Sittin’ up drunk shuffling thoughts
Got paper but I’m lost
Losing focus what a n#%$a still hustin’ for?
My seed is straight the family’s settled
Idle time get the man in trouble
—Nas, Suicide Bounce
One of the most difficult decisions that a CEO ever makes is whether or not to sell her company. Logically, determining whether selling a company will be better in the long term than continuing to run it stand-alone involves a huge number of factors, most of which are speculative or unknown. And if you are the founder, the logical part is the easy part.
Indeed, the task would be far simpler if there were no emotion involved. But selling your company is always emotional and deeply personal.
Types of Acquisitions
For the purpose of this discussion, it is useful to think about technology acquisitions in 3 categories:
**Talent and/or Technology**—when a company is acquired purely for its technology and or its people. These kinds of deals typically range between $5 and $50M
**Product**—when a company is acquired for its product, but not its business. The acquirer plans to sell the product roughly as it is, but will do so primarily with its own sales and marketing capability. These kinds of deals typically range between $25M and $250M
**Business**—when a company is acquired for its actual business (revenue and earnings). The acquirer values the entire operation (product, sales, and marketing) not just the people, technology, or products. These deals are typically valued (at least in part) by their financial metrics and can be extremely large (e.g. Microsoft’s $30B+ offer for Yahoo!)
This post is most applicable to business acquisitions with some relevance to product acquisitions and will be fairly useless if you are selling people and/or technology
The Logical
When analyzing whether or not you should sell your company, a good basic rule of thumb is:
If:
A) You are very early on in a very large market
AND
B) You have a good chance of being number 1 in that market
Got paper but I’m lost
Losing focus what a n#%$a still hustin’ for?
My seed is straight the family’s settled
Idle time get the man in trouble
—Nas, Suicide Bounce
One of the most difficult decisions that a CEO ever makes is whether or not to sell her company. Logically, determining whether selling a company will be better in the long term than continuing to run it stand-alone involves a huge number of factors, most of which are speculative or unknown. And if you are the founder, the logical part is the easy part.
Indeed, the task would be far simpler if there were no emotion involved. But selling your company is always emotional and deeply personal.
Types of Acquisitions
For the purpose of this discussion, it is useful to think about technology acquisitions in 3 categories:
**Talent and/or Technology**—when a company is acquired purely for its technology and or its people. These kinds of deals typically range between $5 and $50M
**Product**—when a company is acquired for its product, but not its business. The acquirer plans to sell the product roughly as it is, but will do so primarily with its own sales and marketing capability. These kinds of deals typically range between $25M and $250M
**Business**—when a company is acquired for its actual business (revenue and earnings). The acquirer values the entire operation (product, sales, and marketing) not just the people, technology, or products. These deals are typically valued (at least in part) by their financial metrics and can be extremely large (e.g. Microsoft’s $30B+ offer for Yahoo!)
This post is most applicable to business acquisitions with some relevance to product acquisitions and will be fairly useless if you are selling people and/or technology
The Logical
When analyzing whether or not you should sell your company, a good basic rule of thumb is:
If:
A) You are very early on in a very large market
AND
B) You have a good chance of being number 1 in that market
Comments (0)
The minimum comment length is 50 characters.
Information
Users of Guests are not allowed to comment this publication.
There are no comments yet. You can be the first!