5 ms·

As soon as someone hands you the check it's no longer "your" company and you should stop thinking of it as such. Only misery lies on that path. I see this on a

by jmyeet 4y ago

As soon as someone hands you the check it's no longer "your" company and you should stop thinking of it as such. Only misery lies on that path. I see this on a smaller scale where ICs leave a company and take a copy of "their" code (ask Sergey Aleynikov [1] if that's a good idea). It's not yours. If you ever use it you could face legal consequences. And there's no code I've ever written that I wasn't convinced I could write better from scratch the next time if it ever came up. Side note: it never has. Don't be that guy who takes the check and then expects control. Don't be that guy who is convinced the new owners are messing it up and then goes out and does the exact same thing.. Move on. [1]: https://en.wikipedia.org/wiki/Sergey_Aleynikov https://en.wikipedia.org/wiki/Sergey_Aleynikov

kurthr 4y ago
Often acquisitions are set up with "earn-outs" so that only with the success of the project do you get the full amount of the buy. Even when that's not the case your reputation may well be tarnished by any failure (whether technical or managerial) of the product. I agree with your point though, which is to just walk away with the check unless you're willing to take a significant risks with either of those two other outcomes.
- robbintt 4y ago
  Do you know where I can read more about the structure of "earn outs"? They seem like just another trap, to be clear.
  - kurthr 4y ago
    I'm not an expert, but I've seen the inside of a couple of deals like this in the $100M range. I saw larger % earnouts than described below (e.g. in the 30-50% range), which were based on milestones (e.g. products going to market on time) and income (e.g. $ customer sales over following several years). It's worth noting that the deals closed in a significant amount of stock so that is also an incentive to keep the buyers price high (but that the earner realistically has limited influence over that). https://news.crunchbase.com/ma/earnout-plan-startup-sale-how-to-use-price/ https://news.crunchbase.com/ma/earnout-plan-startup-sale-how...
AussieWog93 4y ago
Have you ever started a business before? Yes, you technically no longer own it once sold, but there's a huge amount of blood, sweat and tears that goes into building something from nothing - not to mention a sense of loyalty to your staff - and you genuinely do want to see it go into good hands and become managed well. I guess a somewhat leaky analogy would be like giving away a dog you raised to another family and finding out later that they're abusing it. Yes, it's no longer your dog, but you're still going to care deeply about its wellbeing.
- hansword 4y ago
  (a) if you want the dog to go to good hands, don't sell it. Spend time finding the best hands possible and give them the dog. (b) as you might see, your analogy is not very good. (c) if you find you care about the money, sell it to the highest bidder. be happy with the money. (d) if you find you care about the fate of the company, perhaps not sell it? or if you do, sell it to someone who also does? or if you don't, at least realise it was your failure to find such a buyer. (e) if you expect an acquirer to care about what they acquired beyond how to make money from it, you are a romantic, a fool, or both... and I want to buy your company for cheap.
  - leaflets2 4y ago
    > sell it to someone who also [cares about the company] That's easy to say But it partly requires reading someone else's mind
- killingtime74 4y ago
  I empathise and think the only solution is to either not sell (only sell a non controlling stake?) or vet the buyer very carefully
  - pbhjpbhj 4y ago
    A pattern I've seen a few times (can't recall examples right now, sorry) is to sell the business and then when the business fails, or turns bad, start a new business to compete. Obviously companies try to tie past owners hands to avoid future competition, but it still happens sometimes.
brailsafe 4y ago
$400k salary is ridic, especially for the time. How can I get summa dat
teddyh 4y ago
A child is still your child, even after they turn 18.
- killingtime74 4y ago
  Are you implying your own your child. Because that’s a perfect analogy, once there 18 they are independent. It’s just like expressing regret for a sold company
  - teddyh 4y ago
    “Own” is, for obvious reasons, not the word we use about children , but in practice it amounts to the same thing. A parent or guardian has complete control over what their child does and where it goes. Until the child turns 18. But we still call it “their” child.

by jmyeet 4y ago

kurthr 4y ago

Often acquisitions are set up with "earn-outs" so that only with the success of the project do you get the full amount of the buy. Even when that's not the case your reputation may well be tarnished by any failure (whether technical or managerial) of the product. I agree with your point though, which is to just walk away with the check unless you're willing to take a significant risks with either of those two other outcomes.

robbintt 4y ago
Do you know where I can read more about the structure of "earn outs"? They seem like just another trap, to be clear.
- kurthr 4y ago
  I'm not an expert, but I've seen the inside of a couple of deals like this in the $100M range. I saw larger % earnouts than described below (e.g. in the 30-50% range), which were based on milestones (e.g. products going to market on time) and income (e.g. $ customer sales over following several years). It's worth noting that the deals closed in a significant amount of stock so that is also an incentive to keep the buyers price high (but that the earner realistically has limited influence over that). https://news.crunchbase.com/ma/earnout-plan-startup-sale-how-to-use-price/ https://news.crunchbase.com/ma/earnout-plan-startup-sale-how...

AussieWog93 4y ago

Have you ever started a business before? Yes, you technically no longer own it once sold, but there's a huge amount of blood, sweat and tears that goes into building something from nothing - not to mention a sense of loyalty to your staff - and you genuinely do want to see it go into good hands and become managed well. I guess a somewhat leaky analogy would be like giving away a dog you raised to another family and finding out later that they're abusing it. Yes, it's no longer your dog, but you're still going to care deeply about its wellbeing.

hansword 4y ago
(a) if you want the dog to go to good hands, don't sell it. Spend time finding the best hands possible and give them the dog. (b) as you might see, your analogy is not very good. (c) if you find you care about the money, sell it to the highest bidder. be happy with the money. (d) if you find you care about the fate of the company, perhaps not sell it? or if you do, sell it to someone who also does? or if you don't, at least realise it was your failure to find such a buyer. (e) if you expect an acquirer to care about what they acquired beyond how to make money from it, you are a romantic, a fool, or both... and I want to buy your company for cheap.
- leaflets2 4y ago
  > sell it to someone who also [cares about the company] That's easy to say But it partly requires reading someone else's mind
killingtime74 4y ago
I empathise and think the only solution is to either not sell (only sell a non controlling stake?) or vet the buyer very carefully
- pbhjpbhj 4y ago
  A pattern I've seen a few times (can't recall examples right now, sorry) is to sell the business and then when the business fails, or turns bad, start a new business to compete. Obviously companies try to tie past owners hands to avoid future competition, but it still happens sometimes.

brailsafe 4y ago

$400k salary is ridic, especially for the time. How can I get summa dat

teddyh 4y ago

A child is still your child, even after they turn 18.

killingtime74 4y ago
Are you implying your own your child. Because that’s a perfect analogy, once there 18 they are independent. It’s just like expressing regret for a sold company
- teddyh 4y ago
  “Own” is, for obvious reasons, not the word we use about children , but in practice it amounts to the same thing. A parent or guardian has complete control over what their child does and where it goes. Until the child turns 18. But we still call it “their” child.