Hacker News Reader

Comment by jmyeet | Hacker News Reader

As soon as someone hands you the check it's no longer "your" company and you should stop thinking of it as such. Only misery lies on that path.

I see this on a smaller scale where ICs leave a company and take a copy of "their" code (ask Sergey Aleynikov [1] if that's a good idea). It's not yours. If you ever use it you could face legal consequences. And there's no code I've ever written that I wasn't convinced I could write better from scratch the next time if it ever came up. Side note: it never has.

Don't be that guy who takes the check and then expects control. Don't be that guy who is convinced the new owners are messing it up and then goes out and does the exact same thing..

Move on.

[1]: https://en.wikipedia.org/wiki/Sergey_Aleynikov

View on HN

Often acquisitions are set up with "earn-outs" so that only with the success of the project do you get the full amount of the buy. Even when that's not the case your reputation may well be tarnished by any failure (whether technical or managerial) of the product.

I agree with your point though, which is to just walk away with the check unless you're willing to take a significant risks with either of those two other outcomes.

Do you know where I can read more about the structure of "earn outs"? They seem like just another trap, to be clear.

I'm not an expert, but I've seen the inside of a couple of deals like this in the $100M range. I saw larger % earnouts than described below (e.g. in the 30-50% range), which were based on milestones (e.g. products going to market on time) and income (e.g. $ customer sales over following several years). It's worth noting that the deals closed in a significant amount of stock so that is also an incentive to keep the buyers price high (but that the earner realistically has limited influence over that).

https://news.crunchbase.com/ma/earnout-plan-startup-sale-how...

Have you ever started a business before?

Yes, you technically no longer own it once sold, but there's a huge amount of blood, sweat and tears that goes into building something from nothing - not to mention a sense of loyalty to your staff - and you genuinely do want to see it go into good hands and become managed well.

I guess a somewhat leaky analogy would be like giving away a dog you raised to another family and finding out later that they're abusing it. Yes, it's no longer your dog, but you're still going to care deeply about its wellbeing.

(a) if you want the dog to go to good hands, don't sell it. Spend time finding the best hands possible and give them the dog.

(b) as you might see, your analogy is not very good.

(d) if you find you care about the fate of the company, perhaps not sell it? or if you do, sell it to someone who also does? or if you don't, at least realise it was your failure to find such a buyer.

(e) if you expect an acquirer to care about what they acquired beyond how to make money from it, you are a romantic, a fool, or both... and I want to buy your company for cheap.

> sell it to someone who also [cares about the company]

That's easy to say

But it partly requires reading someone else's mind

I empathise and think the only solution is to either not sell (only sell a non controlling stake?) or vet the buyer very carefully

A pattern I've seen a few times (can't recall examples right now, sorry) is to sell the business and then when the business fails, or turns bad, start a new business to compete.

Obviously companies try to tie past owners hands to avoid future competition, but it still happens sometimes.

Dog breeders and trainers have this issue in spades. The common advice is to separate your job from your feelings as much as you clearly as you can, otherwise it gets bad really fast and not only you can't continue your job, but it breaks into your personal life as well.

Your analogy could be apt: don't sell your company if you can't see it suffer in other people's hand.

This isn't unique to running a business. You see it with screenwriters for example. A script is sold to a studio and as soon as the check clears, it no longer belongs to the author. The studio is free to completely change it or just put it in a drawer and forget about it. Some have a problem with that. It's their baby.

Selling something is letting it go.

It's more like selling your dog for a lucrative amount, even if there's 50/50 odds the new owner is a sadist.

A child is still your child, even after they turn 18.

Are you implying your own your child. Because that’s a perfect analogy, once there 18 they are independent. It’s just like expressing regret for a sold company

“Own” is, for obvious reasons, not the word we use about children , but in practice it amounts to the same thing. A parent or guardian has complete control over what their child does and where it goes. Until the child turns 18. But we still call it “their” child.

$400k salary is ridic, especially for the time. How can I get summa dat

Reply on news.ycombinator.com