Founders spend years learning how to raise capital. We talk endlessly about term sheets, valuations, and growth metrics. Exits, on the other hand, are often treated as a distant outcome—something to think about after the next round.

Fasken’s Exit InSights study—co-authored by three Fasken lawyers, including Vancouver’s Geoff Pedlow—makes a strong case for flipping that mindset.

Based on more than 250 Canadian tech M&A deals completed between 2019 and early 2024, the report looks at how exits actually happen in practice: how deals are structured, where risk sits, and what founders are really agreeing to when they sell their company .

For founders, the biggest takeaway is this: most exits are far more operational—and far less glamorous—than we tend to imagine.

Let’s start with scale. The average deal in the study was just over $200 million, and more than three-quarters of exits landed between $50 million and $500 million. Billion-dollar outcomes exist, but they’re rare.

This matters because mid-market buyers don’t buy dreams—they buy businesses.

At this size, acquirers care deeply about how predictable your company is: how clean your financials are, how diversified your customers are, and how easily your operations can slot into theirs. Founders who wait too long to professionalize finance, compliance, or internal reporting often discover that these “unsexy” details have a direct impact on exit value.

In other words, discipline compounds, just like growth does.

Another reality check: over 80% of Canadian tech exits are to strategic buyers, not private equity firms.

A strategic buyer is usually an operating company—think a larger tech firm or enterprise player—buying you to strengthen its product, customer base, or capabilities. Private equity shows up far less often.

For founders, this has real implications. Strategic buyers care less about financial engineering and more about fit. They want to know: how your product complements theirs; whether your customers overlap or expand their reach; and if your team and systems will integrate smoothly.

If you’re only optimizing your story for venture investors, you may be misaligned with the people most likely to acquire you.

One of the most consistent findings in the report is how common purchase price adjustments are. Nearly nine out of ten deals include them.

Here’s what that means in plain language: Even after the deal closes, the final price can go up or down based on things like cash in the business, outstanding debt, or working capital (the money needed to run day-to-day operations).

In most cases, the buyer calculates this adjustment, not the seller.

For founders, this is where exits quietly lose value. If your accounting is messy, your working capital definition is vague, or your expense tracking is inconsistent, you may find the final payout is lower than expected—without much room to argue.

Strong financial hygiene doesn’t just help you raise money. It protects your outcome when you sell.

Founders often assume earnouts are standard. They’re not.

Only 25% of deals include an earnout, and when they do, they’re usually highly customized. An earnout means part of the purchase price is paid later, based on hitting specific performance targets after the deal closes.

Those targets aren’t always revenue or profit. Sometimes they’re tied to product milestones, customer retention, or operational outcomes.

Earnouts can make sense—but they also shift risk back to the founder. If you don’t have real control over the business post-sale, hitting those targets can be harder than it looks on paper.

The key question founders should ask isn’t “Is there an earnout?”

It’s “Do I actually control the levers needed to achieve it?”

Nearly every deal includes something called a Material Adverse Effect (MAE) clause. This is legal language that lets buyers walk away—or renegotiate—if something seriously harms the business before closing.

While sellers are usually protected from broad events like recessions or pandemics, there’s a catch. Most MAE clauses include a rule that says: if your company is hit worse than others in your industry, the protection disappears.

In practice, this means issues like: heavy reliance on one customer; regulatory exposure; and platform or supplier dependency.

…can resurface late in a deal if they start to look risky.

Founders who proactively explain these vulnerabilities early tend to avoid last-minute renegotiations when leverage has shifted to the buyer.

When founders sell, they make formal promises about the state of the business, known as representations and warranties. These now almost always include: privacy practices; cybersecurity; and compliance with laws.

Interestingly, explicit promises around AI are still rare—but that’s likely temporary. The direction is clear: buyers are paying closer attention to data use, model training, and software dependencies.

Founders building AI-enabled products should assume these questions will only get sharper over time.

In more than half of all deals—and two-thirds of deals over $100 million—buyers and sellers use representation and warranty insurance.

This insurance shifts some risk away from the founders and investors and onto an insurer. When used well, it can: reduce how much money is held back after closing; shorten how long founders remain liable for issues; and make negotiations less adversarial.

For founders aiming at larger exits, understanding how this insurance works is becoming table stakes.

One of the quietest—but most important—findings in the study concerns employee stock options.

In most deals: options do not fully accelerate; earnout participation for employees is rare; cashless exercises are common, but outcomes vary widely.

This is where founders can unintentionally damage trust. If teams expect a big exit moment but the structure doesn’t support it, morale can collapse at exactly the wrong time.

Exit planning isn’t just financial—it’s cultural.

What Fasken’s data shows, more than anything, is that exits fail less often because of valuation and more often because of lack of preparation.

Clean financials. Clear risks. Aligned expectations. Thoughtful structure.

The best exits don’t come from improvisation at the finish line. They’re built quietly, deliberately, years in advance.