Exits start with structure

The question nobody asks going in

In almost every financing round, the conversation centers on valuation, check size and the plan for the next few quarters. One question tends to get pushed down the road: how does this capital come back?

Putting off the exit conversation feels prudent. Nobody wants to sell a company that was just born. In practice, though, the omission is costly. Many of the decisions that determine whether a company can be bought, and by whom, are made precisely at entry: who holds which rights, how decisions get made, what is written down and what was agreed on a handshake.

By the time the exit finally makes it onto the agenda, years later, much of the road has already been paved — or blocked.

Three paths, three requirements

For private companies, an exit rarely comes in just one shape. Broadly, there are three paths, and each asks something different of the structure.

A sale to a strategic buyer requires a company that is understandable and transferable: contracts that survive a change of control, intellectual property owned by the company, known liabilities, a cap table with no surprises. Strategic buyers pay for fit with their own business, but only after they understand what they are buying.

A secondary sale — one investor selling its stake to another — requires clear transfer rules: rights of first refusal, tag-along, drag-along, and a shareholders’ agreement that spells out how each situation gets resolved. Without them, a minority stake can be hard to sell no matter how well the company is doing.

A buyback, by the company or by its founders, requires that the possibility was anticipated: pricing criteria, timing, conditions. An improvised buyback tends to turn into a tense negotiation between people who still have to work together.

None of these paths is guaranteed. But each one narrows when the structure never planned for it.

What makes a company acquirable

Buyers don’t pay only for revenue, technology or brand. They pay for confidence in what they are acquiring. And in M&A, confidence is built with paperwork.

A clean cap table is the starting point: who owns what, on what terms, with which options and convertible instruments outstanding. Departed co-founders with no agreement, informal equity promises and convertibles stacked up without anyone running the math are among the most common reasons a deal slips, loses value or simply dies.

Then comes governance. A company with a working board, documented decisions and reliable financial statements gets through due diligence with far less friction than one where everything lives in the founder’s head.

Finally, rights. Change-of-control provisions, drag-along and tag-along rights, investor exit mechanisms. Well drafted, they align interests the moment a buyer shows up. Poorly drafted, or missing altogether, they turn an offer into a standoff.

A company becomes acquirable long before anyone wants to acquire it.

What I learned firsthand

I began my career at Icatu Equity Partners, Banco Icatu’s private equity group. There I originated the investment in Mabel, later acquired by PepsiCo.

The lesson I took from that period isn’t about the outcome of any one transaction. It’s about the order of operations. A buyer with global reach only gets close to a company once it can see the whole thing — and the work of making a company visible doesn’t start when the buyer knocks. It starts much earlier, in how the structure is designed and maintained over the years.

The same logic holds in very different settings: the companies able to seize an exit opportunity are rarely the ones that prepared for it in a hurry.

How we bring this to the entry point

That is why, at Trivèlla, the exit conversation starts before the first dollar goes in. Before investing, we seek to map who a company’s natural buyers might be, which liquidity paths are plausible and what would need to be in order for each of them to stay open.

In practice, that means structure: shareholders’ agreements that address transfers and change of control, governance sized to the company’s stage, a cap table kept clean from the first round, and capital released against milestones, so that each stage leaves the company more legible than the last.

None of this guarantees an exit. Markets close, buyers change strategy, companies fall short of their plans, and private equity investments can result in the loss of part or all of the capital invested. What structure does is something else: when an opportunity does appear, we seek to have the company in a position to consider it — instead of spending months trying to explain its own past.

The exit isn’t a chapter written at the end. Much of it is written at the beginning.

See how the thesis shapes our funds on the Venture Capital page, or get in touch.

The structuring mechanisms described reflect the investment discipline Trivèlla seeks to apply and do not eliminate risk. Private equity and venture capital investments involve significant risks, including illiquidity, long holding periods, concentration and the possible loss of all or part of the capital invested. No outcome is guaranteed.

This material is for information purposes only and does not constitute an offer or investment recommendation.