3 ms·

You mean people might have to build a product that people will buy in the long term rather than trying to flip a quick buck? Madness I say.

by j_baker 16y ago

rgrieselhuber 16y ago
It's actually a little more complicated than that because there are many reasons for one company to acquire another one, and many of those reasons have nothing to do with the performance of the actual product in question.
- j_baker 16y ago
  . <- if this period is my point, then what you're saying is somewhere on a completely different website (probably digg :-) I'm saying that maybe people should think outside the acquisition box. I hear that some businesses actually make money by making something people will buy.
joshu 16y ago
They are talking mostly about the escrow, which is held back payment to cover any legal issues that come up. 10-20% of the purchase price is typical.
- j_baker 16y ago
  I saw that and figured it was mundane. At least it provided a decent opportunity to rant. :-)
deleted 16y ago
[deleted]
kayoone 16y ago
what about actually reading the article before commenting ?
URSpider94 16y ago
I think that you are -- incorrectly, unfairly and without data -- assuming that the companies being discussed in this article are not focused on delivering long-term value to customers. Personally, I just recently went through this process after 10 years of helping to build a company. A decent portion of my payout was held for over a year in escrow, while I had to pay income taxes on it, as of the deal closing date, as earned income. I would hardly characterize my decade of work as an attempt to "flip a quick buck".
- dtby 16y ago
  Would you like him to apologize because you made a bad deal for yourself? His comment is over-broad and snarky, but it simultaneously makes a good point.
  - URSpider94 16y ago
    At the risk of taking the troll-bait, I'm not asking for any kind of apology or sympathy. I'm actually quite happy with the deal I got all in all, and in any case, I wasn't at the table when the terms were set. I'm simply pointing out that it's extremely naive to think that focusing on creating long-term value for customers cures all ills. In fact, we are in a period in business history where companies that have achieved cash-flow positive with good growth and a sizable revenue stream are at a loss as to how to free up cash for continued growth (and to reward early investors and employees). IPO'ing brings huge overhead with Sarbox, not to mention the requirement to manage the business to quarterly goals. Continued venture funding is usually quite a bad deal, loans are still really hard to get, and more creative options (like FB's private placement) are under lots of scrutiny from the SEC. That leaves a buyout or private sale as the two best options, neither of which is an efficient transaction (ie unlikely to bring the highest value), and both of which are likely to come with some unattractive terms. As an entrepreneur, don't underestimate the importance of this question: once you create a valuable business, how will you transform the equity that you've created for yourself, your employees and your backers into cash?
    - dtby 16y ago

You mean people might have to build a product that people will buy in the long term rather than trying to flip a quick buck? Madness I say.

by j_baker 16y ago

You mean people might have to build a product that people will buy in the long term rather than trying to flip a quick buck? Madness I say.

rgrieselhuber 16y ago

It's actually a little more complicated than that because there are many reasons for one company to acquire another one, and many of those reasons have nothing to do with the performance of the actual product in question.

j_baker 16y ago
. <- if this period is my point, then what you're saying is somewhere on a completely different website (probably digg :-) I'm saying that maybe people should think outside the acquisition box. I hear that some businesses actually make money by making something people will buy.

joshu 16y ago

They are talking mostly about the escrow, which is held back payment to cover any legal issues that come up. 10-20% of the purchase price is typical.

j_baker 16y ago
I saw that and figured it was mundane. At least it provided a decent opportunity to rant. :-)

deleted 16y ago

[deleted]

kayoone 16y ago

what about actually reading the article before commenting ?

URSpider94 16y ago

I think that you are -- incorrectly, unfairly and without data -- assuming that the companies being discussed in this article are not focused on delivering long-term value to customers. Personally, I just recently went through this process after 10 years of helping to build a company. A decent portion of my payout was held for over a year in escrow, while I had to pay income taxes on it, as of the deal closing date, as earned income. I would hardly characterize my decade of work as an attempt to "flip a quick buck".

dtby 16y ago
Would you like him to apologize because you made a bad deal for yourself? His comment is over-broad and snarky, but it simultaneously makes a good point.
- URSpider94 16y ago
  At the risk of taking the troll-bait, I'm not asking for any kind of apology or sympathy. I'm actually quite happy with the deal I got all in all, and in any case, I wasn't at the table when the terms were set. I'm simply pointing out that it's extremely naive to think that focusing on creating long-term value for customers cures all ills. In fact, we are in a period in business history where companies that have achieved cash-flow positive with good growth and a sizable revenue stream are at a loss as to how to free up cash for continued growth (and to reward early investors and employees). IPO'ing brings huge overhead with Sarbox, not to mention the requirement to manage the business to quarterly goals. Continued venture funding is usually quite a bad deal, loans are still really hard to get, and more creative options (like FB's private placement) are under lots of scrutiny from the SEC. That leaves a buyout or private sale as the two best options, neither of which is an efficient transaction (ie unlikely to bring the highest value), and both of which are likely to come with some unattractive terms. As an entrepreneur, don't underestimate the importance of this question: once you create a valuable business, how will you transform the equity that you've created for yourself, your employees and your backers into cash?
  - dtby 16y ago