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How should acquirers behave? I've thought for a while that one thing that could change the dynamic is price. It doesn't make too much sense to me that a 5 mont
by jedan 16y ago
How should acquirers behave?
I've thought for a while that one thing that could change the dynamic is price. It doesn't make too much sense to me that a 5 month old company with $50K in it should go for more than $1M. That is the other side to the assholedom - the exuberant prices paid for young companies.
The price can and should change as the product and team grow, so this is mainly a comment about very young companies.
- gojomo 16y agoWhy should inputs ("5 months old, $50K in") cap valuation when something unique has been created? That'd be like setting prices by costs rather than value!
- kbob 16y agoBecause the buyer could build the technology themselves for $50K in 5 months. (Okay, $100K in 10 months, given the efficiency of large corporations.)
- arohner 16y agoAssuming the buyer has the programming talent and vision to create it, and the managers to allow something "crazy" to be built. That's rare in large corporations.
- gojomo 16y agoAnd assuming that a 5-month delay wouldn't cost 10s-of-millions.
- houseabsolute 16y agoAnd assuming the startup in question has not acquired a few key patents. And assuming the startup made no unique-but-necessary technical decisions that can't be replicated without relying on information obtained under NDA.
- aaronblohowiak 16y agoI don't think that exuberant means what you think it means. Perhaps you meant exorbitant?
- michaelhalligan 16y agoIt should make sense if you keep the word Bubble in the back of your head. Most acquisitions are ridiculous, $20m to hire a team of 10 people and throw the technology away has become commonplace. The math doesn't work out except for panic buying "Let's make sure they don't aid our competition".