# Sell, keep or raise: an exit strategy > Two offers in one week: a company wants to buy GarageDesk, an investor wants a stake. A business exit strategy with three possible answers, who is really buying, and the questions that decide between them. - Course: [From Idea to Profitable Product: Building Without Investors](https://productovi.com/courses/bootstrapped-product.md) - Module: Without heroics, and for sale - Lesson 28/30, ~28 min - Source: https://productovi.com/courses/bootstrapped-product/sell-keep-or-raise ## Two offers in one week: should you sell? **Alex Tutor:** Big week at GarageDesk: two offers arrive, and the founders want you and me to help weigh them. **Oscar:** Alex, you won't believe this week. Axle Group from Kyiv, the ones who make software for parts distributors and dealerships, want to buy all of GarageDesk. Six million! **Nina:** Four million at closing, two more only if MRR reaches 200,000 a year later. I stay twelve months, Oscar six. And the same week Richard called again: three million for 20%, to grow faster. **Sofia:** The same Richard who offered two million two years ago? **Alex Tutor:** Told you the door was worth leaving open. So your exit strategy has three answers on the table: sell to Axle, keep the company as it is, or raise Richard's money. Before any numbers, one question: why would you sell at all? ![Three paths lead from a garage door: to a large office building, back to the same garage with a new extension, and up to a rocket launch pad.](https://productovi.com/courses/bootstrapped-product/inline/sell-keep-or-raise-illustration-2.webp) **Oscar:** Honestly? Everything my family owns is in GarageDesk. **Nina:** And I love building the product, but running a company of twenty people to reach a thousand shops isn't the job I want. > **Exercise:** Which of these are solid reasons for founders to consider selling their company? Choose all that apply. **Alex Tutor:** Back to Oscar's “Six million!” How should they read that number? > **Exercise:** Axle offers 4,000,000 UAH at closing plus 2,000,000 UAH if MRR reaches 200,000 a year later. Which reading is right? ## What keeping the business looks like **Alex Tutor:** Now the numbers for keeping. Where does GarageDesk stand this October? **Nina:** 240 shops, MRR 165,000. Costs without our pay are 67,000: Martha, Ethan, tools and SMS, the accountant. We pay ourselves 40,000 each. About 18,000 a month is left over. **Alex Tutor:** So keeping means a good income, a growing business you own, and no single payday. Selling means the money arrives at once, and someone else shapes the product's future. **Oscar:** My share at closing would be two million. How long would I need to earn that from my salary? > **Exercise:** Oscar's half of the 4,000,000 UAH paid at closing is 2,000,000 UAH. He pays himself 40,000 UAH a month from GarageDesk. How many years of that pay equal his closing share? Round to one decimal. ## Strategic buyer vs financial buyer **Sofia:** Does it matter who buys, if the price is the same? **Alex Tutor:** A lot. A **financial buyer** buys a business for its profit and keeps it running much as it is. A **strategic buyer** buys it for something that fits its own business: customers, technology, a position in the market. ![Two buyers look at one small garage: one with a calculator admires the cash register, the other unrolls blueprints linking it to his warehouse.](https://productovi.com/courses/bootstrapped-product/inline/sell-keep-or-raise-illustration-3.webp) *A financial buyer wants the profit; a strategic buyer wants what it adds to his business.* **Oscar:** Axle sells to the distributors our shops buy parts from. 240 repair shops using their software every day is exactly what they're missing. **Alex Tutor:** So Axle is strategic. Expect changes: links to their parts catalog, maybe new prices, and they need you to stay, which is why Nina gets twelve months. Ask them what GarageDesk looks like in two years. > **Exercise:** Match each description with the kind of buyer. **Alex Tutor:** I told the founders to ask Axle one thing first. Which question matters most? > **Exercise:** Axle is a strategic buyer. Which question should the founders ask first before going further? ## Raising money instead of selling **Sofia:** Richard's offer sounds even better: three million, and they keep 80%. **Alex Tutor:** Look at where the money goes. It goes into the company, to hire salespeople and open new regions, not into Nina's and Oscar's pockets. Each of their shares falls from 50% to 40%. **Alex Tutor:** And he pays three million for 20% because he expects GarageDesk to be worth far more than fifteen million later. That expectation comes with the money. **Nina:** So it doesn't lower Oscar's risk at all. It raises the stakes. ![Selling to Axle turns ownership into cash now and hands over the product; keeping means pay and control; Richard's money goes into the company and raises the stakes.](https://productovi.com/courses/bootstrapped-product/diagrams/m8-l2-sell-keep-raise.png) *Three answers to an offer.* > **Exercise:** **True or false:** if the founders accept Richard's offer, each of them receives 1,500,000 UAH. ## When to sell your business: the same three questions **Alex Tutor:** Two years ago you answered three questions before saying no to Richard: size, speed, life. Ask them again. **Oscar:** Size: still thousands of shops, not millions. Speed: shops still choose slowly. Life: I want my family to be safe. **Nina:** Life, for me: building something new in a year or two, without a team of twenty to manage. **Alex Tutor:** Then Richard's money answers a question you're not asking. Selling to Axle fits both of your answers, but only at the right price and terms. And offers are signals of interest, not deadlines: a business this healthy will get other offers. > **Exercise:** Richard offers 3,000,000 UAH for 20% of GarageDesk. What total value of the company does this price imply, in UAH? **Alex Tutor:** One more number Oscar will hear from Richard. What is each founder's share worth on paper? > **Exercise:** After Richard's investment each founder would own 40% of a company valued at 15,000,000 UAH. What is one founder's stake worth on paper, in UAH? ## Your turn **Sofia:** So what should they do? **Alex Tutor:** Nobody decides this week. Write the founders a short memo: which answer fits them and what they must find out before saying yes to anyone. > **Exercise:** The options: Axle Group, a strategic buyer, offers 4,000,000 UAH at closing plus 2,000,000 if MRR reaches 200,000 a year later, with Nina staying twelve months and Oscar six. Richard offers 3,000,000 for 20% of new shares, money that goes into the company for faster growth. Keeping GarageDesk pays each founder 40,000 a month with about 18,000 left over. Oscar wants his family's money, now almost all in GarageDesk, to be safe; Nina wants to build something new in a year or two without managing a team of twenty. Write a memo to Nina and Oscar (4–6 sentences): which of the three answers (sell, keep, raise) fits them best and why, and what they must find out before accepting any offer. > **Key ideas** > > - Three answers to an offer: **sell**, **keep** or **raise**. Start with the reasons, not the price. > - Lasting reasons to sell: reducing personal risk, not wanting the work the next stage needs, wanting to move on. A bad week or an unexpected call isn't one. > - Keeping means ongoing income and ownership; a sale turns years of it into cash now: Oscar's 2,000,000 ≈ **4.2 years** of his pay. > - A **financial buyer** keeps the business running; a **strategic buyer** buys it to fit its own plans and changes it. > - Raising money puts cash into the company, not the founders' pockets, and brings growth expectations: 3,000,000 for 20% implies **15,000,000**. > - An offer is a signal of interest, not a deadline. **Alex Tutor:** Next time: is six million a fair price? We'll work out what GarageDesk is worth. - Previous lesson: [Burnout and documented business processes](https://productovi.com/courses/bootstrapped-product/burnout-and-written-procedures.md) - Next lesson: [How much is the business worth?](https://productovi.com/courses/bootstrapped-product/what-the-business-is-worth.md) --- Productovi Learning. Free, no sign-up needed to read.