Why “M. 50m to $ 1b” Offer not always seems to be what:
I have seen this story running as an investor many times, and the lessons are both contradictory and important.
Tl; Dr: In one of my first investment, the founders rejected the acquisition of M 50M to sell their startups after 1b 1b years-yet they must have taken the first contract with almost the same personal result.
Attractive preliminary presentation
After returning in 2013, I made a preliminary investment in a promising start. Without maintaining strong ownership and control, the team had made an impressive traction without increasing the capital. It was early, but through M 1M, they appeared to be a similar army.
Then came the moment when many of the founders dreamed: The CEO of a public company wanted to get them in Million 50 million. The founder really reached me to take the lunch, and asked if the founders would be chosen? Be acceptable. I said I thought so, but I don't know.
With the minimum capital deposit, it would be a life -changing amount for the founder team. But they had great sights. They said no. In fact – he said “at no cost.”
Long, long road to go out a large
8 years later they were acquired for $ 1 billion. After which the startups were equal to the climbing businesses on Everest:
- 5 different management teams
- 2 more CEO
- 4 More Venture Capital Round
- The year of grinding, paving, and scaling
- Significant weakness with each new funding round
Finally, the company sold for about $ 1 billion – 20x multiple on this original offer!
The reality of amazing math
This is the place where things get interesting. Despite the large -scale heading number, the founders made almost the same amount of money that they would go away from this original M50 contract years ago.
Why? Three main factors:
- Weakness is restless: Each funding round ended in ownership of the founder
- Priorities of Permapan were decorated: Investors later received their return first. Despite being modest, he still influenced his return.
- Time is expensive: The founders spent many years of their lives to come out. In fact, he died before one exit. I think a lot about it.
Hidden costs do not argue anybody
Do the headlines never show:
- The psychological tool of multiple management team changes
- Founder Burnout and Relationship Stress
- Never pursuted the cost of other projects opportunities
- The years of life are dedicated to the same result
https://www.youtube.com/watch?v=y4dxrsvgrao
To get out quickly
The suggestion made by my hard work for the founders is:
If the preliminary acquisition offer is personally changing life for you, consider it seriously. The glamor often masks his brutal reality about what happens to get there.
Sometimes the “small” victory that puts millions in your pocket today is more than the ideological major win, which can come after years of significant weakness.
In fact, my advice today is already fixed. Pre -default – If good is good, offer M&A. If you are 95 %+ believe that you can make a 10x big thing, don't say. Lump
But for a strong M&A offer, yes in default. At least talk about it from this point of view.
Brian Helgon, co -founder and $ 30b+ Hub+ Spot Chair… agrees with:
https://www.youtube.com/watch?v=gmtnrjznw2w
Saster lower line
Do not chase the big heading number automatically. Do mathematics that you will really take home, the right price factor, and decide that is right for you – which does not appear to be impressive on social media.
Dear Sister: How can I know if my company has the right time to sell?
