Step 1: Start Early—The 5-Step Framework for Founders to Build a Strategic and Successful Exit
Building Trust, Creating Synergies, and Positioning Your Startup for a Strategic Exit
Summary: Preparing for a startup exit begins well before you need to, and Step 1—"Start Early"—is the foundation for building trust, creating synergies, and unlocking maximum value.
This write-up is a deep dive into Step 1 of a 5-step framework I presented in the last newsletter. The five-step framework is:
Start early: Give yourself at least a year to prepare.
Know your value: Craft a compelling 1+1=3 pitch.
Hire experts: Build a team and trust them.
Stay transparent: Keep finances clean and honest.
Detach emotionally: Focus on the process, not the outcome
What’s this about?
Most founders only think about an exit when it’s already too late.
This newsletter explores why starting early is critical for a strategic and successful exit.
You’ll learn how to build relationships with key players, map your ecosystem, and avoid the pitfalls of rushing into M&A unprepared.
Here’s the question: What practical steps can founders take today to ensure they’re ready for an exit tomorrow?
Please keep reading to find out the answers.
Why Early Preparation Is the Foundation of Success
Getting caught up in the day-to-day grind of building a startup is easy.
You should never be thinking of an exit; you should be focused on building a great company. If you build a great company, an exit is a natural outcome.
The axiom, “You don’t wait to raise money until you need to,” has an equivalent in the world of exits. Most founders are so focused on growth that they leave exit planning until it’s urgent—and that’s a mistake. Waiting until you’re desperate limits your options, reduces leverage, and can force you into a deal that doesn’t reflect your actual value.
Think of an exit as planting seeds. Relationships and opportunities take time to mature, and starting early allows you to build a solid foundation.
So, you should act and behave in such a way that positions your startup for an exit if it happens to happen and aligns with the next phase of your company.
The Ecosystem Mindset
You might be thinking: “How do I even start preparing for something I’m not planning right now?”
Here’s the thing about early preparation: It’s not about chasing an exit—it’s about building partnerships. By shifting your mindset, you focus on understanding your niche within the ecosystem and creating synergies with potential suitors.
Take inspiration from Charlie Munger: just as animals thrive in ecological niches, startups flourish by mastering their specific place in the market. The better you know your niche, the more valuable you become to bigger players who lack your specialization.
In this phase, your mission is to map the top 30 companies in your ecosystem and split them into tiers of complementarity—then begin building trust.
Building Relationships That Matter: The Arranged Marriage Approach
Preparing for an exit isn’t about a shotgun wedding but an arranged marriage.
Think of the process as a journey of getting to know potential suitors—not for an immediate deal but to build a long-term connection. In an arranged marriage, families and individuals spend time understanding each other’s values, strengths, and compatibility. Similarly, founders must approach ecosystem players with curiosity, trust-building, and patience.
Here’s how you apply this metaphor to your business:
Start with introductions: Identify 5-8 top-tier companies that complement your business and open the door to conversations. Find the key people—partner managers, M&A leaders, and product heads—and reach out. This isn’t about selling; it’s about showing up, learning about their challenges, and sharing your vision.
Build relationships over time: Quarterly touchpoints are ideal. Think of these as family visits. You’re not rushing to propose; you’re there to deepen mutual understanding. Talk about your progress, share insights, and explore where synergies might naturally arise.
Look for opportunities to “date”: In this metaphor, dating could look like co-hosting a webinar, collaborating on a customer success story, or discussing potential integrations. These joint efforts help you test compatibility without the pressure of a commitment.
The arranged marriage metaphor underscores a key point: This process is not about rushing toward the altar. It’s about building trust, understanding each other’s strengths, and naturally aligning goals over time.
By approaching relationships this way, you lay the groundwork for a potential acquisition not out of desperation but genuine synergy. When the time comes, these relationships feel less transactional and more like a natural progression of shared goals.
The question is: Are you willing to invest in this process now, even if an acquisition isn’t imminent?
The Reality Check: Balancing Optimism with Realism
Founders are natural optimists, but early preparation demands a balance of hope and hard truths.
Set aside time once a month to view your business from a pessimist’s perspective.
Ask:
What is the risk in your business?
How does your financial health stack up?
Are your processes clean and scalable?
What does the macro-environment look like? (Recession around the corner?)
What does the fundraising environment look like?
How does your runway stack up?
What is the product market traction look like?
Calibrate this by speaking with investors, advisors, and founders at similar stages. Their insights can reveal blind spots and help you adjust your strategy.
By combining realism with action, you’ll stay grounded while still positioning your startup for success.
Conclusion: What Starting Early Gives You
Starting early isn’t just about avoiding mistakes but creating opportunities.
Key takeaways:
Map your ecosystem and build relationships before you need them.
Allocate regular time to connect with potential partners and stay top-of-mind.
Balance optimism with realism to refine your strategy and readiness.
When you begin early, you don’t rush for the exit—you prepare thoughtfully, strategically, and confidently.