When Should A Board Consider Selling A Company?

I recently spoke with the founder of a cybersecurity company that had raised roughly $30 million. I asked him whether the company and board had started thinking about a potential M&A process. His answer was telling. “Not really,” he said. “When my board is in the mood, I will reach out and we can…

I recently spoke with the founder of a cybersecurity company that had raised roughly $30 million. I asked him whether the company and board had started thinking about a potential M&A process. His answer was telling. “Not really,” he said. “When my board is in the mood, I will reach out and we can discuss a process.” What I heard was something different: When things start going south, or when the VC is stressed about liquidity (typically five years in) we will think about selling. That is how many boards approach M&A. They treat it as a fallback plan in case growth slows, cash tightens, or strategic options narrow, and an escape route later on when liquidity is needed to pay back LPs. But by then, the company’s leverage may already be gone. The first signal is often the most counterintuitive: Everything is going exceptionally well When revenue is growing rapidly, customers are happy, retention is strong and the leadership team is excited about the future, selling is usually the last thing anyone wants to discuss. Yet this is often when companies command their highest valuations. Strategic acquirers pay premiums for momentum. They want businesses that are winning markets, not struggling businesses trying to survive. Boards should periodically ask themselves a difficult question: If we are currently operating from a position of maximum strength, should we at least understand what the market might pay for the business? A second signal emerges when the founder begins losing energy In many growth-stage companies, the founder remains the primary driver of vision, product strategy, recruiting, customer relationships and culture. After a decade or more of building a company, it is not unusual for founders to begin thinking differently about their future. That does not automatically mean the company should be sold. In some cases, a CEO transition may be appropriate. In others, a secondary transaction can provide liquidity to founders and reduce the pressure to pursue a full exit. However, boards should not ignore founder fatigue. If the founder’s personal objectives are changing, that reality should become part of the strategic discussion long before it begins affecting company performance. A third signal occurs when buyers begin calling Many CEOs dismiss inbound acquisition interest because they believe their company is still too early to sell. While that may be true, repeated inbound interest often contains valuable information. Strategic buyers spend significant resources analyzing markets, technologies and competitive dynamics. When multiple buyers independently express interest, it may signal that the company occupies a more valuable strategic position than management realizes. This does not mean launching a formal process. It means listening. Understanding why buyers are interested, how they view the market, and what strategic value they see can help boards better assess their options. Sometimes the market identifies value before the company itself does. Ironically, the situation that most often triggers discussions about selling may be the weakest reason to pursue it When growth slows, competitors appear stronger, or cash reserves begin shrinking, boards frequently turn their attention toward M&A. The logic seems straightforward: If the company is struggling, perhaps it should be sold. Unfortunately, buyers can see the same challenges. When a company enters the market because it is running out of options, valuations typically reflect that reality. Acquirers gain negotiating leverage, and shareholders often receive less attractive outcomes than they expected. In many situations, a strategic reset may create more value than an immediate sale. A product pivot, leadership change, market repositioning or operational turnaround can restore momentum and dramatically improve future strategic options. What I have observed from conversations with CEOs and boards is that many begin thinking about selling precisely when they should be thinking about reinventing. Meanwhile, the strongest exits often begin when nobody feels urgency to sell at all. In my mind, the role of a board is to actively avoid inertia, and continuously evaluate whether selling, scaling, pivoting or remaining independent creates the most value for shareholders. The best time to have that conversation is usually before circumstances force it. Itay Sagie is a strategic adviser to tech companies, investors, CEOs and boards, specializing in strategy, growth and M&A. He is a guest contributor to Crunchbase News and a university lecturer on strategy, finance and entrepreneurship. Learn more at SagieCapital.com and connect with him on LinkedIn. Related reading: Your AI Strategy May Be Destroying Your Exit Value Illustration: Dom Guzman

Source: Crunchbase News — Published August 19, 2026 at 11:00 UTC — Category: Business