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Assuming 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 m
by nuclear_eclipse 13y ago
Assuming 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!