As boards turn their focus to the 2026 proxy season amid growing macroeconomic headwinds, one message from activist investors is clear: volatility may delay campaigns, but it rarely deters them. 

Diligent Market Intelligence convened leading asset managers and advisors to investors and public companies to learn what we should expect this proxy season. The key takeaway: performance and strategy remain the ultimate grading curve, regardless of geopolitical shocks or tariff-driven uncertainty.


Diligent’s Proxy Season Preview 2026 report, which distils key takeaways from our recent Stewardship Series Summit in New York, highlights a backlog of campaigns paused during last year’s “Liberation Day” volatility that may reemerge if companies have not demonstrably improved. Activists are increasingly systematic, scanning for misalignment between performance, strategy, governance and pay, weak succession planning and boards slow to refresh or communicate. Abrupt strategic pivots, under-integrated M&A and failed “say on pay” votes are now common triggers for a campaign.

Rethink engagement in a reshaped ecosystem


Regulatory shifts have complicated the traditional dialogue between boards and large asset managers, with last year’s Securities and Exchange Commission (SEC) guidance on 13G eligibility linked to more cautious engagement by index funds. At the same time, the influence of proxy advisors is moderating as leading investors rely more on internal policies and analysis than on recommendations. Boards can no longer assume that a small circle of gatekeepers will interpret their story for shareholders; they must own the narrative directly and be proactive sharing their strategy and governance with investors.


M&A has reemerged as a central battleground with investors more willing to challenge underpriced take-privates and to use withhold campaigns or dissident slates to influence outcomes. Meanwhile, lagging AI strategies and thin communication can give activists an opening to argue the company is falling behind or failing to explain its plan.


Directors should define a clear “North Star” strategy and align capital allocation, incentives and messaging to it, rather than swaying with each bout of volatility. Refresh board skills, particularly around technology and M&A; pressure-test succession plans; and ensure 2026 incentive designs balance flexibility with visible alignment to shareholder outcomes. In a season that continues to play out amid geopolitical uncertainty and economic volatility, and as director quality is under sharper scrutiny, activism preparedness is the best defense.

Activism, AI and M&A in a market that won’t sit still 

For founders and CEOs at growing companies, an exit plan for startup success is about more than choosing between an acquisition, an IPO or a PE buyout. The gap between having an exit strategy and being ready to execute one is where millions in valuation go to die.

You've probably discussed timing with your board and your investors. But when the moment arrives, when a buyer sends a term sheet or the IPO window opens, the companies that capture top-dollar multiples aren't the ones with the best pitch decks. They're the ones with the operational infrastructure that lets a deal close fast, clean and at maximum value.

 by Diligent Institute in partnership with Wilson Sonsini, NetSuite, CFO Alliance and CFO Leadership Council

 companies rate their confidence in transaction readiness at just 5.7 out of 10, and limited resources rank as the top challenge for 56% of organizations. For growing companies with lean teams, that confidence gap translates directly into valuation risk.

What separates founders who capture premium multiples is an operational playbook that turns exit readiness from a someday aspiration into a continuous discipline, directly increasing what you walk away with.

What a startup exit plan actually means beyond choosing a route

The major exit strategy types every founder should understand

Operational levers that increase your valuation before a transaction begins

A timeline framework for what to build and when

Common exit planning mistakes that cost founders real money

How technology helps growing companies stay transaction-ready year-round

What is a startup exit plan and why does it matter?

A startup exit plan is the strategic framework that defines how founders and investors will eventually realize a return on their equity, whether through acquisition, IPO, management buyout or another liquidity event. But defining the route is the easy part.

Directors are adjusting to that reality across the board. In 

84% say they have strengthened their approach to scenario planning

, expanding both the scope and depth of the risks they prepare for. Exit readiness follows the same logic: it’s not a one‑time decision, but infrastructure built to withstand uncertainty.

The harder, higher-value work is building the operational readiness that makes any route executable at maximum value. That means clean 

, organized financial documentation, audit-ready entity structures and board materials that tell a compelling growth story.

Investors and PE firms increasingly expect this infrastructure from the companies they back as a foundational signal of management quality. As the 

National Association of Corporate Directors (NACD)

 puts it: "Companies with strong board practices often command higher valuation multiples and better deal certainty." Exit readiness isn't just a slide in your pitch deck. It's the infrastructure behind every slide.

"Companies can do a lot of things day-to-day to improve readiness for a potential transaction, many of which would probably make life easier running the company absent a deal," says Rich Mullen, Partner at Wilson Sonsini.

Before diving into the operational playbook, here's a concise overview of the exit routes available to growing companies. Each has distinct governance implications, but the operational readiness that drives maximum value is consistent across all of them.

 A larger company acquires your company to gain technology, talent, market share or customer base. Strategic buyers focus heavily on integration compatibility and IP ownership, so your governance documentation must clearly demonstrate both.

 Taking your company public through a stock exchange listing. IPOs carry the most stringent governance requirements: majority-independent boards, formal committee structures, 

 and multiple years of audited financials. The preparation timeline is the longest among all exit paths.

 A PE firm acquires a controlling stake, typically with the goal of improving operations and a subsequent exit at a higher valuation. PE buyers scrutinize operational maturity, management quality, and value-creation levers, and they use your governance documentation as a proxy for all three.

 The existing management team acquires the company, often with financing support. MBOs require clear cap table documentation and board authorization records to execute cleanly.

 Existing shareholders sell their stakes to new investors without the company changing hands. Secondary sales require precise ownership records and clean transfer documentation.

 A company acquires yours primarily for the team rather than the product or revenue. While valuations tend to be lower, employment documentation and IP assignment records must be airtight.

 The company winds down operations and distributes remaining assets to stakeholders. Even in liquidation scenarios, clean governance records determine how efficiently assets are distributed and disputes are avoided.

How to maximize your exit valuation before the transaction starts

Most exit planning advice stops at growing revenue and reducing churn. That matters, but the operational levers below are what separate companies commanding premium multiples from those leaving money on the table, and none of them require a single new customer.

1. Maintain clean governance documentation and board records

, resolutions and committee records during due diligence. Missing minutes or unsigned consents raise immediate questions about whether management had proper authority for material decisions like option grants, executive compensation changes and strategic pivots.

Document all board decisions through formal meeting minutes that demonstrate proper governance procedures for future investor due diligence. Start treating every board meeting as one that a buyer will eventually review, because they will.

2. Build an organized data room well before a transaction

The companies that command the best outcomes maintain a current, organized data room as standard operating procedure. The companies that scramble to assemble one when an offer arrives signal exactly the kind of operational immaturity that triggers buyer discounts.

PitchBook analysis of EY's Private Equity Exit Readiness Study

 found that 72% of PE respondents identified access to robust data and KPIs as their biggest exit challenge from a finance perspective. Build your data room now, organized across corporate documents, financials, legal agreements, IP, HR and commercial operations, and update it monthly.

3. Professionalize board materials and investor reporting

PE partners and institutional investors evaluate governance sophistication as a proxy for management quality. If your board materials are inconsistent slide decks cobbled together the night before each meeting, buyers notice. Professional, consistent board books with clear financial summaries, operational metrics and strategic updates signal a company that operates with discipline, not one that's performing governance theater for the transaction.

"One of the clearest gaps I notice is between governance and finance systems... Organizations that close this gap gain speed, credibility, and control in transactions," says Jack McCullough, Founder and President of the CFO Leadership Council.

4. Ensure cap table accuracy and entity records are audit-ready

Cap table errors like phantom equity disputes, unclear convertible note treatment and option pool miscalculations create ownership uncertainty that PE buyers in particular will not tolerate. Any ambiguity about who owns what gets priced into the valuation as risk or used as justification to walk away entirely. Review your cap table quarterly and reconcile it against all outstanding agreements.

5. Close compliance gaps before buyer due diligence exposes them

Employment misclassification, IP assignment gaps and regulatory lapses are hidden liabilities that compound over years and surface at the worst possible moment. 

 identifies employment misclassification as one of the top issues that can materially reduce valuation or kill deals if uncovered late. Conduct your own 

 so you find and fix these gaps before a buyer's diligence team does.

6. Build a financial reporting cadence that tells a growth story

Buyers don't just want to see the numbers. They want to see that you've been consistently tracking, reporting, and making decisions based on those numbers. A regular cadence of board-ready financial reports with clear KPIs demonstrates the operational maturity that justifies premium multiples and reduces the perceived risk a buyer is taking on.

Diligent Institute's Transaction Readiness Report shows that only 4% of organizations have their GRC and finance systems fully integrated into a single platform, with private companies nearly three times more likely to have completely siloed systems than public companies. That fragmentation creates exactly the kind of reporting gaps that erode buyer confidence during due diligence.

Explore how growth-stage companies prepare for funding rounds and exits.

Get transaction-ready faster

The most common and most expensive mistake founders make is treating exit preparation as a 90-day sprint. It's an 18-month minimum. Buyers review your governance history during diligence, and improvements made in the final six months before a transaction are visible but provide insufficient evidence of sustained operational maturity.

18+ months out: build the governance foundation

This is when the structural work happens. Recruit independent directors if your board is currently all founders and investors. Establish a formal board meeting cadence, quarterly at minimum, with documented minutes and resolutions for every session. Review and clean up your corporate charter, bylaws and 

Eliminate dormant subsidiaries and restructure related-party transactions that won't survive buyer scrutiny. Review IP assignments and employment classifications. These processes take months to complete properly and cannot be compressed.

6–12 months out: prepare documentation and close gaps

Commission a quality of earnings study to identify and normalize one-time items before a buyer's team does it for you. Build or update your data room with comprehensive document categorization across all major categories.

Finalize your advisor team: accountant, attorney, investment banker and tax advisor. Standardize your revenue recognition practices and ensure they align with GAAP requirements. For IPO candidates, 

 reports that 83% of successful IPO companies had scalable ERP and financial reporting systems in place at least a year before going public. Deploy the financial infrastructure now, not later.

"The most effective finance leaders are turning the discipline of transaction readiness into a year-round capability," says Nick Araco, CEO of CFO Alliance.

90 days pre-transaction: execute with precision

Develop your management presentation with a compelling equity story reconciled to your financial statements and forecasts. Ensure your data room is detailed and self-service so buyers can work efficiently without constant hand-holding.

Address any remaining tax and legal issues proactively. Align stakeholders, including board members, key executives and major shareholders, on transaction terms and timing. And critically, maintain management focus on running the business. Nothing kills a deal faster than performance deteriorating during the sale process because the team was distracted.

Exit planning mistakes that cost founders money

Even well-run companies leave money on the table or lose deals entirely by making avoidable mistakes during the exit process. A solid exit plan for startup founders addresses these before a deal is live, not after. Here are the most common ones to watch for.

Waiting until a deal is live to organize governance records

By the time a term sheet arrives, you need 18–24 months of clean documentation already in place. Buyers aren't just reviewing your current state. They're evaluating your governance history. Rebuilding that history under deal pressure is expensive, time-consuming and often incomplete.

 over 60–90 days. Strategic acquirers may take several months to over a year, depending on deal complexity. 

 spans 12–18 months of regulatory work. If your documentation isn't ready before diligence begins, every week of delay erodes buyer confidence and your negotiating leverage.

Neglecting board documentation that buyers scrutinize

Missing board minutes don't just look sloppy. They raise questions about whether material decisions received proper board authorization. Option grants approved without documented board consent, executive compensation changes without recorded votes and strategic pivots without formal resolutions can create legal liability or give buyers leverage to renegotiate.

Assuming financial projections alone drive valuation

A compelling revenue forecast matters, but buyers discount projections from companies that can't demonstrate the operational infrastructure to deliver on them. Clean governance records, a professional reporting cadence, and audit-ready financials give your projections credibility.

Failing to distinguish PE vs. strategic buyer expectations

PE buyers focus on operational due diligence, value-creation levers, and management quality. Your cap table must be precise, and your operational metrics must be defensible. Strategic buyers prioritize IP due diligence, integration readiness and cultural fit. IPO underwriters require majority-independent boards, formal committee structures and SOX compliance. Building toward the most rigorous standard, IPO governance, positions you to pursue any path.

How Diligent helps growing companies stay exit-ready

The preparation challenges outlined above, from manual board materials and disorganized documentation to compliance gaps discovered too late and financial reporting that doesn't scale, are exactly what Diligent's platform addresses for growing companies.

 eliminates the manual burden of creating professional board and investor materials. Instead of rebuilding board books from scratch before every meeting or funding round, Smart Builder intelligently gathers prior company materials, practices and action items to create a first draft. This maintains consistent, investor-ready documentation continuously rather than scrambling when a transaction demands it.

 provide the secure, organized due diligence infrastructure that signals operational maturity to buyers. Built for high-stakes transactions like M&A, IPOs and capital raises, Data Rooms use AI to summarize key content so buyers and advisors can understand critical information in minutes rather than hours, reducing review cycles and potentially lowering outside counsel fees.

 shifts compliance management from reactive to proactive by scanning board materials for legal, compliance and operational risks before meetings. Instead of waiting for a buyer's diligence team to surface issues that trigger valuation reductions, companies can identify and remediate gaps on their own timeline.

 connects financial data and operational metrics directly into board materials, providing an up-to-date view of financial performance without manual data entry. One documented integration saved up to 12 hours of reporting time per month, time that compounds significantly over an 18-month exit-preparation window, while eliminating the manual errors that buyers scrutinize during financial due diligence.

Together, these tools address a persistent gap: maintaining transaction-ready governance as a continuous operating discipline rather than a last-minute project.

Exit readiness is a growth strategy, not a finish line

The companies that command the highest exit multiples don't treat governance readiness as a box to check when a deal materializes. They build it into their daily operations. Clean board records, organized data rooms, proactive compliance monitoring and professional financial reporting aren't just exit preparation. They're the habits that help growing companies make better decisions, raise money faster and operate with the discipline that investors and buyers reward.

Start building exit readiness now, not because you're planning to sell tomorrow, but because the infrastructure that maximizes your eventual payoff also makes your company run better today. See how Diligent helps growing companies turn exit readiness into a daily operating advantage. 

Frequently asked questions about startup exit plans

What is an exit plan for startup founders, and why is it critical?

An exit plan for startup founders is a strategic framework that defines how you and your investors will realize a return on equity through an acquisition, IPO, PE buyout or other liquidity event. Beyond choosing a route, it includes the operational readiness, governance documentation and financial infrastructure needed to execute any transaction at maximum value. Without this foundation, growing companies risk leaving significant valuation on the table when opportunities emerge.

How far in advance should I start preparing for a startup exit?

The minimum viable preparation timeline is 18 months; 24 months is ideal. Buyers review 18–24 months of governance history during due diligence, so improvements made in the final six months before a transaction appear rushed and don't establish sustained operational maturity. If your exit horizon is shorter, prioritize the highest-impact gaps: cap table accuracy, board documentation completeness and compliance review.

What should be included in an M&A data room?

A comprehensive data room should cover corporate documents, financial information, legal agreements, intellectual property, human resources, commercial operations, technology, IT systems and ESG documentation. Organize with a clear folder hierarchy that places summaries before source documents. Update financials and operational metrics monthly, conduct a full document review quarterly and add materials immediately when material events occur, like financing rounds, key hires or major contracts.

What's the difference in exit readiness requirements for PE buyers vs. strategic acquirers?

PE buyers focus on operational due diligence, management quality, value-creation levers and precise cap table documentation. Strategic acquirers prioritize IP ownership, integration compatibility, cultural fit and the identification of synergies. IPO underwriters impose the most stringent requirements: majority-independent boards, three mandatory committees and multiple years of PCAOB-audited financials. When uncertain about your exit path, build toward IPO governance standards since they're a superset of what other buyers require.

What governance mistakes most commonly reduce exit valuations?

Startup exit plan: strategies to maximize your payoff

This article originally appeared in our February 26th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe 

Across board conversations this year, one theme keeps resurfacing: directors are leaning into growth, with deals firmly back on the table — and AI is a major catalyst. Many see today’s environment as a buyer’s market and are positioning to move while conditions create openings — even as their internal systems and processes are still catching up.

AI-fueled M&A tops board agendas for 2026

The appetite is real. M&A and strategic partnerships top the 

 this year, with 40% of directors citing deals as a leading strategy for 2026. 

 as the second-highest capital allocation priority (just behind technology adoption — including AI investments), with directors split evenly between investing in transactions and expanding into new markets. That tight pairing of capital priorities underscores how directors increasingly see AI and broader technology integration as the way to make those deals pay off — by building the data, analytics and automation muscles required to capture post-transaction value.

35% of directors say M&A opportunities are among the most pressing topics for their next board meeting, behind only strategic planning and AI-related risks and opportunities. In a striking asymmetry, just 1% cite the M&A landscape and valuations as a leading risk, while 26% view it as one of their greatest opportunities for 2026. Boards, in other words, are reading the macro environment as a moment to act — not wait.

On paper, directors feel confident. More than half say they have strong transactional/M&A expertise on the board and another 38% report at least some expertise. Yet nearly one in five still list M&A among the most challenging areas to oversee, alongside AI, innovation and capital allocation.

Taken together, the data suggests a familiar pattern: ambition is running ahead of infrastructure. Boards are ready to pursue transformative — often AI-oriented — deals, but many organizations still lack integrated data, standardized playbooks and technology-enabled diligence.

 of 2026, transaction readiness has to become a continuous discipline, not a one-off exercise. In practice, that means pressure-testing whether governance, due diligence and oversight are truly deal-ready at all times — from roles and decision rights to data access and approvals — not just when a transaction is imminent.

 outlines what to have in place across M&A, IPO and other liquidity events.

From transaction readiness to transaction velocity

While there’s great enthusiasm for deals this year, are companies truly ready? Our 

 last fall with Wilson Sonsini and NetSuite surfaced some 

 about M&A, IPO and other transaction readiness:

Only 4% of organizations had fully integrated governance, risk, compliance and finance systems for transactions; roughly 60% were operating on siloed or partially integrated platforms.

56% pointed to limited resources as the chief barrier to deal readiness; 35% cited economic and geopolitical uncertainty and 28% a lack of experienced personnel.

Adoption of core deal-enabling technology was thin: just 20% reported using secure data rooms, 16% ERP tools, 10% specialized financial reporting systems and 5% AI-powered tools for transactions.

The takeaway then was clear: many organizations were still built for analog deals in a digital and AI-fueled market. Fast-forward to today: appetite has rebounded, but the underlying infrastructure hasn’t fully kept pace — especially as AI accelerates dealmaking and raises the bar for diligence, integration and oversight.

Building always-on M&A transaction readiness at the board level

For boards, the mandate is clear: make transaction readiness always-on. Use integrated systems, define clear roles, standardize diligence, stand up robust data rooms and maintain continuous board engagement. The boards that come out ahead in this cycle won’t necessarily be the ones doing more deals — they’ll be the ones pairing bold, AI-informed strategy with the governance, data and integration muscle to execute cleanly.

 to pressure-test your board’s M&A playbook for the year ahead.

M&A is back — and supercharged by AI. Are boards ready to execute? 

This article originally appeared in our February 12th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe

 produced with our partners at Corporate Board Member, and the signals on risk oversight are impossible to miss. More than 200 corporate directors shared how they see the year ahead; their views reveal where boards are strengthening oversight and where blind spots still linger.

Key risk trends boards can’t ignore in 2026

From a risk oversight perspective, the story starts in a familiar place: the macro environment. A majority of directors cite a sharp downturn in the U.S. economy as the single biggest risk over the next few years, with “black swan” events and large-scale cyber incidents close behind. Economic conditions and government policy shifts top the broader risk landscape too, even as directors see technological disruption and M\&A as some of 

Boards are not standing still. Over the past five years, 84% say they’ve changed their approach to scenario planning, expanding the scope of scenarios they consider, increasing the time devoted to planning and broadening the range of geopolitical, technological and social risks they examine.

Some risk-oversight trends that stood out

 of directors cite a sharp downturn in the U.S. economy as a top organizational risk, and 

 worry most about a black swan event they haven’t yet scenario planned.

 include cyber events or data breaches in crisis exercises, 

 test for technology-related disruption and 

 say more frequent, structured risk discussions at the full-board level would most improve risk oversight, and 

 want a clearer link between risk and strategy.

 point to better use of AI-powered data and technology tools as a key lever to strengthen risk oversight.

 of directors view cybersecurity as a top organizational risk, even though cyber incidents are modeled in crisis planning more than any other scenario.

 say strengthening cyber and data‑privacy defenses is a priority for 2026.

AI and technology‑related regulation is expected to demand the most compliance attention this year, yet 

 of directors say it remains the most underestimated area of compliance oversight.

Upgrading the board’s risk oversight toolkit

Boards still lean most heavily on management reporting and updates from internal audit or the risk committee, but many say that isn’t enough in a world of always-on risk. They point to AI monitoring tools, 

 into strategy discussions, and more frequent engagement with external experts as the upgrades they need most.

Digital infrastructure is improving — nearly half of directors now receive real-time or near-real-time operational data between meetings — but many wish board time were more forward-looking, noting that risk and performance data are often used to monitor the present rather than reframe the future.

What emerges is a picture of boards working hard to catch up with the velocity of risk, but still wrestling with misalignment between what they rehearse, what they prioritize and how they equip themselves. Directors in this year’s survey point to the same set of needs: more structured risk discussions, clearer links between risk and strategy, better tools and analytics and ongoing education on emerging threats.

Risk oversight has to become a continuous discipline, not a periodic exercise. That means pairing richer scenarios and better data with more disciplined boardroom processes, so directors can anticipate disruptions, challenge assumptions and guide management through whatever “unimagined” risks come next.

Diligent

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Activism, AI and M&A in a market that won’t sit still

Startup exit plan: strategies to maximize your payoff

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