Should You Sell Your Startup, or Install a New CEO? (Case Study)

Should You Sell Your Startup, or Find a New CEO? (Case Study)

29 Jan 2020

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Should a small company founder facing stalling growth sell to a competitor or hire a new CEO?

In this HBR fictionalized case study, 2 Proud Pups is Elena's all-natural dog care product business. She launched it to create products that weren't full of chemicals that irritated her dogs. She invested her own savings, and grew her staff and product line — and now her products are carried by more than 1,000 independent pet retailers nationwide. But revenue growth has stalled flat, and she's ready for a change. She sees two options for moving forward:

Option 1: Hire a new CEO who wants to target Amazon, Chewy, and Petco. She'd get less cash up front, but could retain her majority shareholder position while stepping back from the business.

Option 2: Sell the company to a competitor who could expand her brand's reach, gaining a generous cash buyout and 10% of merged equity — while losing control of the company and risking a departure from her values.

What would you do?

Script and Audio Production : Jessica Gidal

Based on the HBR Case Study, “A Founder Steps Back from Her Start-Up” by David R. Dixon

https://hbr.org/2018/06/case-study-can-i-step-back-from-my-start-up

Illustration: Ryan Garcia