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Because they're not evaluating the things that scale. They're evaluating the founders, which is constant, and also the legal paperwork, which grows only linearl
by Alex3917 12y ago
Because they're not evaluating the things that scale. They're evaluating the founders, which is constant, and also the legal paperwork, which grows only linearly. The cost of valuating the company, negotiating, getting board consent, etc., are all basically constant.
- vonmoltke 12y ago> Because they're not evaluating the things that scale. .. also the legal paperwork, which grows only linearly Um, that is something that scales. > The cost of valuating the company, negotiating, getting board consent, etc., are all basically constant. I don't see how that can be, though. If the company is just my friend and I, your "board consent" is just getting the two of us to say yes (assuming we are not structured as an LCC, in which case it is irrelevant). The cost of appraising a purchase is generally related to how much it is claimed to be worth. Ditto with negotiating; a higher price tag or larger organization brings more things to haggle over.