Founder exit guide
Founder exit guide
Overview
A full sale ends your ownership. Growth equity extends it with someone else's money and expectations. Between them sit partial liquidity and non-dilutive debt. The right answer depends on your number, your timing and what you want to be doing in three years.
Founders usually arrive at this decision from one of two directions. Either a buyer or a fund has approached and the question is whether to take the offer, or the business has reached a point where the next stage needs more capital, more management or more risk than the founder wants to carry alone. In both cases the instinct is to start with valuation. The better starting point is personal: how much money you need, how much control you want to keep, and how long you are prepared to stay.
A full sale converts everything to cash now and hands over control. Growth equity sells a minority stake, keeps you in charge, puts money into the business or into your pocket, and brings an investor who expects a further exit within a few years at a higher price. Partial liquidity and non-dilutive debt sit between the two: cash off the table without handing over the company, at the cost of either some equity or a repayment schedule.
This guide sets out what each route gives you and costs you, how the structures work, and a way of deciding that starts with you rather than with the multiple.
The options
Each is a different deal with a different investor, a different structure and a different life afterwards.
All of the equity changes hands, usually to a trade acquirer or a private equity buyer. You receive the price, less any deferred or conditional element, and control passes on completion. It is the cleanest outcome for a founder who wants out, and the hardest to reverse. The price reflects what the business is today, not what it might become under your leadership.
A minority investment, commonly between twenty and forty percent, from a fund that backs the plan and expects an exit within three to five years. The money goes into the business, to you, or both. You keep control of day to day decisions, but the shareholder agreement gives the investor a board seat, consent rights over major decisions and, usually, the right to force a sale after an agreed period.
Selling part of your holding without selling the company. A secondary sale to a growth investor, a minority buyout, or a recapitalisation that borrows against the business to pay you a dividend. It answers the founder who has most of their wealth in one asset and would like to sleep at night. The cost is dilution, debt, or both, and a new shareholder with a view on the exit.
A lender or credit fund advances money against recurring revenue, with no equity given up. Terms are usually a few years, with covenants on revenue, retention and cash, and a repayment schedule the business has to carry. It suits a profitable or near profitable business with predictable ARR, and it is the option founders most often overlook because nobody is marketing it to them.
Every option except a full sale brings a new shareholder or lender with rights. Read the consent matrix, the board composition, the drag and tag provisions and the exit timetable before the headline terms. A growth investor who can force a sale in year four has, in practice, decided your exit date. That may be exactly what you want. It should not be a surprise.
Start with the number you need to be secure, then the role you want in three years, then the capital the plan needs. A founder who needs the number, wants out and has a credible successor should run a sale. A founder who believes the business will be worth three times more and wants to lead it there should raise growth equity or debt and keep the equity. Most founders sit between those, which is where partial liquidity earns its place.
Situations
Start with what you want in three years. The structure follows from that, not the other way round.Why the decision is personal before it is financial.
FAQ
Growth equity is a minority investment in a business that is already working, where the founder keeps control and the fund backs a growth plan. Private equity in the usual sense is a buyout, where the fund takes a majority and the founder becomes a minority shareholder with a role. Both are private capital. They are different deals with different lives afterwards.
Yes. A secondary sale of part of your holding to a growth investor, a minority recapitalisation, or non-dilutive debt raised against recurring revenue all release cash while you keep control. Each has a cost: dilution, a new shareholder with exit rights, or a repayment schedule and covenants.
Debt or credit advanced against recurring revenue by a bank, a specialist lender or a credit fund, with no equity given up. It is usually available to businesses with predictable ARR and a path to profit, over terms of a few years, with covenants on revenue, retention and cash. It is the option most often missed because nobody markets it to founders.
Commonly between twenty and forty percent, depending on how much capital the plan needs and the valuation agreed. The percentage matters less than the rights that come with it: board seats, consent rights, liquidation preferences and the right to force an exit after an agreed period.
Most growth equity agreements include a mechanism that lets the investor require a sale process after a set period, often four or five years, if no exit has happened. It is negotiable in timing and in form. Understand it before signing, because it decides your exit date more surely than anything else in the document.
Yes. The thinking stage of founder exit work is exactly this decision: what you want, what the business needs and which structure delivers both. Corinium Advisory is independent of any adviser, bank or fund and is paid by the founder. See the founder exit page for how the work runs and for the Corinium Capital disclosure.
Read next
The main guide: thinking, preparing and executing a sale, partial liquidity, growth equity or succession, with independent, founder paid help at each stage.
Selling a software businessThe two kinds of buyer pay for different things, structure the deal differently and want different things from you afterwards. Knowing which you are talking to changes how you prepare and what you should ask for.
Selling a Software Business to Private Equity vs TradeExit readiness means having the evidence a buyer will ask for before they ask for it. This checklist covers the six areas every buyer of a UK software business tests, and what good looks like in each.
SaaS Exit Readiness Checklist for UK FoundersContact