The Startup ecosystem develops in a changing, turbulent, and—for those who feel comfortable—truly exciting environment.

It is well known that many of our Startups are born on the formula of the three Fs: “Family, Friends & Fools”; but they maintain the expansive spirit and ambition to develop the project to unimaginable limits in the early stages of the idea.

As the company reaches milestones and creates scenarios of exponential growth, the moment of the exit represents a culminating milestone and a transformative opportunity for its founding partners or investors (mainly initial ones).

In economic terms, the exit means the departure of the founding partners or investors, obtaining a return from the increase in the value of their shares in the company.

And from a legal point of view, the exit is a process of M&A applied to the entrepreneurial world in which the founding partners or investors transfer their shares to a third-party acquirer and relinquish (to a greater or lesser extent) control of the company.

Regarding the execution methods, one can be as creative as regulatory and normative restrictions allow.

The departure of the founding partners or investors can be made effective through (i) company sale processes and total transfer of shares, (ii) structural modification operations (e.g., mergers, spin-offs, segregations, etc.), (iii) issuance of a Public Offering (e.g., going public), (iv) or any other method that ensures the transfer of the shares subject to the exit.

Undoubtedly, the exit provides a very significant liquidity return to the outgoing partners (see, for example, the sale operation of the real estate portal https://www.idealista.com/); and additionally, positions those affected on a kind of list of successful entrepreneurs (redundancy intended) making their CV even more interesting for the development of similar projects.

We all know that this process is not easy, and examples of success among founders and initial investors are not abundant. According to the specialized Startup magazine Business Insider (link) and based on the report "Investment Trends in 2023" presented by the Bankinter Foundation Observatory (link), in 2023 there were 53 exits compared to 80 in 2022 (=34% decrease); likewise, the total amount of exits went from 1.405 billion euros in 2022 to 1.002 billion euros in 2023 (=29% drop).

Despite this apparent market setback, at Summons Abogados we have led M&A processes in which the founding partners have achieved the deserved success after years of effort and development of a project that started from nothing.

We encourage all entrepreneurs to follow this path: it is not easy, but somewhere in the market, success will be assured.