Startups face huge risks when looking for channel partners. Often startups go after massive corporations as partners (because those companies have the sales channels and resources), which makes the relationships highly inequitable. But one of the benefits of partnerships is securing early relationships with potential acquirers.

Many companies are ultimately acquired by partners. It only makes sense; you’re already doing business with the partner, and when it’s time to take the relationship to the next level that’s a great time for an acquisition.

Recently on Quora someone asked the following question, “How does a startup state their intention of being ‘up-for-sale’ to a potential acquirer they have an existing relationship with?”

Great question. I can’t share all the answers with you, but I can share mine.

I think you come out and say it. If you are looking to exit then you can go to each partner and let them know.

You can let them know that you’ve had some interest from others in acquiring your company, and since you’ve worked with them as a partner for some time, enjoy the relationship and see tons of future value in “getting married”, you wanted to let them know what was going on and get a sense of their interest.

In my experience you’ll get one of two answers:

(1) We’re interested, let’s talk; or,
(2) We’re not interested and we won’t do business with you anymore.

So you run the risk of losing a partner who isn’t ready to acquire you but also doesn’t like the potential instability that’s going to come out of an acquisition (or whatever else might happen down the road.) In either case you’ll also most likely get more questions about your financial status – as they assess the opportunity to acquire – or sever the relationship. So you have to be prepared to open up the kimono.

Looking at your existing partner list you can figure out which ones are most likely to acquire you:

• Those that are succeeding the most because of the partnership
• Those with a past history of small startup acquisitions
• Those that are most concerned about locking up a competitive advantage and see your startup as providing that advantage
• Those that are the most paranoid

The risk of losing partners that aren’t comfortable with you “shopping around” is absolutely real, so you have to be prepared for that. And if you open up the kimono and your partners don’t like what they see, they might walk away at that point as well.

You should also think about whether or not you’re prepared to take on strategic investment instead of being outright acquired. I’m seeing more and more strategic investments of late, although people are generally not huge fans. In the case of a strategic investment, you have to be cautious about how it limits you. For example, they might want some form of exclusivity, and will almost certainly want “first right of refusal” on an acquisition. That makes it almost impossible for anyone else to buy you, if the strategic investor can just take over the deal at the last minute. If the terms of the strategic investment are really bad, try this argument, “This investment is basically like getting married. So why don’t we cut the B.S. and just get married already.” (i.e. buy us don’t just invest in us.)

If you do get interest from partners, move as quickly as you can to get the acquisition done. As it drags on, you’ll have less time to actively focus on growing your business, which means it will start suffering. As well, other partners that aren’t interested may fall further to the wayside. So run an active, aggressive acquisition process to get the deal done.