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> They are either profitable or acquired :) Why? Once a company has been acquired, does it automatically fall out of profitability? If it's acquired in a stoc

> They are either profitable or acquired :) Why? Once a company has been acquired, does it automatically fall out of profitability? If it's acquired in a stock sale, it remains an independent entity and still has a P&L If it's acquired/merged in an asset sale (not usually a good sign), it can still be assessed whether the new division is profitable - except in some rare cases like Google (allegedly!) not wanting to itemize some of their divisions to avoid too much regulatory scrutiny on monopoly positions. > Becoming profitable never enters the picture :) Seems very wrong based on looking at YC's portfolio, which apparently includes a bunch of profitable startups

troupo 2y ago
> Once a company has been acquired, does it automatically fall out of profitability? It becomes a part of the company that bought it? > Seems very wrong based on looking at YC's portfolio, which apparently includes a bunch of profitable startups It contains very few profitable startups. Those are the exceptions.
- sebastiennight 2y ago
  > It becomes a part of the company that bought it? Not necessarily. As I explained above, most successful acquisitions are stock sales, in which case the acquiring company now owns the startup (they hold the shares). The startup is still a separate entity at this point. Google is known for just merging the acquired startups into their product line (and/or killing them), but it's not a hard rule that all acquisitions are mergers. For example, AFAIK Livestream is still a subsidiary of Vimeo (ie wholly owned, but separate): https://en.wikipedia.org/wiki/Vimeo_Livestream https://en.wikipedia.org/wiki/Vimeo_Livestream So Livestream can be profitable or not, separately from whether its acquirer is.