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How to stay semi-independent after selling your startup

Note: Venture Beat first published this piece of mine.

Last December, my cofounder Todd Zino and I sold our startup, Wallaby Financial, to Bankrate. We immediately went from being a team of nine, on the verge of going big or going broke, to being part of a 600-person company valued at more than $1 billion on the New York Stock Exchange.

Startups are acquired every day, and for many, this means the end of the road in terms of independence and products, especially earlier-stage companies like ours. But we’ve managed to maintain a high level of independence and autonomy for our work. It’s a position we’re very fortunate to have, and we are thankful to our new owners. If you’re thinking of selling your company and want to keep running it, here are a few things you can focus on to make it a successful transition.

1. Understand the type of sale

When you sell your startup, you may be selling the company in a stock transaction, or you may be selling assets. When you sell assets (e.g. your software or your website domain), you wind down and close the original corporation. This is a path to less autonomy, as you literally close the original business. By doing a stock transaction, your startup lives on as a subsidiary that sets a structure for an independent business.

2. Understand the motivations of the acquirer

Bankrate has a long history of acquiring businesses and giving them independence. The company believes that if you did a good job building a business, you are probably the best person to keep building it. You can verify this by speaking with previous acquisitions or simply by looking at the organizational chart. Are the founders or leaders of previous businesses still there a couple of years in, or did they all leave? Bankrate’s operating companies are still run by many founders, and that speaks to a culture of support and autonomy. In contrast, many acquirers have well-known reputations for pushing leaders out.

3. Structure the deal to reward long-term performance

While many people look at an earn-out from an acquirer as a form of handcuffs, it’s actually about investing in the long term success of the team. If your acquirer is providing very short earn-outs, it is likely they plan to replace people or jettison the business. If they are investing in the entire team with earn-out structures that are achievable and make sense, then you can build on what you have already made.

4. Make sure you have a joint plan

While plans always change, if you and your acquirer don’t have a consistent one going in, you can be guaranteed things won’t go well. You might not want to hear the answers, but you have to ask early on if brands will be sunset, who will report to whom, what the hiring and budget plan is, and more.

5. Understand reporting structures carefully and communicate them

One common issue in acquisitions is when part of a startup begins reporting to functional leadership. Will all of the startup’s engineers start reporting to a VP of technology in another city? Or will they keep their current leader? Will the startup’s CTO report to the startup’s CEO, or will he or she report to a CIO elsewhere? Ask these same questions for operations, product, marketing, and more. If cross-organization and matrixed organizational charts pop-up, you’re probably in trouble. Maintaining your startup as a unit is key to future autonomy.

6. Play nice, and be prepared for corporate life

I have founded companies, been amongst the first employees at startups, and also worked for the world’s largest organizations, such as AT&T. I know what corporate life requires (on-time expense reports, meetings!), and I am prepared to make that tradeoff. Coming into a bigger corporation means understand its culture and processes and not being a total jerk. If you are nice, people will be nice back and you will maintain more independence in the long run.

Selling your startup is a tough decision, but if you want to continue to develop it, then you must set up an acquisition that truly positions you for success.