A big startup dilemma: Continue growing or look into M&A?

I'm a man, I'ma make a new plan
(It's alright, it's okay)
Time for me to just stand up and travel new land
(I'm gonna make it anyway)
— Eminem

There was a moment at Transifex when we faced a major decision point. Our ARR was growing at 35% year over year and we had healthy 25% profits. We felt super solid.

At that point, we were twelve years into the game and we were contemplating what the next decade would look like for us. "What's next?" was a question that kept coming up in my mind, during my one-on-ones, and in our board meetings. I saw it boiling down to two all-out choices:

1. We keep going: Our financials were in top shape. We operated the company with sustainability in mind. We even considered borrowing some cash and offering to fully buy out our investors, keep growing, and revisit the topic in a few years.
2. Shake the Ground: This meant diving headfirst into the world of M&A. Consider acquiring a game-changer company, partnering with a major player, or even getting acquired. Fortunately, no one pressured us to exit sooner than we desired, thanks to our excellent VC partners who had a deep respect for founders and employees.

Now, I could picture us keeping going. We had a clear vision of where to innovate and how to get the product into the hands of 1000 more customers. But let's be real: so far, it had been far from a walk in the park.

I felt (and our board agreed) that we needed more market feedback. What were the various available options for us? What did our company, plan forward, and metrics look like to potential acquirers? What could we learn from a handful of deep discussions with the best companies in our field?

We enlisted a seasoned M&A Advisor, Andy from Palmarés. I wanted someone with deep experience, who would handle our case personally instead of passing it off to a junior associate. I felt finding the right person would be pivotal in pinpointing the perfect timing, analyzing various scenarios, and navigating through the ocean of potential buyers. They would also help us move much faster than if it were just me talking to some people.

We learned a lot in the process. We got a lot of feedback from tech giants to smaller firms we considered acquiring or merging with. And we received a few acquisition offers, too.

If you find yourself in a similar spot, consider the following:

1. Running an M&A process will get you super valuable market feedback, even if you decide not to sell your company. It will also allow you to reflect more seriously on whether you're ready to let go.
2. Strong metrics for the past 18-24 months will increase your ARR multiple with many buyers. It will also affect the discussions with big, strategic tech buyers (who don't sweat metrics too much), because it gives your company the option to continue growing.
3. Start early! A good process to maximize the number of offers may take time.