The heart of the deal: how founder motivations and communication impact dynamics and outcomes.
By Sophia Tupolev-Luz & Zeevi Michel
The heart of the deal lies in alignment—between motivations, messaging, and actions.
While so much in entrepreneurship feels beyond a founder's control, deal dynamics are deeply influenced by the founder’s inner truth. In this exploration of founder motivations and M&A dynamics, we tackle these key topics:
Why talking about the endgame is so taboo
The three types of founders and how their motivations shape outcomes
The impact of early financial decisions on exit opportunities
The importance of transparency and alignment with yourself, your investors, and your team - from inner circle and beyond.
The Taboo of "The Endgame"
Many hesitate to discuss their endgame openly. Why? Founders often see M&A discussions as taboo because they clash with the entrepreneurial narrative of solving big problems or building enduring companies. Yet, avoiding the conversation doesn’t make it less relevant.
"Nobody is starting a company saying that it's just to sell it. That is not THE goal. The goal is to solve a real problem, to create a company solving a real problem."
The 3 types of founders and how their motivations influence success or failure
"I always say, there are three types of founders. There are founders who come and truly want to change the world... The second type of founder is much more realistic... The third type of founder, and unfortunately the most common, are the ones who say they want to change the world but are ultimately driven by financial goals they won’t admit publicly."
Driven by purpose, these founders are more resilient and won’t sell at any price until their mission is fulfilled.
These founders plan for an eventual exit and understand the financial realities from the outset while building their business.
Say they're driven only by purpose alone, but are really driven by financial goals they won’t admit to others.
No judgment from your friends on the show. But at least be aware of where you fall on this spectrum. It’s essential for navigating decisions honestly and effectively.
Early decision points (like fundraising and choosing investors) narrow or expand exit opportunities.
Decision-making during a company’s lifecycle is complex. Each choice—whether to raise capital, hire specific employees, or target certain clients—closes doors while opening others.
"When we choose to raise money from Tier 1 American VCs... we are closing other doors. By raising at a $200 million valuation, you now need a $500 million acquisition to exit successfully. Your pool of potential buyers shrinks as you climb the valuation ladder.”
How employee dynamics during an M&A create communication challenges, from early employees to leadership teams
How M&A impacts employees is often overlooked. Zeevi stressed the importance of transparency and alignment between founders and their teams.
"Your early employees are like co-founders in their own right," Zeevi said. "Yet, the gaps in financial outcomes between founders and employees can lead to frustration and misalignment."
Leadership plays a unique role during M&A. Senior executives are often privy to the deal’s intricacies and bear significant responsibility for its success—even when their own futures with the company are uncertain. Zeevi’s advice to founders is to try to fight for compensation from the acquirer’s opex budget, which is different from the capex (budget used for the acquisition itself).
Lessons learned: building a culture of honesty starts from within
"The bigger the gaps between what you really believe or want to happen and what you are messaging to your employees, the bigger the disappointments will be."
Takeaways for founders before & during M&A:
Know your "Why": Be honest with yourself about your motivations and align your messaging with your truth as much as possible along the way.
Prepare early: Identify potential acquirers and partners from day one, even if M&A isn’t your immediate goal.
Foster transparency: Bring employees into the loop at the right time and manage expectations carefully.
Think long-term: Decisions made today have lasting consequences. Be mindful of opportunity costs and the doors you’re closing.
"Entrepreneurs, CEOs, always need to be thinking about the endgame. Not as the central point of decision-making, but as another consideration influencing core decisions about the business."
Understanding motivations, managing relationships, and aligning interests are critical to achieving successful outcomes.
Stay tuned for more insights on founder journeys, M&A strategies, and the delicate balance of building value while planning for the endgame.
Credits:
Produced by: Sophia Tupolev-Luz
Video and sound editing by: Yair Walden
Location: Google for Startups Campus Studio, Tel Aviv