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Would you accept a buyout offer that made you rich but you still felt was undervalued?

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Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#31

Post by ericb »

reitzensteinm wrote: post #29
ericb wrote: post #26

Earlier quoted context omitted.

"The implicit assumption of conventional economics is that the only relevant metric is the magnitude of the absolute change in expenditure." I'm not the first person to say this: http://en.wikipedia.org/wiki/Loss_aversion#Can_loss_aversion...

I'm no economist, I just took a few units a while ago, but I'm pretty sure that's not an implicit assumption, because marginal utility is an important part of economics. In fact the article you linked to says exactly that: "All of the above effects can be expressed in terms of the utility function of money, and, in particular, not regarding money as a linear measure of utility. In other words, if money has diminishin…

At that point in the link they're going over counter-arguments to the standard line.

Anyhow, I agree marginal utility is well understood by economists, just disagree that that is the standard way dollars themselves are viewed in classic economic theory. And perhaps I over-reached when I built my straw economist.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#32

Post by hhm »

nazgulnarsil wrote: post #23
mattmaroon wrote: post #11

It depends on your financial situation. How much money do you think will make you happy? If you hold out for more, even if you make it, will your life significantly improve? What are the chances of ending up with nothing? I'm a swing for the fences type of guy, but I'd have a hard time passing up any offer that hit my minimum number. That's why I think investors should let founders of companies take money off the tab…

this is the crux. will it make your life any better? I'd say the law of diminishing returns applies here. 1 million will make you happy because you don't have to work anymore, 2 million will make you happier, but not twice as happy.

Do you really think 1 million means you don't have to work any more? 1 million is 10.000 per month for less than ten years. Unless you invest them I'm not sure you can't stop working forever if you have that amount of money.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#33

Post by suboptimal »

hhm wrote: post #32
nazgulnarsil wrote: post #23

Earlier quoted context omitted.

this is the crux. will it make your life any better? I'd say the law of diminishing returns applies here. 1 million will make you happy because you don't have to work anymore, 2 million will make you happier, but not twice as happy.

Do you really think 1 million means you don't have to work any more? 1 million is 10.000 per month for less than ten years. Unless you invest them I'm not sure you can't stop working forever if you have that amount of money.

I do. Put the million in a savings account, move to an affordable area and rent, or purchase a living space and bank the rest, then live (modestly) off the interest. Or if you can tolerate greater risk, pursue investments with higher returns, and/or expatriate yourself.

The question is, could you stop working and retain your sanity? I wonder about people who achieve success too early in life--they have many years ahead of them and much to learn, and wealth in some ways may be a hindrance.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#34

Post by wschroter »

suboptimal wrote: post #33
hhm wrote: post #32

Earlier quoted context omitted.

Do you really think 1 million means you don't have to work any more? 1 million is 10.000 per month for less than ten years. Unless you invest them I'm not sure you can't stop working forever if you have that amount of money.

I do. Put the million in a savings account, move to an affordable area and rent, or purchase a living space and bank the rest, then live (modestly) off the interest. Or if you can tolerate greater risk, pursue investments with higher returns, and/or expatriate yourself. The question is, could you stop working and retain your sanity? I wonder about people who achieve success too early in life--they have many years ahe…

People undervalue $1 million (or similar numbers) incredibly. It doesn't mean you don't have to work, but it pays for just about all of the things you end up working the first 15 years of your life for - house, furniture, "stuff". Once you've purchased all that crap, any money you make over and above that actually seems like a lot more because it's not going toward buying couches and bedroom sets.

I made my first million when I was 22, and though it didn't keep me from working ever again, it basically paid for all of the things I needed. Anything beyond that has been incremental gains. It's a lifestyle changing amount of money.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#35

Post by symptic »

With the numbers I tend to play with, if it's enough to live off the interest comfortably for the rest of my life, sure. Then I can work on whatever I want with my time rather than avoiding projects because of the assumed inattention they would receive.

If the company has more potential than the offer, most likely no.

The real question is... will this buyout impact your life they way you want it to? ...or will you be miserable or somehow transformed into someone you don't want to be as a result?

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#36

Post by jyu »

kingkongrevenge wrote: post #18

Colonel Sanders sold KFC cheap. After he said "If someone puts a million dollars in your hand you close your fist."

He was 74 when he sold the franchise. Maybe that had something to do with it? http://www.corbinkentucky.us/sanderscafe.htm

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#37

Post by jey »

suboptimal wrote: post #33
hhm wrote: post #32

Earlier quoted context omitted.

Do you really think 1 million means you don't have to work any more? 1 million is 10.000 per month for less than ten years. Unless you invest them I'm not sure you can't stop working forever if you have that amount of money.

I do. Put the million in a savings account, move to an affordable area and rent, or purchase a living space and bank the rest, then live (modestly) off the interest. Or if you can tolerate greater risk, pursue investments with higher returns, and/or expatriate yourself. The question is, could you stop working and retain your sanity? I wonder about people who achieve success too early in life--they have many years ahe…

Yes, but remember to subtract inflation from the expected return! 5% interest means you get like 2% post-inflation.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#38

Post by alyx »

I guess it all comes down to one's priorities. If you put your ego and pride above all else then I don't think any amount of money will ever be enough to quench your self-obsession.

On the other hand, if you have the chance to become comfortably rich and essentially free then why not?

Of course there is a third (fourth, fifth and so on) variation. Perhaps it has nothing to do with pride or money, perhaps you enjoy the work that you do so much that being rich is not something you can enjoy with the same amount of passion.

I'd probably take the money though.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#39

Post by huherto »

hhm wrote: post #32
nazgulnarsil wrote: post #23

Earlier quoted context omitted.

this is the crux. will it make your life any better? I'd say the law of diminishing returns applies here. 1 million will make you happy because you don't have to work anymore, 2 million will make you happier, but not twice as happy.

Do you really think 1 million means you don't have to work any more? 1 million is 10.000 per month for less than ten years. Unless you invest them I'm not sure you can't stop working forever if you have that amount of money.

I used to think that I needed to make enough money so I would not have to worry about working.

But anyway you should always produce (See pg essays). So the thing about money is not to solve the problem now, but to be able to have enough resources so you can have more freedom on deciding what to work on. If I am lucky, I should be able to work until I die.

Re: Would you accept a buyout offer that made you rich but you still felt was undervalued?

#40

Post by huherto »

DaniFong wrote: post #30
nazgulnarsil wrote: post #23

Earlier quoted context omitted.

this is the crux. will it make your life any better? I'd say the law of diminishing returns applies here. 1 million will make you happy because you don't have to work anymore, 2 million will make you happier, but not twice as happy.

It depends on what you're using it for. When I cash out, I'm considering putting much of my earnings into fusion research.

Bad decision. You should diversify it is economy 101.
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