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Profitability might not be as relevant as it used to be in M&A discussions, but it matters when you’re paying $1B. Valuations like this only make sense if ther
by dan_goosewin 1y ago
Profitability might not be as relevant as it used to be in M&A discussions, but it matters when you’re paying $1B.
Valuations like this only make sense if there’s a clear path to significant strategic leverage or future cash flow.
- bobxmax 1y agoNo, it doesn't matter when you're paying $1B. Why would it? Tech companies don't care about profits. It's easy to become profitable - tech margins are obnoxiously high. They're bought and valued for their ability to scale and rapidly absorb market share.
- dan_goosewin 1y agoFair point. I submit that I'm probably overestimating how much profitability matters here. I've been hearing that Neon is burning through cash pretty aggressively, which raised eyebrows for me. But you're right: high margins and scalability mean profits can be deferred.