How to Prepare for a Startup Exit with MontPac’s Monty Montgomery

For many startup founders, a successful exit is the endgame. According to one report, the average successful venture-backed startup exit is valued at $242.9 million dollars, making an exit an obviously attractive proposition.

However, there are a number of factors that can prevent startup founders from exiting without a hitch. During his 25 years of experience in financial management, Monty Montgomery has seen the exit challenges startup founders face firsthand. He’s completed six successful acquisitions and says it’s never too early to lay the groundwork for a successful exit strategy.

“There are things you can do on your founder’s journey to make that process smoother,” Montgomery says. “There are things you can do upfront to take friction out of the deal.”

Montgomery is the Chairman and CEO of MontPac, a full-service, outsourced accounting firm. At Founders Network’s fnSummit 2022, Montgomery will offer insights from his work in startup exits during a fireside chat, where he’ll relate real world experiences from exits that almost didn’t happen, and share what founders can do throughout their startup journey to take friction out of the deal.

Here’s a sneak peek of Montgomery’s insights on exits.

A Strong Foundation

Montgomery’s experience with exits comes from his decade of experience as a consulting CFO to a variety of early-stage startup and venture capital firms focused on financial management and merger and acquisition activity. He’s also supported deal structuring, due diligence and management of strategic buyers for acquisition.

“I always did some low cost, straightforward things to help the exit down the road,” Montgomery says. “As you go along this continuum from inception to exit, there’s more you should do, practical things. For example, contracts should have wording related to change of ownership. Otherwise, it’s all up in the air when you get acquired.” 

Laying the Groundwork

It’s never too early to start doing your due diligence to prepare for an exit. According to one report looking at exits in 2016, nearly 50 percent occurred before the company had reached its series B round. 

“Once you start a company, your goal is to sell it at some point,” Montgomery says. “And as soon as you take someone’s capital, you’re definitely going to sell. The clock starts ticking then. If it’s a VC fund, they want an exit in four to seven years. At some point you’re going to want an exit so what are the things you can do now to make that run smoother.”

Setting Expectations

There are several different forms an exit can take. While many startup founders might have their eyes set on an IPO, that’s not the statistical reality.  For every IPO, there are more than 30 acquisitions each year. Montgomery says founders should be prepared for every eventuality and take necessary steps to ensure their startup is equipped to handle what comes their way. 

“Whenever you do anything, think about the impact it could have on an exit,” Montgomery says. “Whether it’s a customer contract or an employee agreement, everything has a consequence. So you have to be looking through that lens.”

In his fireside chat, Montgomery will cover:

• Views on exits from the CFO seat
• How to enable smoother and more optimized exits
• What CEOs can do to empower finance and accounting teams

Montgomery will also be hosting office hours for Founders Network members on October 5. 

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fnSummit 2022 encapsulates the Founders Network experience, giving startup founders the opportunity to learn from other tech founders in the startup ecosystem, build deep relationships with investors, and uncover solutions to the challenges they’re facing. The annual event provides the perfect setting for off the record discussion, reflection, and networking.

Learn more about Founders Network see if you qualify for membership