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Modern guidelines for valuing a tech company in an M&A: - The technology asset is worth $3-5M, no matter what it is. - Higher AWS bill = better product. - EB
by bkanber 9y ago
Modern guidelines for valuing a tech company in an M&A:
- The technology asset is worth $3-5M, no matter what it is.
- Higher AWS bill = better product.
- EBITDA is not important, you can ignore that.
- What's the QoQ revenue growth for the last 8 quarters? Doesn't matter if margins are going down. Only revenue growth matters.
- More employees = better company. Obviously.
- Valuation should be directly proportional to venture capital raised.
- You have a remote engineering team in the US? Why not go offshore or nearshore?
- Make sure it's an asset deal, not a stock deal, so that you can write it off but the founders get double-taxed.
- Design earnouts such that they are unachievable.
- deleted 9y ago[deleted]
- nunez 9y agoHere's something I've always been confused about. How does employee headcount get factored into an acquisition or public offering? Why is having so many more employees than needed a "good thing" in these situations?
- moxious 9y agoThe poster is a bit making fun of this mindset; more employees isn't obviously better. But the "growth at all costs" mindset is real, and in that worldview rapid growth is a sign of success because you're building capacity to capture the market. In reality the plan is everything because without a great plan more people means just more burn, and hitting the wall sooner.
- murbard2 9y agoHiring people is expensive, a large team of people used to working together is a valuable asset in and of itself.