Berkonomics

AUGUST 17, 2023

Preparing for the game… If you have been following our recent insights, you’ll be up to speed knowing that professional investors negotiate tough terms, from provisions of control over asset acquisition, eventual sale of the company, future investments, forced co-sale when others attempt to sell their shares and more.

Liquidity Event 118

Liquidity Event Stock Options Stock Audio 118

Berkonomics

JANUARY 3, 2019

But it is within the range of experience by many of us professional investors, and with those who have acted as brokers, serial purchasers or consultants for acquisitions. Why would anyone acquire a company? With this rate of disappointment, why would anyone or any company purchase another? And the lesson? So, this insight is simple.

Acquisition 48

Acquisition Due Diligence Forecast Employee 48

Berkonomics

JANUARY 3, 2019

But it is within the range of experience by many of us professional investors, and with those who have acted as brokers, serial purchasers or consultants for acquisitions. Why would anyone acquire a company? With this rate of disappointment, why would anyone or any company purchase another? And the lesson? So, this insight is simple.

Acquisition 48

Acquisition Due Diligence Forecast Employee 48

Steve Blank

JULY 15, 2010

Number of Venture Backed Liquidity Events 1991-2000. The size of the red bars (IPO’s) versus blue (mergers and acquisitions) illustrates that while venture-backed startups did get acquired, the IPO market was booming. Number of Venture Backed Liquidity Events 2000-2010. Take a look at the chart below. (It

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Startup Professionals Musings

AUGUST 17, 2014

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. That’s why investors want to hear about your exit strategy. If you don’t have one, or intend to buy out investors with their own money, you probably won’t get much interest.

Liquidity Event 249

Liquidity Event Equity Venture Capital Merger 249

Steve Blank

JUNE 23, 2016

Capital is returned to these investors through liquidity events (originally public offerings, but today mostly acquisitions). Its acquisition of Android may have been the biggest bargain in corporate history. Risk capital has provided financing for new ideas in the form of startups.

Architecture 227

Architecture IRR Balance Sheet Liquidity Event 227

Startup Professionals Musings

MAY 28, 2013

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. That’s why investors want to hear about your exit strategy. If you don’t have one, or intend to buy out investors with their own money, you probably won’t get much interest.

Liquidity Event 243

Liquidity Event Startup Equity Venture Capital 243

Startup Professionals Musings

MAY 18, 2015

Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Professionals Musings

SEPTEMBER 7, 2015

Premium startup-acquisition targets usually at least double revenues every year, so conservative 20 percent yearly-growth projections will not win accolades. Show a liquidity event and investor return at the end of the period. Growth projections should be aggressive, never conservative.

Liquidity Event 120

Liquidity Event Startup Initial Public Offering Equity 120

Berkonomics

SEPTEMBER 20, 2018

Most entrepreneurs and certainly all investors would like to see “a positive liquidity event” (a good sale of the business) someday. Not only will group focus upon the possibility of a liquidity event, it will begin to focus upon a number of possible buyers. So, that’s the reason for this insight.

Liquidity Event 48

Liquidity Event Intellectual Property Naming Acquisition 48

Hunter Walker

MARCH 8, 2014

The Early Team Still There and They’ll Be Your Tribe for Years : The founders and early team are still in place because there hasn’t been a liquidity event and the work is still exciting for them. Don’t think it makes total sense but hey, make it work in your favor.

Liquidity Event 134

Liquidity Event Early Stage Seed Stage Startup 134

Gust

AUGUST 10, 2014

The only path to any return for equity investments is a liquidity event, like a merger or acquisition (M&A), or IPO. Build a path to 10x return. Thats why investors want to hear about your exit strategy. If you dont have one, or intend to buy out investors with their own money, you probably wont get much interest.

Liquidity Event 176

Liquidity Event Equity Venture Capital Merger 176

Startup Professionals Musings

DECEMBER 11, 2015

The best way to support your acquisition potential for $100 million -- or going public -- is to find a competitor who has shown it can be done. Investors need a liquidity event to get their money out. Solidify your exit strategy by picking a competitor as a comparable.

Intellectual Property 120

Intellectual Property Liquidity Event Exit Strategy Angel Investor 120

Startup Professionals Musings

AUGUST 7, 2015

Startup investments are extremely risky, primarily because the stock has no value until a future liquidity event, such as an acquisition or public offering. The entrepreneur needs to show a strategy for such an event, and a projected value and return to the investor. Putting together a good investor pitch is hard work.

Product 120

Product Intellectual Property Liquidity Event Burn Rate 120

Startup Professionals Musings

FEBRUARY 13, 2016

Technically, this is your exit strategy, usually a merger and acquisition (M&A) or initial public stock offering (IPO). If you don’t plan a liquidity event, you won’t find many investors interested. I ask for five-year projections, since that’s the average time before investors can cash out.

Sweat Equity 120

Sweat Equity Advisory Board Liquidity Event Startup 120

Growthink Blog

MAY 26, 2011

Last week, TruckCenter.com was purchased by Liquidity Services (NASDAQ: LQDT), a company that runs online auctions for surplus goods. I found this pretty amusing since when a company is purchased, we often say it reached a "liquidity event." your business) into cash.

Acquisition 81

Acquisition Liquidity Event Valuation Revenue 81

Steve Blank

MARCH 18, 2011

The reward for doing so was a liquidity event via an Initial Public Offering. Tech IPOs were a receding memory, and mergers and acquisitions became the only path to liquidity for startups. Startup exits in the next three years will include IPO’s as well as acquisitions. The New Exits.

Internet 334

Internet IPO Silicon Valley Agile 334

Berkonomics

SEPTEMBER 24, 2015

For high growth ventures being groomed for a lucrative liquidity event, this is usually a wise choice, presuming additional growth capital can be successfully raised on agreeable terms. The bottom line: Looking at best example companies in a sale, their acquisition strategy was to avoid growing their cash flow before the exit.

Liquidity Event 48

Liquidity Event Ohio Acquisition Revenue 48

Gust

OCTOBER 21, 2011

This week we move on to something near and dear to the hearts of entrepreneurs and investors alike: The exit, more formally known as a “ liquidity event.” Suppose the notes converted as if the acquisition were an eligible financing round. Most would agree this is not a fair outcome.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

YoungUpstarts

MARCH 11, 2015

This compensation can come in the form of a stock option , a stock appreciation right, or a similar financial instrument, which can potentially be quite lucrative for employees at the time of a merger, acquisition or initial public offering (IPO).

Valuation 100

Valuation Stock Options CPA Merger 100

Gust

NOVEMBER 4, 2011

Never missing an opportunity for a good war story, I’d like to revisit one high-profile transaction, the $650 million acquisition of MySpace by Fox Interactive Media in 2005, on which I spent many sleepless nights along with the rest of the deal team. Read on for a fuller explanation. Intermix and its advisors weren’t fools. of MySpace, Inc.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Berkonomics

SEPTEMBER 13, 2011

The magic of this exercise is not only in the organization of group focus upon the liquidity event and possible buyers. You will quickly note that at least four of the ten candidates, if each had perfect knowledge of your company and its resources, would want the very same thing from an acquisition.

Intellectual Property 67

Intellectual Property Liquidity Event Acquisition Distribution 67

Hunter Walker

NOVEMBER 20, 2013

3) The Alternate Liquidity Syndicate. Institutional VCs rely a model which optimizes for billion dollar outcomes via an acquisition or IPO. And accordingly, they’d be able to attract investors not because they have a large Twitter following but because they’re bundling a scarce and desired skill.

Syndicate 98

Syndicate Syndication South America Seed Stage 98

David Teten

JUNE 17, 2015

According to Dow Jones VentureSource , at the close of the third quarter of 2014, German and Israeli companies that exited each took on average under 4 years from first round of funding to acquisition.

Angel Investor 60

Angel Investor Angel Groups Liquidity Event IPO 60

Berkonomics

SEPTEMBER 6, 2018

But each commitment of resources of any substantial size for acquisition of new products, talent, even new companies, changes the value of your enterprise perhaps to a great degree. Should I make an acquisition to increase value? Let’s analyze the effect of a potential acquisition upon the value of your company.

Acquisition 48

Acquisition Distribution Channel Operations 48

Startup Professionals Musings

JUNE 6, 2022

Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. Think long-term. It’s a lot easier to buy stock in a startup than it is to sell it.

Liquidity Event 300

Liquidity Event Angel Investor SEC Accredited Investor 300

The Next Web

OCTOBER 7, 2013

What you need to consider: - x : percent ownership upon a liquidity event. Are they especially acquisitive? Again this is somewhat simplified as the liquidity event (sale or IPO) may come as cash, stock, or a combination of the two. It doesn’t matter how high your offer is if your startup fails.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Berkonomics

AUGUST 27, 2011

But each commitment of resources of any substantial size for acquisition of new products, talent, even new companies, changes the value of your enterprise perhaps to a great degree. Let’s analyze the effect of a potential acquisition upon the value of your company.

Acquisition 73

Acquisition Distribution Channel Revenue 73

Haystack

MAY 9, 2019

Any billion-dollar liquidity event is a rare event, so it will get the Haystack blog treatment. It was just about three years ago when the startup world learned that Unilever had decided to plunk down a cool $1B to buy LA’s Dollar Shave Club.

Acquisition 121

Acquisition Liquidity Event Venture Capital Vertical 121

The Next Web

SEPTEMBER 29, 2013

Investors are always thinking about growth mode because that’s the path to where they want to go – liquidity event. You know cost of acquisition at a low scale, so instead of 10 users you decide to test with 100 or 300 users. How do you do that? Put yourself in an investor’s shoes for a second. Your company will die.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Startup Professionals Musings

MARCH 13, 2020

Define an exit strategy for investors to liquidate their share. They prefer a liquidity event such as an IPO or an acquisition by an existing large industry player, with a valuation at that time of five multiples or more of your projected revenues. Back up your projections with a simple financial model.

Liquidity Event 308

Liquidity Event Forecast Exit Strategy Bootstrapping 308

Berkonomics

AUGUST 13, 2015

For publicly traded potential acquirers, reviewing their public filings regarding previous acquisitions can be quite illuminating – especially finding information about whether they have borrowed to finance past company purchases. Many large companies have a preferred template from which their deal teams rarely stray.

Ohio 48

Ohio Acquisition Forecast Sales 48

Startup Professionals Musings

SEPTEMBER 6, 2019

Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. Think long-term. It’s a lot easier to buy stock in a startup than it is to sell it.

Liquidity Event 224

Liquidity Event SEC Entrepreneur Accredited Investor 224

Hearpreneur

OCTOBER 29, 2017

With annual healthcare expenditures for conditions that either have an underlying cellular degeneration or damage component, now surpassing $7 trillion globally, Bioquark’s platform makes the company an attractive candidate for high-value strategic transactions and liquidity events for investors. Thanks to Ira S.

Entrepreneur 73

Entrepreneur Social Media Liquidity Event Private Equity 73

Startup Professionals Musings

SEPTEMBER 16, 2017

Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. Think long-term. It’s a lot easier to buy stock in a startup than it is to sell it.

Liquidity Event 184

Liquidity Event SEC Accredited Investor Angel Investor 184

Hunter Walker

SEPTEMBER 29, 2022

So for the most part a venture investor holds their equity until the company exits via an acquisition, IPO, or some sort of other liquidity event (management buyout, whatever). These are all rare, but real, and fortunately not anything we’ve dealt with in our firm.

Venture Capital 122

Venture Capital Cap Table LP Equity 122

Startup Professionals Musings

NOVEMBER 1, 2013

Once invested, you should expect no return until the first “liquidity” event in 3-5 years, maybe longer. Liquidity events include merger or acquisition (M&A), or Initial Public Offering (IPO) when the stock goes public. Think long-term. It’s a lot easier to buy stock in a startup than it is to sell it.

Accredited Investor 219

Accredited Investor Liquidity Event Stock SEC 219