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0 pointsChuckMcM11y ago0 comments

Lets take this apart shall we?

   > All this said, a $10m acquisition of a vc-funded co
   > with 10 employees will probably include at least
   > 25%-30% return to investors depending on preference,
   > or else they won't accept.

   > I would expect to see a 1/3 to 1/2 price discount 
   > on a bootstrapped startup, or even more depending 
   > on how short a time you've been working on the product.

My understanding here is that the only difference in those two statements (other than the price) is this ... or else they won't accept.

If that is the case, then the assertion boils down to "VCs will hold out for more money", and they get it, so where did the "extra" value come from? We could speculate that BigCo is doing a 'favor' for the VC but really? And from an economic standpoint BigCo is not looking at a material impact on their books. My assertion is that the value proposition for BigCo is the same, VC or not, so the price they are willing to pay "should be" the same. I get that they may want to haggle more, but the acquisition target should understand the game here. There are many BigCo's that are buying engineering teams.

0 comments

lgsilver11y ago

You'll be hard-pressed to find an acquiring company that would be willing to pay $1-1.5m / engineer for a bootstrapped co :). But sure.

j / k navigate · click thread line to collapse

0 pointsChuckMcM11y ago0 comments

Lets take this apart shall we?

   > All this said, a $10m acquisition of a vc-funded co
   > with 10 employees will probably include at least
   > 25%-30% return to investors depending on preference,
   > or else they won't accept.

   > I would expect to see a 1/3 to 1/2 price discount 
   > on a bootstrapped startup, or even more depending 
   > on how short a time you've been working on the product.

My understanding here is that the only difference in those two statements (other than the price) is this ... or else they won't accept.