Over the life of our business Pagely we’ve seen a few term sheets from potential acquirers (No, we are not selling). There are few things I’ve seen in all of them that as a founder stuck out to me. Cash is not really Cash until it is in your hand. We’ll use some made up number’s here that make for easy math. You are minding your business and someone comes along and ask’s to buy your company. You choose to entertain them and see what they are offering. You got a number in mind, let’s see how how it all shakes out. The term sheet has this nice big number acquisition price that get’s your attention: $30 million. Hey $30million, that’s a lot of cheddar and in line with what you were thinking is a good price for your company. Okay, so you keep reading and the terms go on to spell out something like this. $8m cash at closing $2m at milestone 1 $5m at milestone 2 $5m at milestone 3 500,000 stock options You think to yourself, hey that looks like only $20m, WTF? You keep reading and more details emerge. $8m cash at closing $3m of which will be held in Escrow for 24 months $1m of which is written in as a clawback you repay if you or any important staff leaves prior to 24 months $2m at milestone
Share This