4 ms·

If they are buying a combination of preferred at a $69B valuation and common at a 30% lower valuation, it is certainly possible that the overall valuation is a

If they are buying a combination of preferred at a $69B valuation and common at a 30% lower valuation, it is certainly possible that the overall valuation is a discount to the $69B. Hard to know without seeing detailed terms I'm sure the liquidation preference (presumably 1x?) is worth something, but is it worth a 5-10-20-30% discount? At Uber's current valuation, the preferred would convert anyway so the liquidation preference would not be relevant Edit: saw that the total investment is slated to be $10B, with $1B invested at the $69B valuation and the rest presumably in common shares at a 30% discount. It could be true that this does not represent a decrease in valuation, but there is reason to believe that the overall valuation is a step down. Devil in the details

simonrobb 9y ago
> it has no effect on the current valuation at all Agreed, this statement was probably a little strong. But certainly it doesn't represent a new $48B valuation as the article suggests. I suppose I'm objecting to the implied suggestion that Uber is having a down round (a few other commenters have jumped on that) because of the negative public sentiment they are copping at the moment. It's not like Uber needs cash right now, and I really doubt the board would approve a deal which brought their valuation down for the sake of money they don't need.
- aaavl2821 9y ago
  The headline was certainly provocative and misleading. Could interpret this as a bit of signaling risk with early investors cashing out at a discount, but I don't think that's fair. There isn't really precedent for a $4B+ non m&a or IPO liquidity event for private company shareholders. The liquidity discount that private equity investors use is typically 20-30%, so now that I think about it the 30% discount seems like a logical liquidity discount to anchor on
- deleted 9y ago
  [deleted]
simonrobb 9y ago
I may be falling for a nice perception play from Uber, but I took this more-or-less at face value: Softbank is buying up a lot of valuable property at the moment, and even though Uber wouldn't be raising again for another 6-12 months, they wanted a piece. This is the mechanism they managed to negotiate. Early shareholders gain liquidity, Softbank gets cheap stock, and the market gets some bullish signals on Uber in the form of Softbank's backing. From the outside it looks like a pretty good deal. Of course there might be internal panic and I've got it all wrong, but I see some big wins for both parties.
- deleted 9y ago
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- ethbro 9y ago
  I'm curious about whether a sale like this included full due diligence or if the extra-ordinary nature meant some other standard of accounting was used. If SoftBank went in with eyes open, this seems business as usual. If they're rushing after the cool kid on the block, then this starts to sound like Theranos 2.0.
  - linkregister 9y ago
    SoftBank has been equivocating for months over this deal. It has been in the works long before the current Uber CEO arrived. They are structuring a deal that is advantageous to themselves, exploiting Benchmark’s desire for an exit so they can pay its investors their returns. SoftBank is getting extremely cheap debt at the moment, so it makes sense to take advantage of shareholder turmoil to get valuable companies at a discount. With this purchase, SoftBank will have a hand in every significant ride sharing other than Lyft.
    - simonrobb 9y ago
      > exploiting Benchmark’s desire for an exit Does that imply that they'll be buying Benchmark's stock, rather than employees'? > SoftBank is getting extremely cheap debt at the moment That sounds like some interesting background to the deal, please expand if you have more detail!
jonmc12 9y ago
Interpreting article, I think SB investment would be $6.72B (14% of $48B) plus $1B at $69B valuation. $7.72B total. btw, $2.94B = $6.72B * (69/48) - $6.72B --> I believe thats SB's nominal gain on paper the minute the deal closes.
- aaavl2821 9y ago
  Thanks, that's a good catch. nice "built in" gains

simonrobb 9y ago

> it has no effect on the current valuation at all Agreed, this statement was probably a little strong. But certainly it doesn't represent a new $48B valuation as the article suggests. I suppose I'm objecting to the implied suggestion that Uber is having a down round (a few other commenters have jumped on that) because of the negative public sentiment they are copping at the moment. It's not like Uber needs cash right now, and I really doubt the board would approve a deal which brought their valuation down for the sake of money they don't need.

aaavl2821 9y ago
The headline was certainly provocative and misleading. Could interpret this as a bit of signaling risk with early investors cashing out at a discount, but I don't think that's fair. There isn't really precedent for a $4B+ non m&a or IPO liquidity event for private company shareholders. The liquidity discount that private equity investors use is typically 20-30%, so now that I think about it the 30% discount seems like a logical liquidity discount to anchor on
deleted 9y ago
[deleted]

simonrobb 9y ago

I may be falling for a nice perception play from Uber, but I took this more-or-less at face value: Softbank is buying up a lot of valuable property at the moment, and even though Uber wouldn't be raising again for another 6-12 months, they wanted a piece. This is the mechanism they managed to negotiate. Early shareholders gain liquidity, Softbank gets cheap stock, and the market gets some bullish signals on Uber in the form of Softbank's backing. From the outside it looks like a pretty good deal. Of course there might be internal panic and I've got it all wrong, but I see some big wins for both parties.

deleted 9y ago
[deleted]
ethbro 9y ago
I'm curious about whether a sale like this included full due diligence or if the extra-ordinary nature meant some other standard of accounting was used. If SoftBank went in with eyes open, this seems business as usual. If they're rushing after the cool kid on the block, then this starts to sound like Theranos 2.0.
- linkregister 9y ago
  SoftBank has been equivocating for months over this deal. It has been in the works long before the current Uber CEO arrived. They are structuring a deal that is advantageous to themselves, exploiting Benchmark’s desire for an exit so they can pay its investors their returns. SoftBank is getting extremely cheap debt at the moment, so it makes sense to take advantage of shareholder turmoil to get valuable companies at a discount. With this purchase, SoftBank will have a hand in every significant ride sharing other than Lyft.
  - simonrobb 9y ago
    > exploiting Benchmark’s desire for an exit Does that imply that they'll be buying Benchmark's stock, rather than employees'? > SoftBank is getting extremely cheap debt at the moment That sounds like some interesting background to the deal, please expand if you have more detail!

jonmc12 9y ago

Interpreting article, I think SB investment would be $6.72B (14% of $48B) plus $1B at $69B valuation. $7.72B total. btw, $2.94B = $6.72B * (69/48) - $6.72B --> I believe thats SB's nominal gain on paper the minute the deal closes.

aaavl2821 9y ago
Thanks, that's a good catch. nice "built in" gains