SAFEGUARDING PURPOSE: A Founder’s Guide to Impactful Exits

Imagine you’re the founder of a purpose-driven startup, born from an idea incredibly close to your heart. If you’re reading this, perhaps it’s not so hard to imagine.

After months of sleepless nights, endless coffees, and pouring everything you have into making it work, your idea has taken off. You’ve even caught the attention of a venture capital (VC) investor who’s ready to provide the funding needed to turn your vision into a world-changing company!

But then, the conversation shifts to exit strategies…

In the finance world, an “exit strategy” traditionally means preparing a business for acquisition (selling it privately) or an IPO (listing publicly on the stock market). These exits allow early stage investors to earn significant returns on their initial investment, balancing the high risks of funding startups, many of which will fail.

For the VC firm, an exit is standard procedure. But for you, the idea of handing over control of your company gives you anxiety. This journey has never been about chasing profits; it’s always been about making a difference. And the thought of losing control of your company’s mission – it simply becoming a marketing strategy for a profit-making machine – is your worst nightmare.

Naturally some founders see the risk of an exit as too high and opt for alternative forms of financing to avoid it altogether. Others, like you, are open to the idea of an exit—but only if they can be sure their company’s mission remains protected.

So, what can you do to ensure that the mission behind your company remains intact even if it comes under new ownership?

An Impactful Exit

As the purpose-driven sector gains prominence, several strategies have emerged to help embed and protect established missions within businesses.

Governance Structures

Embedding your mission into governance documents helps ensure future owners are guided by the company’s purpose. Certifications like B-Corp demonstrate a commitment to balancing profit and purpose. While not legally binding, losing B-Corp status can harm reputation and stakeholder trust, incentivising adherence to these standards. In some jurisdictions, such as the US and Canada, Benefit Corporation status provides stronger protections by legally obligating directors to balance societal impact with profit. Stakeholders, typically shareholders, have the right to file lawsuits against directors if they fail to uphold these obligations. Patagonia exemplifies how this framework can reinforce a company’s mission.

Control Mechanisms

Certain control mechanisms can help ensure that mission-critical decisions align with the company’s purpose, even after the founders have stepped away. 

Golden Shares, for example, grant veto power over key decisions, such as altering the company’s mission. The slave-free chocolate company, Tony’s Chocolonely, has used this approach by issuing a golden share to an independent foundation, overseen by three trusted ‘Mission Guardians’ with strong track records in social impact and sustainability, to safeguard its values.

Alternatively, Dual-class share structures allocate greater voting power to certain stakeholders, such as founders or mission-aligned representatives, to help preserve influence over strategic decisions. The New York Times uses this system to uphold journalistic integrity, with enhanced voting rights granted to the founding Ochs-Sulzberger family, intended to protect the publication’s mission.

Mission-Aligned Sale Agreements

Another way to mitigate the risk of mission dilution post-sale is by structuring the terms of the sale agreement to reflect your company’s purpose. Founders can work with potential buyers to set expectations and include clauses that encourage the new owners to uphold the mission.

For instance, selecting buyers who share the company’s values – often referred to as ethical buyer selection – can significantly increase the likelihood of mission continuity. Agreeing on these criteria with investors at the point of funding can be challenging but not impossible. For example, when Ben & Jerry’s was acquired by Unilever, the sale agreement included provisions to protect the company’s social mission. An independent board was established to oversee decisions related to its values, ensuring they remained central to the company’s operations.

Another option is to include specific contractual obligations in the agreement. These might require the new owners to maintain sustainability initiatives, uphold fair labour practices, or adhere to Environmental, Social, and Governance (ESG) principles.

Cultural Integration

Arguably the most effective way to ensure your company’s mission endures is to embed it as deeply as possible within the culture. A strong cultural foundation creates resistance to mission drift and ensures that purpose is inseparable from the company’s identity.

Measurable ESG goals aligned with business strategy can tie operational success to purpose. This also generates consumer expectations, as seen with brands like The Body Shop, whose ethical commitments create external pressure to maintain its mission.

Additionally, hiring mission-driven employees and embedding purpose into onboarding and training reinforces cultural alignment at every level.

If your company fully embodies its purpose – where that purpose is not just a marketing strategy but the very foundation of its value – it becomes far harder for any future owner to compromise its integrity without jeopardising its success. Furthermore, potential buyers will be far more likely to openly agree to measures that preserve the mission, as doing so helps maintain brand value and stakeholder confidence—just as Unilever did with Ben & Jerry’s.

The Limits of Mission Protection Post-Sale

At the end of the day, these approaches are not without their challenges and controversies. Embedding a mission into legal structures can make businesses less attractive to traditional investors who solely prioritise profit. And even with mission protection mechanisms in place, leadership changes or shareholder conflicts can still challenge a company's ability to uphold its purpose. On the whole, corporate law remains skewed towards prioritising profit over purpose, unless explicit legal frameworks are in place to protect mission-driven goals. Essentially, however robust a founder’s efforts to safeguard their company’s mission, there is no absolute guarantee that purpose will be respected after a sale.

If purpose-driven companies are to thrive, we must continue to innovate and build systems that enable growth without compromising on values. It’s an exciting, if daunting, prospect—but one that has the power to redefine what success means in business beyond profit alone.

-

In the coming months, I’ll be taking a deeper dive into the issues and challenges facing purpose-driven companies in a profit-driven world. If this is a conversation you’re interested in, make sure you subscribe below! 👇