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Tech Startup Exit Strategies for Navigating the Later Stage

Article

January 6, 2026

As technology companies continue to grow and gain market share, choosing the right partners and investors to help drive consistent expansion becomes increasingly important and can help minimize common obstacles in the late stage.

When a tech startup reaches the late stage, it has proven product viability, a strong market presence and dependable financing, typically in the form of a private equity (PE) investment. Around this time, most founders start preparing for an exit strategy, a pivotal moment in the startup lifecycle and one that requires careful planning and scaling of infrastructure.

Mergers and acquisitions (M&A) are typical in this phase of a tech company’s trajectory, and acquisitions of venture-backed companies exceeded $100 billion in the first half of 2025, a 155% increase year over year, according to Arion Research. This article outlines strategies to successfully navigate through the late stage and prepare your business for a streamlined exit.

Types of Exit Strategies

Initial public offerings (IPOs) for venture-backed startups have lagged since 2021, according to JP Morgan. While an IPO is still an exit option, M&A is now a more accessible strategy — often one with less stringent criteria than going public — in the tech and software space. Software M&A deals jumped from 460 in 2020 to 546 in 2024, with 149 deals occurring in the first quarter of 2025 alone.

Exit Strategy	Definition	Complexity	Popular With
Acquisition by Larger Company	One company takes ownership over another company.	Medium to high	Tech, Software, Healthcare
Merger	Two entities merge as equals to form a new company.	Medium to high	Tech, Software
IPO	Company launches on the stock market and sells public shares.	High	Fintech, Biotech

In 2024, Pitchbook found most acquirers were venture-backed, U.S. companies motivated by opportunities to integrate new technologies, elevate product offerings and improve customer experience.

Strategies To Prepare for an Exit

Maintain Scalability and Growth

Investors are attracted to companies with a clear competitive advantage and market expansion opportunities, so it’s important to continue demonstrating growth potential. This may involve expanding into new geographies or building upon existing product lines to further cement your place in the industry. As companies grow their operations, having the right management in place is essential.

Develop Talent

As a founder in the late stage, you may have taken a step back from overseeing all aspects of the business operations or have already hired a chief executive officer (CEO) to manage the day-to-day functions. Having a management structure in place is a key component of building and growing a profitable business and what worked well when you had 10 or 20 employees may be ineffective with larger teams.

Additionally, building a strong leadership team will help your business navigate changes and drive post-exit growth. PE investments can bring disruptive shifts in leadership talent and strategies, but the right foundational team will be able to skillfully steer the company through these changes.

Continuing to hire and develop skilled talent will support the company as it grows and show investors the business has the management infrastructure to drive future success.

Prepare for Due Diligence

Preparing for due diligence involves organizing financial statements, contracts, legal agreements and compliance documentation to demonstrate that your business is high quality and has future growth prospects.

Sell-side readiness can be time-consuming and complex, and working with a deal advisory team can help you effectively manage the sale process and navigate the numerous M&A considerations that always arise. Transaction tax structuring, accurate valuation, accurate accounting and financial projections and post-deal integration items are critical to the successful completion of an M&A transaction. Tasks during due diligence prep may involve:

Compiling audited financial statements
Reconciling earnings before interest, taxes, depreciation and amortization (EBITDA) adjustments
Analyzing revenue trends, gross margins and consumer behavior
Organizing tax filings and corporate structure documents
Evaluating potential cyber risks
Identifying any compliance issues or legal risks
Documenting key supplier or vendor contracts
Developing forecasts and projections

Careful preparation will help you present business financials with confidence and avoid any surprises during the transaction.

Enhance Your Infrastructure

An acquisition can expose pitfalls in a company’s processes and systems, making it vital to strengthen your infrastructure prior to an exit. While your business has likely invested heavily in research and development, marketing, and go-to-market activities, the core financial and operational infrastructure may have been relegated to the back burner during periods of intense growth.

Finance is one function within your organization that may yield a significant return on investment when enhancing infrastructure, as 48% of chief financial officers struggle with data integration and 34% with audit preparation, according to Cherry Bekaert’s CFO Survey.

Tips to strengthen infrastructure include:

Establishing a digital strategy
Implementing automation and artificial intelligence (AI) tools
Upgrading enterprise resource planning (ERP) systems and other technologies, such as cloud-based platforms
Outsourcing or co-sourcing finance and accounting

Engaging with professional, third-party advisors can help your business navigate the complexities of the exit process, from preparing for due diligence to driving efficiencies within your operations to withstand the changes that follow an exit.

Common Mistakes To Avoid

The exit landscape presents a variety of opportunities, as well as challenges to be mindful of. Common exit mistakes include:

Planning too late in the exit process
Considering only one startup exit strategy
Misaligned expectations between investors and leadership
Having a poor cultural fit between companies in M&A

Your Guide Forward

Regardless of your tech company's current stage, Cherry Bekaert provides a comprehensive suite of solutions for your digital, tax and accounting needs. Our Technology industry practice professionals have extensive experience supporting companies through their lifecycle — from initial funding to exit planning.

Combined with our Finance Transformation Consulting services, we are equipped to help your business prepare financials and processes for a successful exit and integration. Navigating the fast-paced tech landscape can be challenging, but our team is here to help.

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