Exit Planning for Startup Acquisition | Tory Burch Foundation

You’ve heard of the pay gap, where women in the U.S. earn 83 cents for every dollar a man makes. You may be familiar with the fundraising gap, too—venture capitalists funnel just two percent of their investment dollars to women-founded startups.   

But did you know there’s also an exit gap? The stat is just as sobering: women-owned businesses extract less than one percent of total exit value today. The good news? It doesn’t have to be this way.

Just ask Carrie Kerpen, a.k.a. the Exit Whisperer. After launching, scaling, and selling a social media agency for eight figures in 2021, Kerpen launched The Whisper Group, an advisory firm helping women navigate exit planning She’s cracked the code on how to prep early, position smart, and walk away with the highest possible valuation—and she shared her knowledge with us in a webinar session. 

NETWORK EARLY AND OFTEN.

Think about who your ideal partners would be, create a running list, and start building relationships. Instead of saying up front that you’re looking to be acquired, Kerpen recommends a casual networking approach—three to five years before your planned exit. 

“Keep it light,” she said. “‘Hey, I’d love to get on your radar, share where I am today, and learn about where you are in your growth trajectory.’ That’s code for acquisition merger.” 

As you get closer to the exit date, then you can be more direct about actively exploring acquisition opportunities. 

EXIT PLANNING IS MORE THAN BUSINESS READINESS. 

A smart exit strategy looks beyond the dollars. A windfall is great, but it doesn’t account for one’s personal readiness—or lack of. “The business is our identity, who we are in the community, and people often feel a deep sense of loss,” said Kerpen, noting that 75% of business owners experience profound regret one year after the sale.

That’s why she emphasizes a happy, healthy exit and designed a seven-step roadmap to make it happen. It follows the acronym, yes, WHISPER and applies to any exit path, whether you’re selling to a co-founder, creating an ESOP (employee stock ownership plan), or working with a strategic buyer. 

W IS FOR WHY.

First things first: get clear on why you want to exit, when you want to exit, and for how much. Don’t pick a target valuation out of thin air; make sure you have a rationale for it (more on this below). It’s also important to think about what you want to do next, even if it’s only a general idea. This not only helps you move forward, it helps articulate what you want to your acquirer as well. 

H IS FOR HOW.

How do you arrive on that would-be exit figure? Start with market multiples, which value your business by comparing its profit, usually EBITDA, to similar companies that have sold. Your business’ worth is calculated by multiplying your EBITDA by a factor—the multiple—that reflects what acquirers typically pay for companies like yours. These multiples are not in your control; they’re determined by the market and change with time. 

Remember, every business category has a value range—e.g. e-commerce companies might sell for three to six times EBITDA—and where you land is entirely within your control. Check databases like PitchBook or industry-specific reports, such as Acquire.com for tech and SaaS, to find your range. 

I IS FOR INCOME.

Your income should be recurring, expected, diversified—or, to use another Kerpen acronym, RED. Even if you’re selling in a tough year, these three factors will boost your business’ value. 

• Recurring: Customer retention is key. The more locked in your customer is, like with a subscription, the better. One-time sales won’t cut it. 
• Expected: Can you forecast with ease? If your revenue is predictable—and you have a system for how that growth happens—you may be evaluated on those future earnings, not just the past 12 months. 
• Diversified: Simply put, don’t put all your eggs in one basket. 

S IS FOR SECRET SAUCE.

This is your company’s competitive edge. What do you have that no one else does? If you’re unsure, use the below to guide you. 

• Why do your customers choose you, and keep showing up? Ask them. 
• Why does your staff stay? Find out why they work there, what they love about it, and what makes you better than past employers.
• What makes your competitors different or interesting? Does your company fill in a white space, a gap in the market? 

Once you’ve established your secret sauce, review it every six months. The beauty of these questions is that they ensure everything is measurable so you can adjust to get back on track if anything changes. 

P IS FOR PROFIT.

Know the industry averages for your business. Are you better? Where can you improve your margins while maintaining a happy, healthy business? 

Don’t get complacent and let things slip through the cracks. In a fast-growing business, revenue can hide a lot of problems. Examine your P&Ls regularly, and don’t be afraid to go line by line. At the end of the day, your profits determine your valuation and, even if you delegate finances, you absolutely have to stay on top of your numbers. 

E IS FOR EXECUTIVE TEAM—OR ECOSYSTEM.

When it’s time to sell, buyers want to know the business can thrive without you. Your executive team should be strong, grounded in trust and incentivized for the exit. Avoid empty promises. Prioritize transparency and clarity. But be discreet beyond your core group, especially as you actively go to market, or you risk losing employees and clients. 

Solopreneurs

In lieu of a team, set up a strong ecosystem. Have clear standard operating procedures you can pass on. 

R IS FOR ROAR FACTOR.

“The reality is, 80 percent of our net worth is likely tied up in our business,” said Kerpen. “I know mine was, and so, when I’m standing in a room full of men negotiating the biggest deal of my lifetime for 80 percent of my net worth, it’s really, really hard and scary.” The key is to be confident in what you want, and don’t measure your success against somebody else’s. Have the courage to rise above the noise and choose happiness. And when the tough questions come, be ready. Your business should hold up when under fire. 

THE LAST ACT: LETTING GO. 

Yes, legacy matters, but you have to recognize that once you sell the business, it’s out of your control. “This can be a hard pill to swallow,” said Kerpen, who described the experience of selling her own agency as “a sort of mourning.”

What helps? Picking the best partner you can. Being transparent. And focusing on an exit that’s happy, healthy, and on your own terms.