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> 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
by 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.