Hosted by Jay Adelson.
Entrepreneur, CEO, and business owner Jay Adelson (Equinix, Digg, Revision3, SimpleGeo) demystifies the start-up process by providing advice, tips, and answering questions. Ask Jay how to turn any business idea into reality: email@example.com, @jayadelson, or http://youtube.com/askjayadelson Read More
Successful entrepreneur and CEO, Jay Adelson, demystifies the start-up process by providing advice, tips, and answering questions. In this episode, Jay explains many of the elements that are negotiated in a merger or acquisition deal. It's not always a straight cash or even straight stock deal. Often times there are earn-outs and holdback provisions. This episode explains what they all are and mean along with how to weigh your options (pun kinda intended).
Jay's Chalkboard Notes:
- Company value = cash value offered
- Earn-outs and holdback provisions are a separate number
- Sometimes performance after M&A deal provides extra $
- Lately, "earn-out" provisions less popular
- Many tech acquisitions are talent grabs
- Hold back provision requires key talent to stay on the company
- Fully vested stock converts to cash
- Options aren't necessarily cash payout
Weighing your options in an M&A negotiation:
- Do you want to remain at the company?
- Fully understand requirements for cash or milestones