Navigating Earn-Out Negotiations

How do founders and finance leaders prepare for the sale of their company when the other side of the negotiating table does this every day? In this episode, CJ interviews David Siegel, Partner at Grellas Shah LLP, a Silicon Valley law firm that guides some of the biggest names in tech through their most significant raises and exits. David shares insights from countless deals, revealing what it really takes to prepare for a sale, negotiate with buyers, and manage conflicting advice from bankers and lawyers. He unpacks investor dynamics, deal timelines, and why the $150 million to $350 million valuation range is the “awkward middle.” The conversation also covers how companies can de-risk themselves before going to market, how to spot a bad banker, what critical pitfalls to avoid in Letters of Intent (LOIs), the emotional realities founders face when selling their “baby,” and the shifting power dynamics in today’s M&A landscape.

—

LINKS:

David Siegel: https://www.linkedin.com/in/david-siegel-a271265

Grellas Shah:

https://grellas.com

CJ on X (@cjgustafson222): https://x.com/cjgustafson222

Mostly metrics:

—

TIMESTAMPS:

(00:00) Preview and Intro

(02:06) Sponsor – Brex | Aleph | RightRev

(06:41) The Average Time To Close M&A Deals Today

(10:55) How To Start the Process of Selling a Company

(13:09) Being Realistic About Your Valuation

(15:13) Sponsor – Navan | Rillet | Pulley

(19:08) VCs Versus Acquirers

(20:12) The $150 Million to $350 Million Valuation Awkward Middle

(23:17) Investor Behavior and Founder Incentives in Deals

(24:59) The Banker Versus Relationship Route in Selling

(27:46) What Makes a Bad Banker

(28:43) PSA: Investment Banker Engagement Letters Are Negotiable

(34:43) LOIs: What Sellers Should Push To Include Before Signing

(39:43) What To Prioritise as a CFO in an LOI

(43:21) The Worst Case Scenario for Vague Networking Capital Targets

(46:22) De-Risking Your Company in the Eyes of an Acquirer

(49:17) How Acquirer Risk Aversion Derails Deals

(52:07) The Emotional Impact of Selling a Company

(55:32) The Rules of Negotiation

(57:19) Current State of M&A in Tech

(1:01:30) Wrap

—

SPONSORS:

Brex offers the world's smartest corporate card on a full-stack global platform that is everything CFOs need to manage their finances on an elite level. Plus, they offer modern banking and treasury as well as intuitive expenses and accounting automation, bill pay, and travel. Find out more at https://www.brex.com/metrics

Aleph automates 90% of manual, error-prone busywork, so you can focus on the strategic work you were hired to do. Minimize busywork and maximize impact with the power of a web app, the flexibility of spreadsheets, and the magic of AI. Get a personalised demo at https://www.getaleph.com/run

RightRev automates the revenue recognition process from end to end, gives you real-time insights, and ensures ASC 606 / IFRS 15 compliance—all while closing books faster. For RevRec that auditors actually trust, visit

https://www.rightrev.com

and schedule a demo.

Navan is the all-in-one travel and expense solution that can give you access to exclusive, proprietary Nasdaq-validated data that reveals what's happening with corporate travel investments. See the Navan Business Travel Index at https://navan.com/bti.

Rillet is the AI-native ERP modern finance teams are switching to because it’s faster, simpler, and 100% built for how teams operate today. See how fast your team can move. Book a demo at https://www.rillet.com/metrics.

Pulley is the cap table management platform built for CFOs and finance leaders who need reliable, audit-ready data and intuitive workflows, without the hidden fees or unreliable support. Switch in as little as 5 days and get 25% off your first year: https://pulley.com/mostlymetrics.

#TechAcquisitions #AcquisitionLaw #StartupExit #MergersAndAcquisitions #ExitStrategy

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit cjgustafson.substack.com