> When an acquisition sells at the same price as money raised, good sign the company isn't worth that much - it's just the minimum $ amount that would allow the Board to sign off on it.
You realize this makes absolutely no sense, right?
You realize this makes absolutely no sense, right?
real_company_worth = sum(valueOf(technology), valueOf(people), valueOf(assets))
sale_price = max(total_money_raised_owed, real_company_worth)
if sale_price == total_money_raised_owed {
sale_price < real_company_worth // likely, since rarely total_money_raised_owed == real_company_worth
}
"sale_price < real_company_worth"
This statement in that conditional seems like it could never be true.
If sale_price == total_money_raised_owed, then real_company_worth <= total_money_raised_owed because sale_price = max(total_money_raised_owed, real_company_worth).
Therefore, inside the conditional, sale_price = total_money_raised_owed >= real_company_worth, therefore sale_price >= real_company_worth which is the opposite of sale_price < real_company_worth.
What am I missing? Perhaps you meant min?
max is correct though (whichever value is highest, that sets the base price).
And of course, some sheareholders lost their stakes in this sale.
> Because the company’s obligations to its preferred shareholders exceeded the sale price, investors won’t be paid out in full, according to a document reviewed by Bloomberg.
Companies rarely sell for less than the total amount raised. This is true. It doesn't mean that buyers regularly pay double for something because the company wouldn't otherwise sell. It means the buyers just don't buy it!
If Genius was really only worth $1M - we probably wouldn't ever hear about it - because they probably wouldn't ever sell it for that price.
Very common that the baseline is the amount of money raised - it's why sometimes companies die and not get sold. Other times, companies will use amount of money raised as leverage to increase the final sale price (based on investor expected returns).
Money raised plays a huge factor in regards to sales price, or if a sale occurs at all.