4 ms·

From an accounting standpoint yes, but in reality they paid about $1B. Half was directly for the company, the other half was golden handcuffs. They are choosing

From an accounting standpoint yes, but in reality they paid about $1B. Half was directly for the company, the other half was golden handcuffs. They are choosing to allocate the second to operating expenses and not acquisitions. To the employees of Cruise, still feels like a sweet billion. For once investors got less and employees got more, which is a refreshing change

argonaut 10y ago
Do you have inside knowledge we're unaware of? Otherwise it's hard to say "in reality...." $1B is plausible, but much more questionable given this article.
- mikeyouse 10y ago
  Dan Primack wrote a clarifying article yesterday: https://www.google.com/amp/amp.timeinc.net/fortune/2016/07/21/more-on-what-gm-paid-to-buy-cruise-automation/%3fsource=dam# https://www.google.com/amp/amp.timeinc.net/fortune/2016/07/2... The key part: because GM GM is being very narrow in how it describes the deal value. The $581 million (or $600 million, whichever you prefer) is the cash and stock that actually went out the Detroit doors during GM’s second fiscal quarter. Not included were a variety of other things, including cash still being held in escrow, expected earn-out payments, employee retention packages and other expected employee compensation (particularly for those with unvested shares at the time of acquisition).
  - argonaut 10y ago
    Yes, but I find a $400M retention package to be highly implausible. We're talking the kind of compensation that Google/Facebook would spend to retain 40 top executives.
  - gumby 10y ago
    That seems unlikely, as GAAP would require reserving that amount on the balance sheet and typing it to the acquisition. What Primack describes would be like buying a house and claiming its price is what you paid as the down payment.
- ttam 10y ago
  Justin Kan [x], who's brother Dan is the co-founder that's unnamed in the picture of the BI article, snapchatted several times the Cruise deal being $1B / unicorn I consider this article to be pretty poor, if they wanted to actually find the real price, they could've investigated some more instead of trying to infer from the earnings' reports. [x] I believe he was also an investor in Cruise
- theoracle101 10y ago
  In reality was a reference to the difference between why an acquisition price is reported as so high in the press yet appears on the financial statements as much less. This isn't unique to Cruise. Not a slight at this article.
abannin 10y ago
Surely $500M of retention incentives would be considered 'material' and require disclosure
- Aelinsaar 10y ago
  It would also be a lunatic number for this deal.

argonaut 10y ago

Do you have inside knowledge we're unaware of? Otherwise it's hard to say "in reality...." $1B is plausible, but much more questionable given this article.

mikeyouse 10y ago
Dan Primack wrote a clarifying article yesterday: https://www.google.com/amp/amp.timeinc.net/fortune/2016/07/21/more-on-what-gm-paid-to-buy-cruise-automation/%3fsource=dam# https://www.google.com/amp/amp.timeinc.net/fortune/2016/07/2... The key part: because GM GM is being very narrow in how it describes the deal value. The $581 million (or $600 million, whichever you prefer) is the cash and stock that actually went out the Detroit doors during GM’s second fiscal quarter. Not included were a variety of other things, including cash still being held in escrow, expected earn-out payments, employee retention packages and other expected employee compensation (particularly for those with unvested shares at the time of acquisition).
- argonaut 10y ago
  Yes, but I find a $400M retention package to be highly implausible. We're talking the kind of compensation that Google/Facebook would spend to retain 40 top executives.
- gumby 10y ago
  That seems unlikely, as GAAP would require reserving that amount on the balance sheet and typing it to the acquisition. What Primack describes would be like buying a house and claiming its price is what you paid as the down payment.
ttam 10y ago
Justin Kan [x], who's brother Dan is the co-founder that's unnamed in the picture of the BI article, snapchatted several times the Cruise deal being $1B / unicorn I consider this article to be pretty poor, if they wanted to actually find the real price, they could've investigated some more instead of trying to infer from the earnings' reports. [x] I believe he was also an investor in Cruise
theoracle101 10y ago
In reality was a reference to the difference between why an acquisition price is reported as so high in the press yet appears on the financial statements as much less. This isn't unique to Cruise. Not a slight at this article.

abannin 10y ago

Surely $500M of retention incentives would be considered 'material' and require disclosure

Aelinsaar 10y ago
It would also be a lunatic number for this deal.