The Post-Sale Stay-Period

There is a lot of chatter on Tech Twitter and elsewhere about the Instagram founders leaving Facebook six years after selling their company to Facebook.

All I can say about that situation is they gave Facebook way more of their time and energy than most founders would have.

Of course there are cases where founders stay at the buyer for many years, sometimes even rising to become CEO

But that is rare.

Way more common is the founder bailing after a year or less.

When companies that I am on the board of acquire founder-led companies, I advise them to highly incentivize the founders to stay (usually with a combination of cash and stock that is time based) but prepare for them to leave (by having a clear succession and transition plan in place right away).

The truth is that many entrepreneurs don’t make for great corporate citizens. Entrepreneurs like to be in charge, to be able to move quickly without a lot of friction, and they like to feel a deep sense of ownership in what they are working on.

That is often hard to find in a corporate environment where teamwork, collaborative decision making, and checks and balances are the norm.

I am a big believer in acquisitions as a path for wealth creation (for both the seller and buyer) and as a logical exit for most startup founders. And staying for some period of time is required to make the acquisition work for both parties.

But getting the founders to stay for six years is an amazing accomplishment and quite rare in my experience.