Earlier quoted context omitted.
A bird in the hand.
A sparrow in hand is better than a pigeon on the roof.
And where does the stone fit in with these two birds?
Taking money off the table
11–20 of 114 posts
Re: Taking money off the table
#12I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
You are ignoring the risk aspect. There is a chance that it is worth more than they are paying, but there is also a chance it will be worth less.
Selling a part of your business can help spread risk to a new investor reducing your own personal risk.
Re: Taking money off the table
#13I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
This assumes risk appetite is the same. For instance, insurance works this way - in expectation you’d pay less yourself, but a 3 sigma event can bankrupt you. You willingly pass on this risk for a price.
Re: Taking money off the table
#14A 10% tender offer isn't really an interesting discussion. You should take definitely take 10% off the table unless you're already pretty wealthy. The interesting discussion is how much you should take off the table if the offer is uncapped.
100% correct. Taking 10% away to remove downside risk of the remaining 90% is an absolute no-brainer, especially if it is a meaningful sum of money to you.
Re: Taking money off the table
#15I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
Almost all startups go to zero, meaning every cent what VCs paid for stock, at any price, did not end up being worth more than they paid.
Re: Taking money off the table
#16I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
Everything you said is true. It doesn't refute that you should sell the 10% though. You're describing commerce.
not getting it.
Re: Taking money off the table
#17I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
You are ignoring the risk aspect. There is a chance that it is worth more than they are paying, but there is also a chance it will be worth less. Selling a part of your business can help spread risk to a new investor reducing your own personal risk.
what I'm saying is the buyers are subject to the same risks, I'm not ignoring them
Re: Taking money off the table
#18[flagged]
Re: Taking money off the table
#19Earlier quoted context omitted.
You are ignoring the risk aspect. There is a chance that it is worth more than they are paying, but there is also a chance it will be worth less. Selling a part of your business can help spread risk to a new investor reducing your own personal risk.
what I'm saying is the buyers are subject to the same risks, I'm not ignoring them
But obviously an investor with $XYZ under management that can make N bets is better equipped to handle that risk than you, an individual with 1 bet.
Re: Taking money off the table
#20I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?
Almost all startups go to zero, meaning every cent what VCs paid for stock, at any price, did not end up being worth more than they paid.
Sure, what I'm getting at is that in your hands, or in the buyer's, the value can go to zero or multiply. If they buy, it's because they assess that the chances of it multiplying are greater than it going to zero. Why sell in that case?