Hornik's Deal or No Deal: There is always a price

Damn I should be sleeping by now, but I could not help reading buddy David Hornik’s last post: “Google/Yahoo: Deal or No Deal” in which he makes an interesting analogy between the eponymous US TV show and early startup M&As. It is a well written post that is worth the read.

As large Internet companies maintain or increase their M&A activities, several entrepreneurs and/or founders teams will be faced by this dilemna: should we sell now and reap the benefits of our efforts at a current price (potentially leaving future gains on the table) vs. should we push further and hope for a higher exit value (at the risk of taking additional dilution or not seeing any increase in value).

Each case is different, and depends on the hopes, expectations and situations of the teams. In my experience, there is a “magic number” between $5M and $15M per founder that makes a deal a no-brainer, especially if this is their first hit. Whatever the number, it is one that can materially improve their living conditions.

I will also suggest this: because of the increased chatter about Bubble 2.0 – either one we are in, or are about to see coming – first time entrepreneurs having an early exit opportunity will tend to take a conservative view as to their future prospects –leading them to consider an early sale perhaps more favorably than otherwise, if less people were crying wolf bubble.

Jason (Calacanis) has added his two cents to the conversation, and for him, it is essentially about the number of times an entrepreneur can say No to acquisition offers.

Comments

[Mr Wave Theory]

Mr Wave Theory thinks that there is a Bubble 2.0 for Web 2.0 and Most Analysts Are Overestimating the Size of Google's Total Addressable Market for Internet Advertising

I am sick and tired of hearing analysts make wild projections about Google's growth prospects based on wild projections about the size of Google's total addressable market.

Continued ...

http://mrwavetheory.blogspot.com/2006/03/bubble-2.html