be visible, you need to make sure potential acquirers know who you are, what you’ve built, and how it fits into their strategy. That means showing up in the right markets, being part of industry conversations, and proactively building relationships with potential buyers well before you want to sell.
When both are done well, your company becomes not just a good business, but an obvious strategic fit. That’s what drives competitive interest, justifies premium valuations, and leads to exits that work for everyone involved.
Simple but hard to pull off in practice
From the equation above you know what to do but how easy is it to actually pull off?
Many great companies miss their window or settle for suboptimal outcomes because they weren't prepared or visible when it mattered most. Some others have focused on being visible but took their eyes off the ball and performance started to falter.
At 23mile, we work with venture-backed companies who are exploring exits. Whether you need help refining your narrative, identifying the right acquirers, or managing the deal process from first conversation to close, we can support you. If you’re starting to think about your exit, it’s not too early to talk.
Let’s make sure you’re ready when the opportunity comes.