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Ask HN: Early startup valuation for acquihire?

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Re: Ask HN: Early startup valuation for acquihire?

#41

Post by cpncrunch »

AznHisoka wrote: post #39
cpncrunch wrote: post #16

Earlier quoted context omitted.

That seems a bit low, for a well-funded company. $1 million per employee is more like the going rate. See for example: http://www.quora.com/What-is-a-typical-deal-structure-of-an-...

You assume those deals scale down. Just because a company will pay $50 million for 50 engineers doesn't mean it's going to pay $1 million for 1 engineer. 50 engineers is magnitudes more valuable than 1 engineer.

Generally most startups have one or two "star" employees, who actually created the startup. I would say that the single engineer in a one-man startup is worth a lot more than the average engineer in a 50-engineer startup.

Instagram had 13 employees and was acquired for $1BN. Ptch had 3 employees and was purchased for $6.5M. In those cases the technology and product took up most of that value. If the acquirer is actually going to use your technology, that will obviously be a large factor in determining the sale price.

Re: Ask HN: Early startup valuation for acquihire?

#44

Post by haack »

codingdave wrote: post #7

I would turn it right back around and tell them to make you the offer. You (probably) have no idea what is going on internally with them, so you don't know the full value you bring. It doesn't even have to be a negotiation tactic - just tell them the same thing you posted here. You aren't sure what would be fair, and are not sure what number to respond. Really, they are coming to you - let them do this part of the wo…

Surely you wouldn't want them to know you have no idea? I'd agree the onus is on them to come up with the initial valuation, however I'd let them think I knew how valuable my company was.

Disclaimer: I have no idea what I'm talking about.

Re: Ask HN: Early startup valuation for acquihire?

#45

Post by codingdave »

haack wrote: post #44
codingdave wrote: post #7

I would turn it right back around and tell them to make you the offer. You (probably) have no idea what is going on internally with them, so you don't know the full value you bring. It doesn't even have to be a negotiation tactic - just tell them the same thing you posted here. You aren't sure what would be fair, and are not sure what number to respond. Really, they are coming to you - let them do this part of the wo…

Surely you wouldn't want them to know you have no idea? I'd agree the onus is on them to come up with the initial valuation, however I'd let them think I knew how valuable my company was. Disclaimer: I have no idea what I'm talking about.

If it were purely a negotiation for purchase, I might agree. But they are talking about joining forces. Maximizing the valuation is probably less important than establishing their working relationship.

If it were me, I'd be more concerned with the "working together" part, so I would be open and transparent with what I am thinking, and who I am. If they come back with too small of a number, I could always say, "No." I figure they either will get along well and can come to a mutual agreement on this, or not. Trying too hard to make a deal happen sometimes just isn't the right answer, if the deal would be with people with whom you don't work well.

Re: Ask HN: Early startup valuation for acquihire?

#46

Post by saganus »

late2part wrote: post #2

Here's some advice: The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate. Now, having said that, you have to determine your goals and how to synthesize an ideal set of negotiating levels. Typically these levels are: 1. Possible Best Case 2. Likely negotiated agreement 3. Worse you'll take (walk away below) 4. BATNA - Your "Best Alternative to…

The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate.

This is very interesting. I hope you don't mind me quoting you.

Re: Ask HN: Early startup valuation for acquihire?

#47

Post by haack »

codingdave wrote: post #45
haack wrote: post #44

Earlier quoted context omitted.

Surely you wouldn't want them to know you have no idea? I'd agree the onus is on them to come up with the initial valuation, however I'd let them think I knew how valuable my company was. Disclaimer: I have no idea what I'm talking about.

If it were purely a negotiation for purchase, I might agree. But they are talking about joining forces. Maximizing the valuation is probably less important than establishing their working relationship. If it were me, I'd be more concerned with the "working together" part, so I would be open and transparent with what I am thinking, and who I am. If they come back with too small of a number, I could always say, "No." I…

Good point, perhaps I'm being overly cynical about the buyers intentions.

Even if it was about paying the least amount possible, I guess there is no harm in honestly saying you have no idea and later coming to a valuation (that perhaps doesn't match theirs).

Re: Ask HN: Early startup valuation for acquihire?

#48

Post by sidarok »

late2part wrote: post #2

Here's some advice: The word "fair" stopped making sense in kindergarten. You don't get what's fair or what you deserve, you get what you negotiate. Now, having said that, you have to determine your goals and how to synthesize an ideal set of negotiating levels. Typically these levels are: 1. Possible Best Case 2. Likely negotiated agreement 3. Worse you'll take (walk away below) 4. BATNA - Your "Best Alternative to…

"a negotiation is a game in which both people agree things are fair, or both people agree that they get screwed equally"

Well said.

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