The 10-Step Playbook for Founders When Considering a Micro-Exit
Part 3 in a series on micro-exits and how to do them successfully (#98)
Adam McIsaac is an entrepreneur and startup operator who executed a successful micro-exit. He’s writing a series of deep dives into his experience and best practices for other founders looking to exit their startups. Here’s the first and second posts.
Follow Adam for more on LinkedIn and X.
Welcome to another addition of my guest posts on Focused Chaos. Before I get into it, I'd like to thank those who have reached out with nice things to say about my previous contributions. It means a lot and encourages this non-writer to carry on.
Let's be honest: as founders we begin our startup journeys with no idea how to eventually sell our companies. And why would we? Most of our journey is consumed by figuring out how to hire teams, build products, find customers and raise money. Many of us don’t spend nearly enough time thinking about how we are going to find the right buyer (at the right time), until we have to.
What follows is a 10-step playbook born from my own experience selling Robin, conversations with other founders who've executed similar exits, and the hard-earned wisdom that comes from doing it for the first time and making mistakes along the way.
This isn't theory—it's a battle-tested playbook for founders who want to run a process to find the best outcome for their slow growth business.
The process typically takes between 6 to 12 months from first conversation to close, and the founders that succeed often follow a playbook or process to increase their chances. Good luck.
Step 1: Make an Honest Assessment
Here's what nobody tells you about deciding to sell: the hardest part isn't finding buyers—it's admitting to yourself that your original vision isn't going to work out as planned and you have a slow growth startup.
Most founders I know, myself included, spent months or years in denial before facing reality. We keep moving the goalposts: "If we just hit $X in revenue..." or "Once we close this next hire..." But at some point, you need to step back and assess where you actually are versus where you thought you'd be by now.
This isn't about giving up—it's about making an informed strategic decision based on data, not hope. The best founders I know who've executed successful micro-exits made this shift from emotion to analysis early in their decision-making process.
Revenue Trajectory: If you're seeing steady but slow growth (less than 10% quarter-over-quarter), you're likely in micro-exit territory.
Customer Feedback Patterns: Review your customer success data, support tickets, and renewal conversations. Are customers describing your product as "helpful" and "useful" rather than "essential" or "game-changing"? This language gap often signals a nice-to-have product rather than a must-have solution.
Team Energy Levels: Pay attention to how your team talks about the future. Are they energized by the roadmap, or do conversations feel like damage control? Burnout spreads faster in small teams, and acquirers can sense it during diligence.
Quick-Hit "Should We Sell?" Assessment:
Rate each statement 1-5 (1 = Strongly Disagree, 5 = Strongly Agree):
I consistently hit my internal revenue forecasts
Customers choose us over competitors for reasons other than price
We have enough runway to reach meaningful scale at our current growth rate
I feel energized when planning next year's goals
Our best people are staying because they're excited about our vision
I have real confidence that we can drive consistent revenue growth
If it took another 4 years to get to an exit, I would be excited about that path
If you scored below 21, congratulations—you're not failing, you're facing reality earlier than most founders. That's actually a competitive advantage in the exit market. Buyers prefer founders who are making strategic decisions rather than desperate ones. The sweet spot for micro-exits is an honest assessment of what you've built and what's realistically achievable with your current trajectory.
Hacky Tip: Take an audit of your last 12 monthly investor updates. Count how many times you used phrases like 'slight headwinds,' 'market challenges,' or 'pivoting strategy.' More than 4 mentions means it may be time to consider the path to an exit.
Step 2: Be Real About Your Numbers
Review your ARR, churn and unit economics. Look at your growth trajectory and ask: if we keep this pace for two more years, where do we realistically end up? Could a 1-2x multiple on revenue today be far better than grinding toward a highly uncertain 10x return in a few years?
Write down your minimum acceptable outcome from a micro-exit. What would make the journey feel worthwhile? Not what TechCrunch would celebrate, but what would actually impact your life today and make you proud of what you built. Now compare this with the likelihood of an outsized outcome in a few years. Do the math yourself and assign probabilities.
Hacky Tip: If you can't afford help from a third party to clean up your numbers, use ChatGPT or Claude to build a financial dashboard template. Export your accounting and analytics data to CSV, plug it into the template, and you'll have 80% of what you need to start an engaging conversation with your AI sidekick about the realities of your business.
Step 3: War Game Your Stakeholders
When you’re eventually heads down on due diligence or valuation—you don’t want to get blindsided by a stakeholder who objects at the worst possible moment.
A founder I know had a 7-figure acquisition (from a world class tech company that you know!) fall apart because his cofounder decided to air his discontent about the idea of working at the acquirer… to the acquirer… in the 11th hour. 🤕
As a founder you don't just build consensus; you need to anticipate every possible objection and prepare responses before they're needed.
Think of this as scenario planning for human psychology. Every person on your cap table and in your organization has different motivations, timelines and definitions of success. Your job is to map these out and create strategies for each.
Stakeholder Objection Framework:
First, categorize every stakeholder by their likely reaction to an exit announcement:
Champions: Will actively support and help facilitate
Supporters: Generally positive but may need reassurance
Neutrals: Don't care much either way
Skeptics: Will have concerns but can be convinced
Blockers: Likely to oppose and potentially sabotage
Then prepare responses to what are some common objection patterns:
Co-founders: "We're giving up too early"
Prep: Document all the pivots, missed targets, and market feedback that led to this decision. Show the math on realistic future scenarios.Early Employees: "What about my equity/job security?"
Prep: Model different deal structures and their impact on employee payouts. Research the acquirer's retention policies and integration history.Investors: "The valuation is too low for our returns"
Prep: Calculate their actual returns including time value and opportunity cost. Sometimes a 2x return in year 4 beats a potential 5x return in year 8.
Hacky Tip: Schedule "scenario planning sessions" instead of "we're selling" meetings. Get people thinking analytically before emotionally. It's amazing how much more reasonable people can be when they think they're being strategic consultants instead of recipients of “bad” news.
Step 4: Increase the Negotiation Fuel Tank
Desperation is expensive. Buyers can smell it from across the table, and they'll use it to squeeze every dollar out of your valuation.
You need a runway—not just to survive, but to negotiate from the best position of strength available. The difference between having six months of cash versus three months isn't just three months. It's the difference between considering multiple offers and taking whatever scraps are left on the table.
But don't treat your cash runway as your only source of leverage. Smart founders build multiple forms of leverage before entering into exit conversations—some more obvious than others.
Time Leverage: 6+ months of runway is decent, but also consider seasonal factors. If your business has strong Q4 performance, starting conversations in Q3 gives you data momentum heading into negotiations.
Option Leverage: Multiple interested parties, even if they’re not all serious. The perception of competition drives urgency and better terms.
Information Leverage: Deep knowledge of the buyer's strategic needs, competitive pressures, and internal timelines. This lets you create offers and emphasize points that matter most to them.
Relationship Leverage: Existing partnerships, customer overlap, or mutual connections that make the deal feel natural rather than transactional.
If required, get creative about extending your runway. Offer customers discounts on long term contracts if needed. When selling Robin, I had to start our sale process when we were dangerously low on cash because of Covid. It limited our options and forced us to consider limited offers. Don't be us.
Hacky Tip: If you're running on fumes and need additional capital (quickly!) to fund your sale, consider offering existing investors a capped SAFE that only converts if you close an exit above a certain threshold within 12 months. Frame it as insurance, not desperation.
Step 5: Get Your House in Order
Nothing says "amateur hour" like a messy data room. If you want buyers to see your company as an asset worth acquiring rather than a favor they're doing you, get organized.
Clean financials are essential—defensible revenue recognition and clear unit economics.
Legal basics: signed employee agreements, clear IP ownership, no outstanding issues.
Build a virtual data room that's organized and complete. Finance, legal, product, HR, commercial agreements—everything a buyer might want to see. Test it with a friendly investor or advisor. If they can't find what they're looking for quickly, neither will a buyer.
The "Minimum Viable Exit Package" Checklist
Before moving to Step 6, make sure you have these four documents ready:
12-month financial summary (revenue, expenses, cash flow)
Customer list with contract values and renewal dates
Cap table showing all shareholders and percentages
Ten-page business overview with key metrics and growth trajectory under different scenarios
Hacky Tip: Use Google Drive with a clear folder structure instead of paying for expensive software. Create a "Due Diligence" folder with subfolders for Financial, Legal, Product, etc. Share with view-only access and track who's looking at what with the activity dashboard.
Step 6: Craft Your Story
Buyers don't acquire businesses—they acquire stories about teams, future cash flows, product evolutions and strategic advantages. You need to develop clear, compelling narratives about why acquiring your company makes sense. Not why it makes sense for you (though that's important too), but why it makes sense for them.
For each thesis, we built a simple ROI story: the cost to build versus buy, the revenue opportunity, and the timeline to payback. We even went so far as to mock up what our product would look like with potential acquirers' branding and positioning.
Your job isn't to convince buyers they need you—it's to make it easy for them to convince themselves. Give them the ammunition they need to sell the acquisition internally.
Hacky Tip: Record a 3-minute Loom video walking through your product with the potential buyer's branding photoshopped in. It costs nothing but gives them a visceral sense of what the integration could look like. Way more powerful than a static deck.
Step 7: Use Customer Intros Smartly
Your customers are your most powerful sales weapon—but only if you deploy them strategically. The wrong customer reference kills a deal faster than bad financials, while the right customer advocate overcomes almost any buyer objection.
Most founders treat customer references as an afterthought, bringing them in only when buyers specifically request them. Smart founders use customers proactively to build conviction and urgency throughout the process.
Not all customers make good references. You want customers who can speak to specific outcomes and have credibility with your target buyers. Here's your ideal customer advocate profile:
Results-Oriented: Can articulate specific ROI, time savings, or revenue impact from using your product
Industry Credibility: Well-known in your space or at companies your buyers respect
Articulate Speakers: Comfortable on calls and can tell a compelling story
Stable Relationship: Happy with your service and unlikely to churn during the sale process
Orchestrating Customer Conversations
Here’s how to make sure customer conversations go well:
Pre-Call Preparation: Brief your customer on the buyer's background, industry and likely concerns. Share 2-3 key points you'd like them to emphasize, but let them tell their story authentically.
Strategic Timing: Introduce customers at moments of doubt, not momentum. When a buyer seems hesitant about technical feasibility or market fit, that's when a customer voice carries maximum impact.
Manage the Conversation: Join the call but let the customer drive. Your role is to facilitate, not sell. Ask questions that help the customer elaborate on points that matter to the buyer.
Hacky Tip: Create a "customer story bank"—short written summaries of each customer's results, implementation timeline and key quotes. This helps you quickly match the right customer story to each buyer's specific concerns or use cases.
Step 8: Look for Deal Killer Red Flags
As founders we sometimes focus so much on getting to "yes" that we miss the warning signs that a deal is about to die. Learning to read these process signals early can save you months of wasted effort and help you pivot to better opportunities.
Red Flags Checklist
Watch for these warning signs that indicate a deal is likely to stall or die:
🚩 Due diligence requests become sporadic or stop entirely
🚩 They postpone key meetings multiple times
🚩 Legal teams aren't engaged after LOI signing
🚩 Integration planning discussions are avoided or vague
🚩 Responses take longer than 48 hours consistently
🚩 You're always the one initiating follow-up conversations
🚩 Decision timelines keep extending without clear reasons
When you spot red flags: Don't panic, but do investigate.
Ask direct questions: "I've noticed the pace has slowed—are there concerns I should be aware of?"
Often, addressing issues head-on can resurrect a deal. If not, you'll know to focus your energy elsewhere.
Hacky Tip: Track deal momentum with a simple weekly score (1-10) based on responsiveness, resource allocation, and progress. If your score drops below 6 for two consecutive weeks, start prioritizing other opportunities.
Step 9: Understand Your Real Take-Home—The Economics of Small Exits
Don’t get caught up focusing on headline valuations instead of actual dollars in the bank account when the deal is done. In micro-exits, the deal structure often matters more than the purchase price, and understanding the math upfront prevents nasty surprises at closing.
The Founder's Take-Home Formula:
Your actual payout = (Enterprise Value × Your Ownership %) - (Liquidation Preferences + Transaction Costs + Tax Obligations + Earnout Risk)
Let's break this down with a real example:
Scenario: $8M acquisition, founder owns 65% after raising $2M seed at $8M post-money valuation
Gross Proceeds: $8M × 65% = $5.2M
Liquidation Preference: $2M (seed investors get paid first)
Net to Founder: $5.2M - $2M = $3.2M
Transaction Costs: $200K (lawyers, finance, due diligence)
Est. Taxes and/or Capital Gains (40%): ~$1.2M (assumes QSBS in US or LTCG exemption in Canada doesn't apply)
Final Take-Home: ~$1.8M before earnouts
Earnout Reality Check: Many micro-exits include earnouts—additional payments based on hitting future milestones.
Depending on the targets these can be very lucrative for the founders. That said, you can treat these as lottery tickets until they come to fruition as they’re not guaranteed income.
Deal Structure Considerations:
Cash vs. Stock: All-cash deals provide certainty but may be challenging to secure and can limit upside. Stock deals add risk though, so be wary.
Employment Terms: Most micro-exits require at least 1-3 year employment commitments. Negotiate your role, compensation, and exit clauses carefully.
Acceleration Triggers: Ensure your equity accelerates if you're terminated without cause post-acquisition.
You may end up dealing with an acquirer that is restricted in what they can offer the business (and as a result to your shareholders) but has far greater flexibility for employment contracts / golden handcuffs. Finding the right balance is key so all parties benefit.
Hacky Tip: Create a simple spreadsheet modeling different deal structures and their after-tax impact. This helps you evaluate offers objectively and negotiate more effectively. Remember: a $5M cash deal today might be worth more than an $10M cash and stock deal with 50% earnout.
Step 10: Manage the Marathon
Once you have a signed letter of intent, the real work begins. Due diligence isn't just about answering questions—it's about keeping all parties excited, maintaining momentum and controlling the narrative.
At Robin, I made sure to check in with our acquirer on a weekly basis about more than the deal terms. I wanted them to stay excited about the work we would do together, the customers, how we’d work together, etc. We even talked about where we’d get a nice dinner after it was all said and done.
Set up systems to respond to information requests quickly. If you take longer than 48 hours to respond to something you give buyers time to second-guess their decision or find reasons to renegotiate.
Hold regular check-ins with the buyer's team to address concerns before they become deal-killers. Keep your internal team focused and motivated—due diligence is exhausting, and it's easy for people to lose steam.
Remember: deals are like romantic relationships. Most don't die in dramatic explosions. They die from slow leaks of momentum and enthusiasm.
Hacky Tip: Use a simple Airtable or Notion tracker to log every due diligence request, who's responsible, and deadline. Set Slack reminders for 12 and 24 hours before each deadline. Staying organized costs nothing but can save your deal.
The Reality
Selling your company will likely be one of the hardest things you'll ever do. It's emotionally exhausting, financially complex, and filled with moments where you'll question whether you're making the right decision or will ever see the light at the end of the tunnel.
But here's what I've learned: a well-executed micro-exit can often be far better than grinding for years toward a unicorn outcome that is unlikely to materialize. While your friends building "the next big thing" are still pitching investors, searching for 10x growth and surviving on hype, you could be in a much different position, licking your startup wounds and planning your next $10M exit.
Sure, you won't be featured on the cover of Forbes or invited to speak at TechCrunch Disrupt. But you know what's better than another vanity news story? Financial security for you and your family, a W (win) on the board, a new career challenge and the experience to do it better the next time around.