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I love Pulse. They built a great app and I'm really happy for them, so this isn't a critique, but were they really worth 90M? I get that most of it was in stock
by SurfScore 13y ago
I love Pulse. They built a great app and I'm really happy for them, so this isn't a critique, but were they really worth 90M? I get that most of it was in stock, but damn.
I guess it was more of a team/userbase acquisition, similar to the Dropbox/Mailbox deal. Either way, congrats guys!
- akavi 13y agoIsn't stock == cash when the acquiring company is public?
- nuclear_eclipse 13y agoAssuming a vesting period, that implies much less liquidity from the deal, and very much relies on the longterm value of the stock. IMO, stock later is worth much less than cash now.
- SurfScore 13y agoExactly. And stock is typically much cheaper for a company to spend than actual cash. A perfect example of this was the Facebook-Instagram acquisition. It was right before Facebook had their IPO, so it was much cheaper for them. Ironically, since Facebook's share price dropped so quickly after IPO, that billion dollar valuation ended up being closer to $715M source -- http://www.theverge.com/2012/10/24/3551872/facebook-instagram-acquisition-715-million http://www.theverge.com/2012/10/24/3551872/facebook-instagra...
- hkmurakami 13y agoFor a company like Linkedin which has been on the market for a while, you can buy a bunch of put options. It comes with a cost obviously, but it's a good hedge for an all stock transaction. IIRC this is what Mark Cuban did when he sold his company to Yahoo!
- ChuckMcM 13y agoNo. Typically that stock comes with a constraint. When the company I helped start was acquired in 1999 there was an 18 month 'hold' on selling stock resulting from the transaction. The math did not work out in my favor :-)