The Toughest Sell

A Founder's Guide to Startup Exits

by Derek Z. H. Yan

It was May 15th, 2024. My mom's 60th birthday. Instead of planning a birthday message, I was checking my phone for an acquisition term sheet from a $50 billion company. Unfortunately, when I finally got the email, it was not the yes or no response I had been hoping for.

It took almost four years before we finally found the right buyer. I wished a book like this existed at the time. If you are going through an M&A as a founder or are curious about my journey, I hope this book will be helpful to you.

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Table of Contents

Foreword

Part I: Before You Begin

1. Chances Are, It is Already Too Late 2. An Exit is Not the Silver Bullet You've Been Looking for 3. It's Not You, It's the Acquirer 4. Caught Off Guard: Handling M&A Inquiries Before You're Ready 5. Manufacturing an M&A Market When None is There 6. Know Thyself 7. Sell for the Right Reasons 8. Rewire Your Brain: Getting Into Exit Mode 9. Prepare for the Most Likely Case of No Acceptable Offer 10. Valuation Fantasies and the Art of Disappointment 11. Get Your Personal Finances in Order 12. Herding Cats: Aligning Spouses, Cofounders, Investors, and Employees 13. Paint the Walls: Nobody Buys a Fixer-Upper 14. Come Up with an Outreach List of Potential Acquirers 15. Outbound Slide Decks: Incomplete Canvas with Details To Be Filled In 16. Should You Hire a Banker? 17. Find a Law Firm Who Knows M&A 18. Get Your (Data) Room in Order 19. Checklist Before Engaging with Potential Buyers

Part II: The Opening Moves

20. Don't Forget You Still Have a Company to Run 21. Engage Inbound, Lean In and Learn 22. The Inside View from an Inbound Reach Out 23. Activate Outbound, Plant the Seed 24. The Inside View from an Outbound Reach Out 25. Expect Radio Silence from Outbound Reach Outs 26. First Meetings Are Typically Smoke Tests 27. Second Meetings Are When Things Get Real 28. Should You Run an Official Process? 29. Common Pitfalls in the Opening Game

Part III: The Middle Game

30. The $$$ Expectation Alignment Conversation 31. Initial Due Diligence 32. Key Employee Interviews 33. Surviving the Middle Game 34. Staying in the Race

Part IV: Managing a Losing Position

35. It's Not You, Not Your Bankers, Not Your Board, It's the Market 36. There is No Shame Approaching Your Competitors 37. Act on What You Learned 38. Managing Stakeholders When You Can't Sell 39. What Not to Do 40. It's Okay to Shut it All Down, But Do it On Your Own Terms

Part V: The End Game

41. Pre Term Sheet Negotiations with the Buyer 42. Term Sheet Received - Where to Go from Here 43. Term Sheet Signed, Start of a Thousand Paper Cuts 44. More Negotiations with the Buyer 45. 280G Analysis 46. What to Do When the Buyer Stops Answering Emails 47. Final Definitive Agreement 48. Final Approval Process 49. Where the Deal Could Still Blow Up 50. Closing It Out

Part VI: Aftermath

51. Finding What Brings You Joy Again 52. Thank Those Who Helped You Along the Way 53. Your Best Days Are Ahead

Epilogue

Note: Many readers on Hacker News expressed a preference for the raw, non-LLM-edited version of this book. You can read the unedited manuscript here.

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© 2024-2026 Derek Z. H. Yan. All rights reserved.

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