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Comment by fshbbdssbbgdd | Hacker News Reader

It’s hard to turn down the prospect of making your and all your employees/shareholders investments pay off. In fact, many of them would probably angry if they heard you did that. The potential for an exit is one reason they worked for you and not bigco who pays more. And you didn’t get whatever success you had by ignoring opportunities that presented themselves.

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This wasn't an "exit" though -- the company was already public, and had been for 7 years!

It was "just" an offer with a large premium over the current stock price.

I read "Exit" as "F--- you money", not ... well I'm not sure what you view "Exit" as if you exclude a big paycheck.

Was it F-you money for most employees, though? Sure, it was a 60% premium over the current stock price, in CUC stock which promptly dropped after the announcement.

So I suppose if you were sitting on 300k in equity it was now worth 480k, but it's not like going from illiquid paper wealth to a liquidity event...and given the company's growth trajectory it seemed likely at the time that it would get there in a year or two on its own, without a (risky) acquisition.

Dunno, doesn't seem like a slam-dunk case of F-you money to me.

I dont think an "Exit", as is commonly understood, implies that all employees get rich.

Exits are for founders / top-level guys.

Alright, but the founders here were already liquidly rich from their IPO? At lease one of the execs (Roberta) was super opposed.

They didn't do it for the personal money, they did it because they thought their shareholders would sue them, at least in part, for turning out a deal that was too good to be true.

Assuming you know what the shareholders and founders and execs were thinking, then yeah - that might not qualify for my definition of exit

Well, that’s what they’re quoted as saying in the article!

He should just have asked for all-cash transaction. I think it is fair. If they don't want to sell the company stock and buy the company with cash, or at least make an offer, then there is likelihood that there is some kind of fraud going on.

Easy to say in hindsight, but using stock to pay for a merger is common. Most companies are not carrying a big chunk of their value in cash (it’s not capital-efficient). Therefore buying anything sizable for cash will require the combined company to take on debt. So a stock-for-stock merger can result in a combined company that has a safer balance sheet. If the acquiree believes the merger is a good idea, they might consider owning stock in the merged entity to be a good thing. If nobody is offering them a competitive offer in cash, they don’t have much leverage to ask for it anyway. Even if you value the stock offer with some discount for risk, it can still be attractive.

It need not be a pure debt transaction, the combined company can sell stock to the public rather than the shareholders of the old company who may suddenly feel the need to liquidate.

This is why with my personal companies, I've always avoided issuing shares or giving equity to employees. It handcuffs you.

Note that I'm not saying that others who don't avoid those things are wrong -- they're not at all. They just have different business goals and priorities than I.

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