Startup Exit Readiness Assessment — Free Founder Tool

Q: When is the right time to sell a startup?

The best time to sell is when you don't have to. That means: growth is still accelerating (buyers pay for momentum, not history), your sector has active M&A (strategic buyers compete with PE for assets), and your business is operationally independent of you personally. Most founders wait too long — they sell after growth flattens, when leverage is lowest. The second-best time is before a down round or when a strategic acquirer enters your market. Read our guide on when to sell for a full framework.

Question 1 of 9

Question 1 of 9 · Revenue Stability

How would you describe your primary revenue model?

Acquirers pay the highest multiples for predictable, recurring revenue. Project-based or lumpy revenue is discounted 30–50% vs. equivalent ARR businesses.

Subscription / SaaS — mostly MRR/ARR with low churn

Mixed — recurring contracts plus some one-time deals

Project-based — revenue varies significantly quarter to quarter

Mostly one-time or transactional revenue

Question 2 of 9 · Founder Dependency

What happens to revenue if you step away for 6 months?

Founder dependency is one of the top reasons deals fall apart or get repriced. Buyers need confidence the business runs independently of any single person.

Business continues normally — we have a strong management layer

Mostly fine — some key relationships depend on me but operations are handled

Significant disruption — revenue and/or operations would suffer materially

Business stops — I am the product, the sales, and the delivery

Question 3 of 9 · Customer Concentration

What percentage of revenue comes from your largest customer?

High concentration = high risk. If your top customer represents more than 20% of revenue, acquirers will apply a discount — or make the deal contingent on retention of that customer post-close.

Under 10% — highly diversified customer base

10–20% — manageable concentration

20–40% — meaningful risk that acquirers will flag

Over 40% — single customer dominates the business

Question 4 of 9 · Data Room Readiness

How organized are your financials and legal documents?

A clean data room (audited financials, clean cap table, signed contracts, IP assignments) can shorten a deal timeline by 2–3 months and prevent last-minute price reductions in diligence.

Fully organized — P&L, balance sheet, cap table, contracts all current and clean

Mostly there — financials are current, a few loose ends to clean up

Partial — books need work, some contracts informal or missing

Not ready — would need 3+ months to get organized

Question 5 of 9 · Team Retention

Do your key employees have retention agreements or equity vesting post-close?

Acquirers often value the team as much as the product. If key engineers, salespeople, or operators can walk on day one post-acquisition, it reduces what the acquirer is actually buying.

Yes — retention bonuses and/or unvested equity keep key people through the deal

Partially — some key people have equity, but we haven't structured for an acquisition

No — team could leave at any point post-acquisition without penalty

N/A — solo founder, no employees

Question 6 of 9 · Growth Trajectory

How would you describe your revenue growth over the last 12 months?

Buyers pay for trajectory, not history. A company growing 60% is worth significantly more than an identical company at 10% growth — because the acquirer is buying future cash flows, not current ones.

Accelerating — growth rate is increasing quarter over quarter

Strong and stable — growing 30%+ consistently

Moderate — growing 10–30%, rate is roughly stable

Flat or declining — growth has stalled or reversed

Question 7 of 9 · Market Timing

How active is M&A activity in your sector right now?

Acquirers compete. When strategic buyers and PE firms are actively acquiring in your space, you have pricing power. In slow markets, buyers set terms. Timing matters as much as quality.

Very active — I see deal announcements in my space regularly

Moderate — some activity but not a hot market

Quiet — I'm not aware of many deals happening in my category

I don't know — haven't tracked M&A activity in my sector

Question 8 of 9 · Legal Cleanliness

Is your IP clearly owned by the company, with no pending litigation or compliance issues?

IP disputes, pending lawsuits, or unclear ownership of core technology are deal-killers. Acquirers won't close on legal ambiguity — they'll either kill the deal or escrow a large portion of proceeds.

Clean — IP is assigned, no litigation, no compliance flags

Mostly clean — a few minor items to close out, nothing material

Some issues — IP ownership unclear for parts of the product, or there are open disputes

Significant issues — pending litigation, regulatory exposure, or major IP uncertainty

Question 9 of 9 · Competitive Positioning

How would you describe your competitive moat?

Acquirers buy defensibility. A company with a clear moat — proprietary data, network effects, brand, or entrenched switching costs — commands a meaningfully higher multiple than a feature-equivalent commodity product.

Strong moat — proprietary data, network effects, or deep switching costs

Meaningful differentiation — we're not a commodity, but moat isn't structural

Some differentiation — better product, but competitors could replicate with effort

Commodity — we compete primarily on price or speed, no durable advantage

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Breakdown by Dimension

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Exit readiness, answered

How do I know if my startup is ready to sell? +

Exit readiness depends on several factors: revenue stability (recurring vs. project-based), founder dependency (can the business run without you?), customer concentration (no single customer should exceed 30% of revenue), financial organization (clean books, cap table, IP ownership), and team retention (key employees protected by agreements). The more of these boxes you check, the stronger your negotiating position. Use the assessment above to score your startup across all nine dimensions.

What do acquirers look for in a startup acquisition? +

Acquirers primarily look for: (1) Revenue quality — MRR/ARR with low churn beats project revenue; (2) Founder independence — a business that breaks when you leave is a risk, not an asset; (3) Clean legal and financial records — messy cap tables, unowned IP, or pending litigation reduce price or kill deals; (4) Team stability — key employees who leave at acquisition destroy post-close value; (5) Defensible positioning — a clear moat justifies premium multiples. Each factor can add or subtract 1–3x from your final valuation.

When is the right time to sell a startup? +

The best time to sell is when you don't have to. That means growth is still accelerating, your sector has active M&A (strategic buyers competing with PE for assets), and your business is operationally independent of you. Most founders wait too long — they sell after growth flattens, when leverage is lowest. The second-best time is before a down round or when a strategic acquirer enters your market. Read our full guide on when to sell →

Are you ready to sell?