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Start-Up Law: Exit Strategies

Introduction to Exit Strategies

Know When to Fold

For many founders, the months or years of working around the clock while living in tiny apartments is supposed to pay off with a lucrative exit and a happily-ever-after.  Kevin Systrom's sale of Instagram is a good example of what most founders are hoping for.  However, there are many different ways to exit a company including a merger, stock sale, asset sale, and, for those less-than-happy endings, bankruptcy or dissolution. This guide offers resources to familiarize new practitioners with all of these scenarios except bankruptcy.

First, below is a Bloomberg Law video which gives a ten minute overview about exit strategies. Afterward, look at the Shared Secondary Sources tab and this tab's Secondary Sources sub-page to explore free articles, blogs, and article libraries for more of a general overview.  For more in-depth questions, these secondary sources locations also have state law treatises and start-up specific treatise like The Acquisition and Sale of Emerging Growth Companies: The M&A Exit, which is also available on Westlaw.

After you are familiar with the type of exit strategy that the founders have chosen (or been forced) into, there are many sample documents to choose from under the Sample Document sub-tab. Dissolution documents are often freely available through links to state government websites. Sample documents, including drafting notes and explanations of provisions, are also available through treatises and Practical Law Company. Do not forget to check these documents with the state statutes which are located on the Primary Sources sub-page.