"I don't see how anyone could argue that selling was not optimal for security. Sure, you could gradually save money, but that's not optimal; it's not more secur

"I don't see how anyone could argue that selling was not optimal for security. Sure, you could gradually save money, but that's not optimal; it's not more secure than getting a lump sum upfront." That's a pretty bold statement. If you think that an offer on the table is greater than all the net income you're comfortable your company will generate (discounted to present value of course), then you would take the money and run. If on the other hand your company is creating value (net income), and you are confident it will be creating more value (net income) going forward so that the discounted future net income the company generates is way more than the upfront lump sum, you wouldn't sell and it wouldn't be more secure or optimal. I think the issue is that most 'startup' owners aren't focusing on the net income part so they don't view their company as a cashflow generating entity which can be rationally valued against an upfront lumpsum, which means they'll take the money and run just about everytime; why wouldn't they? I'm sure 37signals could have sold their company right after launching basecamp in 2004 for a multiple of revenues at the time, guessing a couple of million dollars. However, for some reason that wasn't optimal for their security, and by 2007 (doubling revenues every year since 04) chances are they've earned/pocketed the value they could have sold the company for in 04 (if not a majority of that value) and they get to keep that cashflow generating machine going forward (which means more cashflow + more valuable equity).