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Handybook Buys Exec in a Deal for the On-Demand World

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Re: Handybook Buys Exec in a Deal for the On-Demand World

#5

Post by hkmurakami »

minimaxir wrote: post #3
hkmurakami wrote: post #2

Since the acquisition was a 100% stock transaction (and the acquirer is still a private company), this is more of a "let's join forces" type deal than an exit arrangement.

Is that better or worse than an acquihire?

I think that depends on (1) whose perspective we're looking at this from, and (2) what the future holds for the combined company.

In terms of liquidity and it being "a sure thing", an acquihire would surely be better for Exec. But Justin Kan already has a few successful endeavors under his belt and probably isn't hurting for a quick check. Increasing his odds for a homerun probably makes more sense. The same probably goes for the investors.

For the employees on the other hand, an acquihire and subsequent retention package would most likely have a better EV/Risk ratio.

Re: Handybook Buys Exec in a Deal for the On-Demand World

#6

Post by thatthatis »

hkmurakami wrote: post #2

Since the acquisition was a 100% stock transaction (and the acquirer is still a private company), this is more of a "let's join forces" type deal than an exit arrangement.

But not quite a merger of equals. 12mn in handybook funding, 3mn in exec funding, 10mn rumored merger price.

That suggests to me that exec shareholders now own less than 1/3 of handybook but probably more than 10%. Assuming the 12mn in funding has bought exactly 1/2 of the company, then handybook's most recent post money would be ~ 24mn. 10mn in new stock --> 10/34 as the share owned by exec. Probably more than 10% bc that's the amount they'd own if handybook was valuing themselves at 100mn. I doubt that they are that high yet.

This looks to me less like a merger and more like a realization by exec that their value is at a global maximum -- once handybook cracks sf on their own the value of buying exec drops substantially.

In my opinion a shrewd move by all parties.

Re: Handybook Buys Exec in a Deal for the On-Demand World

#7

Post by thatthatis »

hkmurakami wrote: post #5
minimaxir wrote: post #3

Earlier quoted context omitted.

Is that better or worse than an acquihire?

I think that depends on (1) whose perspective we're looking at this from, and (2) what the future holds for the combined company. In terms of liquidity and it being "a sure thing", an acquihire would surely be better for Exec. But Justin Kan already has a few successful endeavors under his belt and probably isn't hurting for a quick check. Increasing his odds for a homerun probably makes more sense. The same probably…

Home services is an enormous market and handybook looks well positioned to be a name brand in the space. I think you're correct that this is placing bets on a homerun.
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