Exit options
How to sell a failed startup
To sell a failed startup, use the route that still has a counterparty — a strategic buyer, an acqui-hire, an asset buyer, or a marketplace — and treat a data license as an additional line, not a replacement sale. If none of those close, what remains is a creditor process, an assignment where that state's law provides one, a bankruptcy case, or a wind-down. Match each route to that counterparty.
| Topic | Rule |
|---|---|
| Assignment, New York | New York Debtor and Creditor Law Article 2 is titled General Assignments for the Benefit of Creditors and covers sections 2 through 24. Section titles in that article include Duties of assignee. New York Senate |
| Chapter 7 | Chapter 7 of the Bankruptcy Code provides for liquidation: the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. A chapter 7 case begins with the debtor filing a petition. The bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds to pay holders of claims. United States Courts |
| Chapter 11 | Chapter 11 of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. On a voluntary petition the debtor becomes a debtor in possession, which is a debtor that keeps possession and control of its assets while undergoing a reorganization without the appointment of a case trustee, until the plan is confirmed, the case is dismissed or converted, or a trustee is appointed. United States Courts |
| Who files | A chapter 11 petition may be a voluntary petition, filed by the debtor, or an involuntary petition, filed by creditors that meet certain requirements. A chapter 7 case begins with the debtor filing a petition. United States Courts |
| Delaware asset sale | Every Delaware corporation may at any meeting of its board of directors sell, lease, or exchange all or substantially all of its property and assets, including its goodwill and its corporate franchises, when and as authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon, at a meeting duly called upon at least 20 days' notice. Delaware Code Online |
| Bankruptcy Code | The United States Bankruptcy Code is title 11 of the United States Code, and bankruptcy procedure also follows the Federal Rules of Bankruptcy Procedure. United States Courts |
| Sale of business assets | The sale of a business usually is not a sale of one asset. Instead, all the assets of the business are sold. Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. Internal Revenue Service |
| Corporate liquidation | Corporate liquidations of property generally are treated as a sale or exchange. Internal Revenue Service |
What selling a failed startup means
Selling a failed startup means finding a counterparty for something that still has a buyer: the company, the team, or named assets. A failed raise, a failed product, or a missed payroll is the reason you are looking. It is not itself a route.
If no counterparty appears, the company still has to close. That work is how to wind down a company: employees, records, taxes, and the state filing. A sale does not skip those steps when the sale does not happen.
Start from the route that still has someone on the other side. If that person stops replying, move to the next route that still has one. Do not wait on a whole-company buyer while payroll, notices, and vendor bills keep running.
If you want a short reading list before the framework, use which exit option is right for my company.
Exit options compared
Start with the route that still has a counterparty. Move to the next row only when that counterparty is gone.
| Option | Best when | Clock | Who runs it |
|---|---|---|---|
| Strategic sale | A buyer wants the operating company. | The closing date in the purchase agreement. | The board and the buyer. |
| Acqui-hire | A buyer wants the team, and the people are willing to be hired. | The offers the people accept. | The buyer and the people who accept. |
| Asset sale | Named assets can move without selling the equity. | The bill of sale or asset purchase agreement. | The board and the buyer. |
| IP, domain, and code | Those assets are assignable and a buyer wants them separate from the entity. | The assignment document. | The board and the buyer. |
| Marketplace listing | The company or its assets can be offered publicly and the board has approved an offer. | Until the board accepts an offer. | The board. A marketplace is the channel, not the seller. |
| Assignment for the benefit of creditors | The board wants a creditor process and your lawyer has confirmed the state of incorporation provides one. | The assignment statute of the state that provides one. | The assignee under New York's assignment statute. |
| Bankruptcy or liquidation | The company is using a federal bankruptcy case. | The case begins when a petition is filed. | In a Chapter 7 case, the trustee. In a Chapter 11 case, the debtor in possession unless a trustee is appointed. |
| Data license, beside a sale | The company has the right to license the records and does not need a buyer for the equity. | A yes or no within 3 days. | The company and the licensee. The licensee is a US-based AI data company. |
The mechanisms themselves, including ones that are not a sale, are listed in how to recover value from a closing company.
Named services, with their fees, are set next to a license in compare exit options for a company.
Strategic sales and acqui-hires
A strategic sale is a buyer who wants the operating company. The board negotiates, the purchase agreement sets the closing, and the equity moves if the deal signs. Until it signs, the company is still the company. Keep the wind-down sequence ready. A term sheet is not a closing.
An acqui-hire is a hire. The buyer wants the people, and the people have to accept. The equity may stay where it is. The product, the contracts, and the stock do not move because someone accepted a job. If the product is meant to move, write that as an asset sale or as part of the equity sale. Do not assume a hire carries it.
Tell candidates the truth about what is being sold. People who think they are joining a buyer, while the board thinks it sold only the team, produce a fight you do not have time for. The board approves the company side. Each person approves their own offer.
- Acquire.com vs Acquisition.com
- Asset sale, acqui-hire, or license
- Selling vs licensing data
- SimpleClosure, Starcycle, and Sunset
- Acquire.com vs Vetrix
- Acquisition.com vs Vetrix
- BizBuySell vs Vetrix
- DataVendor vs Vetrix
- Empire Flippers vs Vetrix
- FE International vs Vetrix
- Flippa vs Vetrix
- Quiet Light vs Vetrix
- SimpleClosure vs Vetrix
- Starcycle vs Vetrix
Asset sales, IP, and marketplace listings
An asset sale moves named assets. It does not, by itself, move the stock. Every Delaware corporation may at any meeting of its board of directors sell, lease, or exchange all or substantially all of its property and assets, including its goodwill and its corporate franchises, when and as authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote thereon, at a meeting duly called upon at least 20 days' notice. Delaware Code Online That rule is Delaware only. See how to dissolve a Delaware corporation for the filing steps after a Delaware sale.
The sale of a business usually is not a sale of one asset. Instead, all the assets of the business are sold. Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. Internal Revenue Service Corporate liquidations of property generally are treated as a sale or exchange. Internal Revenue Service The tax treatment of each asset is a question for the company's accountant.
IP, a domain, and code are asset sales of those items when they are assignable. Read the contracts that created them before you list them. Code written by a contractor, a trademark in a founder's name, and a domain at a registrar are three different transfers.
A marketplace listing offers the company or its assets in public. The board is still the seller. The marketplace is the channel. Accept an offer only after the board has approved that offer. A listing is not an approval, and it is not a price.
Acquire.com and Acquisition.com are easy to mix up. Read Acquire.com vs Acquisition.com before you open an account on the wrong site.
When the choice is assets, people, or a copy of records, read asset sale vs acqui-hire.
If the listing ends with no buyer, the records question is separate. Read my business didn't sell.
Match the records question to the company today in what to do with your company's records in your situation.
If the name you remember is MicroAcquire, read what happened to MicroAcquire. The marketplace rebranded to Acquire.com.
For other options when a listing is the wrong tool, read alternatives to selling your business on a marketplace.
General information only. This is not legal, tax or financial advice.
Assignment for creditors, and bankruptcy
These routes are creditor processes. Ask your lawyer before the board chooses an assignment or a bankruptcy case.
New York Debtor and Creditor Law Article 2 is titled General Assignments for the Benefit of Creditors and covers sections 2 through 24. Section titles in that article include Duties of assignee. New York Senate Other states differ. An assignment is not a federal bankruptcy filing. Ask your lawyer whether the state of incorporation provides one before the board treats the route as open.
The United States Bankruptcy Code is title 11 of the United States Code, and bankruptcy procedure also follows the Federal Rules of Bankruptcy Procedure. United States Courts Chapter 7 of the Bankruptcy Code provides for liquidation: the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. A chapter 7 case begins with the debtor filing a petition. The bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds to pay holders of claims. United States Courts
Chapter 11 of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. On a voluntary petition the debtor becomes a debtor in possession, which is a debtor that keeps possession and control of its assets while undergoing a reorganization without the appointment of a case trustee, until the plan is confirmed, the case is dismissed or converted, or a trustee is appointed. United States Courts A chapter 11 petition may be a voluntary petition, filed by the debtor, or an involuntary petition, filed by creditors that meet certain requirements. A chapter 7 case begins with the debtor filing a petition. United States Courts
Is it legal to sell company data to AI companies? Read that before anyone offers records out of a case. When a case is already open, read selling company data in bankruptcy.
| Route | Who must approve | What they approve | Source |
|---|---|---|---|
| Delaware sale of all or substantially all assets | The board, and the holders of a majority of the outstanding stock entitled to vote. | The sale, lease, or exchange of all or substantially all assets. | Delaware Code Online |
| Bankruptcy petition | The debtor, for a voluntary petition. Creditors who meet the requirements, for an involuntary Chapter 11 petition. | The petition that opens the case. | United States Courts |
| Vetrix Data Licensing | The company, through whoever it authorizes to sign. | The license of records. Vetrix does not sign as the licensee. | How company data licensing works |
| Wind down | The board, and stockholders where the charter or the statute of formation requires a vote. | The decision to wind down, and who will run it. | How to wind down a company |
Data licensing beside a sale
A data license is a copy of operational records, with personal details removed. It is an additional line. It does not sell the equity, it does not hire the team, and it does not wipe debt.
You keep ownership of your data, and full use of it in your business. The licensee is a US-based AI data company. We say yes or no within 3 days.
Read how to sell company data to AI companies before you decide which records a copy can include. How much is my company data worth? The estimator uses your staff and your systems. Tell a buyer who is already in diligence that a license exists or is being discussed. Those promises are written in the license terms.
Running more than one route
More than one route can be open. A strategic conversation, an asset list, and a data license can run in the same month. Each one needs its own approval, and each counterparty should hear about the others.
Read company data license agreement terms before you sign a license while a sale is open. Exclusivity in a license is the term a later buyer will ask about. Answer it before they find it.
Do not sign an asset deal that also promises the same records to a buyer and to a licensee. Pick which contract carries the copy, and write the other contract so it does not contradict that choice. The board minutes should name which route is authorized, so a founder email is not the only record of the decision.
Cash from any route goes to the same creditor order as any other cash. A license payment is not a distribution to stockholders ahead of known claims.
What to do when a sale stalls
A sale has stalled when the counterparty has stopped moving and the company is still spending. Set a date the board will live with. On that date, either the deal has a signed agreement or the company starts the close.
The close is what to do before dissolving a company. Employees, an export of the tools, the final return, and the state filing do not wait on a buyer who has gone quiet.
A license can still be open while that sequence runs. It does not replace the sequence. If a buyer reappears after the board has started the close, the board can still hear the offer. The notices, the exports, and the filings that are already required stay required.
Leave the route that has no counterparty. Stay on a route that has one, or finish the wind-down. Those are the two moves left when a sale stalls.
Related
- Winding down
Order of operations to wind down a company, from approval through taxes and dissolution.
- How to sell company data
How to sell or license company data to AI companies, and which route fits.
- Estimate
US payout bands by staff at peak, and the estimator that uses them.
- How it works
The six steps from a short enquiry to payment, and how to stop.
- Is it legal?
What GDPR, US rules, and bankruptcy law say about licensing company data.
- License terms
The four license terms: what you give, keep, agree, and sign.
- Compare
Exit options compared: sell, broker, shut down, or license records.
- Alternatives
Alternatives when selling on a marketplace is the wrong tool, or the listing did not sell.
- Your situation
What changes for your records in eight company situations.
Questions about selling a failed startup
How do you sell a startup that has failed?
Use the route that still has a counterparty: a buyer for the equity, a buyer who will hire the people, a buyer for named assets, or a marketplace listing the board has approved. A data license is an extra line beside one of those routes. It is not a buyer for the company. If none of the sale routes close, what remains is a creditor process or a wind-down. Start from the options table and stay on a row that has someone on the other side.
What are the options when a company can't be sold?
The options are a strategic sale, an acqui-hire, an asset sale, a sale of IP or code, a marketplace listing, an assignment for the benefit of creditors, bankruptcy or liquidation, and a data license beside any of those. Which route fits depends on your creditors and your board. Take the table to your lawyer. When the equity sale is stuck, move to another row of that table rather than skipping to dissolution.
What is an assignment for the benefit of creditors?
New York Debtor and Creditor Law Article 2 is titled General Assignments for the Benefit of Creditors and covers sections 2 through 24. Section titles in that article include Duties of assignee. Other states differ. An assignment is not a federal bankruptcy filing. Chapter 7 and Chapter 11 are federal cases with their own petitions. Ask your lawyer whether the state of incorporation provides an assignment before the board treats that route as open.
Can we license company records and still sell the company?
Yes. The license runs beside the sale and does not take the place of a buyer. It does not wipe debt. Buyers in a later diligence review often ask what licenses already exist, so tell them about a license that is already signed. The company can keep ownership of the records and full use of them in the business. Read the license terms for who the licensee is. A license is not a reason to stop a sale that still has a counterparty.
Does an acqui-hire count as selling the company?
Not by itself. An acqui-hire is a hire of people who agree to go. The buyer wants the team, and the people still have to accept. The equity may or may not move, and the assets may or may not move. A hire of the team does not automatically transfer the product, the contracts, or the stock. If the product is meant to move, that is an asset sale or an equity sale, with its own agreement.
Who has to approve a sale of substantially all the assets?
For a Delaware corporation, the Delaware vote for a sale of all or substantially all assets is a majority of the outstanding stock entitled to vote, at a meeting called on at least 20 days' notice. The board acts at a meeting, and the stockholder vote is separate. Ask your lawyer about any state other than Delaware. The charter can set a higher bar than the statute, so read the certificate of incorporation before you count heads. An asset sale and a wind-down are different acts.
Sources
- New York Senate. Debtor and Creditor Law, Article 2. Checked 2026-11-04
- United States Courts. Chapter 7 — Bankruptcy Basics. Checked 2026-11-04
- United States Courts. Chapter 11 — Bankruptcy Basics. Checked 2026-11-04
- United States Courts. Bankruptcy Basics. Checked 2026-11-04
- Delaware Code Online. 8 Del. C. § 271. Checked 2026-11-04
- Internal Revenue Service. Sale of a business. Checked 2026-11-04
- Vetrix Labs. How company data licensing works. Checked 2026-11-04
- Vetrix Labs. Company data license agreement terms. Checked 2026-11-04