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Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

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Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#11

Post by nikcub »

spaceflunky wrote: post #4

$271MM in investment and a $250MM purchase price. https://www.crunchbase.com/organization/gilt-groupe#/entity Does that mean that the investors got all the money and anyone holding common stock was basically screwed?

A 1x liquidity preference is standard, but it is common now to see larger multiples - especially in high-value later stage rounds, where the preference to those investors would also be stacked before earlier investors.

So, yes, I doubt common holders got much here, it is also possible that earlier investors didn't get much either.

For founders and employees this is usually made up with a separate bonus or earn-out from the acquiring company - which has been the source of conflict of interest claims from investors in some of these deals (where the acquisition price is much less than the 1x preference but the founders get a separate payout/earnout/signing bonus).

Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#12

Post by gcb0 »

hkmurakami wrote: post #7
gcb0 wrote: post #2

"unicorns" are only interesting for Goldman Sachs and the like for the possibility of a inflated IPO. btw, did Facebook deliver any dividends?

FB has never issued dividends to common stock holders. http://m.nasdaq.com/symbol/fb/dividend-history

hence my point.

this is only to lure people into stock-betting, a zero sum game where the earlier people to join have a great advantage.

Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#13

Post by ssclafani »

hkmurakami wrote: post #8
throwawaythat1 wrote: post #3

This is OT but how come submissions which have less than 12 points appear on the first page? Has anyone figured out the HN algo? There are many other posts with far greater points yet this appears. Maybe techcrunch has higher ratings?

It has a time decaying value function. If the points accumulate rapidly upon submission, you can reach front page with as few as 5 up votes. This often happens for github repo submissions.

This is the correct answer.

Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#15

Post by wslh »

nikcub wrote: post #11
spaceflunky wrote: post #4

$271MM in investment and a $250MM purchase price. https://www.crunchbase.com/organization/gilt-groupe#/entity Does that mean that the investors got all the money and anyone holding common stock was basically screwed?

A 1x liquidity preference is standard, but it is common now to see larger multiples - especially in high-value later stage rounds, where the preference to those investors would also be stacked before earlier investors. So, yes, I doubt common holders got much here, it is also possible that earlier investors didn't get much either. For founders and employees this is usually made up with a separate bonus or earn-out fr…

I am in a similar situation in another acquisition and would love to receive your feedback, mainly if we (the common stockholders) should make a "sanity check" with a lawyer or completely forget about the issue.

The company was acquired recently and has some debt, so they returned money to the preferred stockholders, our common stock "was cancelled and extinguished" and one of the directors received 1 million.

Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#16

Post by tamana »

hkmurakami wrote: post #8
throwawaythat1 wrote: post #3

This is OT but how come submissions which have less than 12 points appear on the first page? Has anyone figured out the HN algo? There are many other posts with far greater points yet this appears. Maybe techcrunch has higher ratings?

It has a time decaying value function. If the points accumulate rapidly upon submission, you can reach front page with as few as 5 up votes. This often happens for github repo submissions.

Does it stay on the front page with so few votes?

This sounds trivially gameable by voting rings.

Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#17

Post by geofft »

gcb0 wrote: post #12
hkmurakami wrote: post #7

Earlier quoted context omitted.

FB has never issued dividends to common stock holders. http://m.nasdaq.com/symbol/fb/dividend-history

hence my point. this is only to lure people into stock-betting, a zero sum game where the earlier people to join have a great advantage.

There is value in a non-dividend paying stock beyond the stock market itself: ideally, the market cap estimates the value of the company if it were to be acquired, and someone buys your shares from you. So it's not simply stock market participants guessing about other stock market participants. There is an actual, valuable, buyable product being traded, namely the company itself; it just happens to be traded in the form of lots of tiny shares.

Whether the chance of an acquisition happening is sufficiently non-nil as to be worth caring about is a legitimate question. It's not completely unheard of even for tech companies (cf. Dell), but it's certainly not the norm.

Also, note that the stock market isn't zero-sum: when the value of a stock goes up, wealth is created. Nothing goes down. If a company IPOs at $10/share, I buy it at $12, and that share gets purchased for $14, nobody loses money. The original purchaser of the share made $2, I made $2, and the final owner now owns a product which the market thinks is worth paying $14 for. There may be another sense in which this activity is meaningless, but it's not because it's zero-sum.

Re: Gilt’s Unicorn Tale Comes to an End After Being Acquired for $250M

#18

Post by mattzito »

wslh wrote: post #15
nikcub wrote: post #11

Earlier quoted context omitted.

A 1x liquidity preference is standard, but it is common now to see larger multiples - especially in high-value later stage rounds, where the preference to those investors would also be stacked before earlier investors. So, yes, I doubt common holders got much here, it is also possible that earlier investors didn't get much either. For founders and employees this is usually made up with a separate bonus or earn-out fr…

I am in a similar situation in another acquisition and would love to receive your feedback, mainly if we (the common stockholders) should make a "sanity check" with a lawyer or completely forget about the issue. The company was acquired recently and has some debt, so they returned money to the preferred stockholders, our common stock "was cancelled and extinguished" and one of the directors received 1 million.

You're always welcome to consult a lawyer, but odds are there won't be much you can do. It's not uncommon to wipe out common shareholders where the preferred stock and other debtholders take all the money out of the acquisition.

It's also difficult to weigh in without knowing the specifics, and even then the specifics from your perspective might be very different from the perspective or facts the board is running with.

I realize the director receiving 1 million may seem unfair (and it may even BE unfair), but it might also be whatever his/her agreement is with the company.

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