Exit Timing: Why the Best Exit Isn't Always the Highest Offer
When we were building toward the Sleepme exit, we received three offers before the one we ultimately accepted. Two of them were for more money.
We said no.
This surprises people. The assumption is that an exit is a financial transaction and the goal is to maximize the number. In our experience, that assumption leads to bad decisions — and sometimes to exits that founders regret for years.
What an Exit Actually Is
An exit is not the end of a story. It's a transition — from one chapter of a business to the next. The question is not just "how much" but "to what." What happens to the business after the transaction? What happens to the team? What happens to the customers? What happens to the founders?
These are not soft questions. They have hard financial consequences. A business sold to the wrong buyer at a high multiple can destroy value faster than it was created. A business sold to the right buyer at a fair multiple can compound for years after the transaction.
Why We Said No to Higher Offers
The first offer we declined was from a strategic acquirer who wanted to fold the brand into their existing portfolio and discontinue the standalone product line. The number was attractive. The outcome for the business, the team, and the customers we had spent a decade building relationships with was not. We said no.
The second offer we declined was from a financial buyer who had a history of aggressive cost-cutting post-acquisition. Their thesis was to buy, cut, and flip. The multiple was higher than what we ultimately accepted. The likelihood that the business would survive the process intact was low. We said no.
The offer we accepted was from KKR — not because it was the highest number, but because the investment thesis aligned with what we had built and where we wanted the business to go. They wanted to scale the business, not strip it. They brought operational expertise and capital to accelerate growth, not extract it.
The Criteria That Actually Matter
After three exits, here is how Todd and I think about evaluating an offer:
Buyer intent. What does the buyer plan to do with the business? A strategic acquirer who wants to integrate your product into their platform is a very different outcome than a financial buyer who wants to grow and sell. Neither is inherently better — but you need to know which one you're dealing with.
Business continuity. What happens to the team, the brand, and the customer relationships? If these are important to you — and they should be, both for ethical reasons and because they affect the earnout — you need to negotiate for them explicitly.
Timing relative to the growth curve. The best time to sell is when you have momentum, not when you need to. A business sold at $10M with 40% year-over-year growth will command a dramatically better multiple than the same business sold at $12M with 10% growth. Timing the exit to the growth curve is one of the most important and most underappreciated exit decisions.
Founder role post-close. What is expected of you after the transaction? A full exit with a clean break is a very different experience than a 3-year earnout with operational responsibilities. Both can be right depending on your goals — but you need to be honest with yourself about which one you actually want.
Building for the Exit You Want
The founders who get the best exits — on the best terms, to the best buyers — are the ones who built for optionality. They built businesses that could run without them. They built financial systems that made due diligence clean. They built customer relationships that transferred. They built teams that could execute post-close.
These are not exit preparations. They are the characteristics of a well-run business. The exit is the reward for building well.
If you want to know where your business stands on the dimensions that determine exit readiness — and exit multiple — the Free Growth Scorecard will give you a clear picture in 5 minutes.
