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What To Do When a Megacorp Wants To Buy You?

Soulskill posted more than 5 years ago | from the demand-autonomy-from-marketing dept.

Businesses 412

Anonymous Entrepreneur writes "I run a small technology startup company; so small that our offices are still located in a room in my home. We are just some young friends, fresh from college, and we haven't started having regular sales, as 99% of our time is invested in development. A large corporation has just approached us, trying to persuade us to sell our company. The money is fair enough, and the employment conditions would seem excellent, since they would enable us to manage good-sized motivated teams, but we are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions. We feel that by accepting the offer, we couldn't achieve the maximum of our potential, and one of us joked that if we get in contact with the corporate environment and accept their money, we risk becoming lazy. Another member is more pragmatic, saying that accepting some money now is better than waiting for the development to go gold, even though all of us agree that if we finished our thing, we'd earn more than what the corporation has offered us. We would be very interested to know your thoughts and viewpoints, especially if you have ever faced a similar dilemma."

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Could you be more vague? (5, Insightful)

seanadams.com (463190) | more than 5 years ago | (#27885319)

You have given us nothing to go on here as far as your business case, so I'll be brief:

Money really doesn't mean much to us as long as we can do whatever we want [...]

The first you will learn about money is that it lets you do exactly that. Make sure it's enough that in case things don't work out with Megacorp, you can get back to doing whatever it is you enjoy.

Michael Scott Paper (2, Insightful)

DirtyCanuck (1529753) | more than 5 years ago | (#27885387)

Somebody doesn't watch The Office.....

Re:Could you be more vague? (5, Insightful)

cayenne8 (626475) | more than 5 years ago | (#27885511)

"The first you will learn about money is that it lets you do exactly that. Make sure it's enough that in case things don't work out with Megacorp, you can get back to doing whatever it is you enjoy."

I could not have put it any better.

It just matters at this point to how much the offer is, and how realistic your changes are looking forward to see if you can make that much more.

It is hard to think of it, with your first company, but, while it is ok to be enthusiastic about your work maybe even a little emotional about it, you can NOT be emotional about the business itself. Work it to make money...to free yourself more and more to do what you want along the way. Many super successful people started a company, worked it up, sold and made a mint....and went on to do more and more interesting things.

Life's a journey....not a destination.

For the most part, a job is nothing more than a means to make money. Making that money allows YOU to do what YOU want to do...and if that is living a life of luxury, sleeping with lots of women, travel....or, even more work, you can't do it or anything they way YOU want to do, without sufficient funding.

Re:Could you be more vague? (5, Insightful)

martin-boundary (547041) | more than 5 years ago | (#27885857)

For the most part, a job is nothing more than a means to make money. Making that money allows YOU to do what YOU want to do...and if that is living a life of luxury, sleeping with lots of women, travel....or, even more work, you can't do it or anything they way YOU want to do, without sufficient funding.

Yes and no. The problem here is that what you're trading for money is *time*, which is a non-renewable quantity. You only have a limited lifespan, and there are no extensions. Moreover, the value of time is a diminishing quantity once you're an adult.

If what you want to do is something simple like sleeping with girls a lot younger than yourself, enjoying luxuries as long as they can be bought etc., then trading in a chunk of your life in exchange is a good choice.

If it's something hard to get, like a skill or comprehensive education, then making money first is typically a disaster. There aren't many basketball stars who concentrated on becoming well off before they started practicing hoops. There aren't many top surgeons who learned medicine from scratch only in their 50s. If that's the kind of thing you want to do with your life, then you should ignore the money, as it's the best way to kill your dream.

The key is to figure out what you want early in life, before you waste a chunk of it collecting the means to achieve it.

Make Decision Executive-style (5, Insightful)

soloport (312487) | more than 5 years ago | (#27885613)

Most important: Decide quickly. Also important: Try to put as little emotion into the process as possible. When you have made your decision, consider the following:

If you decide in favor, make certain the process moves as quickly as possible. Make sure you have put in place -- before taking each and every step -- provisions for backing out (at no cost to you). At the slightest sign of foot-dragging, stop the process and pull out. Decide from the beginning what your triggers will be for backing out. Then stick to the plan.

Being bought out is time-consuming. Think of it as a huge distraction to your business. A huge distraction could be the only thing Magacorp wants to "buy". If they're earnest, they'll understand and appreciate caution as well as haste. (Time is money.)

If you decide against, let Magacorp know immediately. Then get back to work, pronto. Looking back, second thoughts and re-negotiations are distractions, too. Let Megacorp know that your decision is final.

Good luck!

Re:Could you be more of a vagina? (0)

Anonymous Coward | more than 5 years ago | (#27885671)

all it comes down to is what the realistic chances are that not selling now will net you way more in the near future. If the answer is almost a definite "yes", then you should wait and get what its really worth as a more complete product. If the answer is no, then sell it. Its not difficult. However, if you, like me, hate the idea of working under others when you have the capability to work on your own and still make money (unlike me), then you should stick to just making these ideas and selling them, because you don't want to end up maintaining things when you could instead be creating things (again, where i currently am in a megacorp). Your creative freedoms will be ultimately stripped, just a matter of when. Plus once your product goes into maintenance mode they will most likely outsource it then can you.

Obviously everything I just said is in no way 100% guaranteed to be the case, and is certainly quite a bit on the pessimistic side, but honestly what it comes down to is safety. Which end result is the safest for you and your chums, financially, in the long run.

Are You Looking For Success? (4, Insightful)

soloport (312487) | more than 5 years ago | (#27885767)

There are certain core ingredients typically required for success:
* Marketing -- finding out if there is a need for a product, creating requirements for a new products based on emerging needs in a market
* Sales -- getting the word out, building relationships and closing deals
* Distribution -- fulfilling orders, positioning goods for easy access and generally getting products into the hands of your customers
* Support -- keeping the brand alive in your customer's mind, keeping the relationship positive and creating secondary opportunities to, say, up-sell or repeat-sell
* Accounting -- getting paid for all of the above, keeping current with accounts payable (esp. taxes) and paying employees and shareholders
* Product Development -- (the easy part) research, design, testing and documentation
* Production -- parts procurement, assembly, verification, bundling and shipping (on time and under budget)
* Human Resources, Legal and Staff -- people named "Peter"

Does you company have all of these in place? If it's missing even two or three components, you may be headed for real trouble. If Megacorp can fill in some of the blanks, consider being bough out a real win-win!

No advice to give (2, Insightful)

cptnapalm (120276) | more than 5 years ago | (#27885343)

From what you wrote, there does not seem to be any real question in (most) of your minds as to what to do, so not really sure what you are asking.

Please don't be one of those "I'm asking for advice, though I really just want affirmation" people.

Re:No advice to give (5, Insightful)

Anonymous Coward | more than 5 years ago | (#27885515)

Well, you know, someone (I think John Steinbeck) said that a man never asks for advice unless he's already made up his mind.

Re:No advice to give (1)

cjfs (1253208) | more than 5 years ago | (#27885525)

Chance of success * estimated payoff, compare that to the offer and adjust for how highly you value stability/independence.

I'd usually say even if the question is simple it might still spark good conversation, but really this is too vague to be useful.

Re:No advice to give (2, Insightful)

Dhalka226 (559740) | more than 5 years ago | (#27885821)

I tend to agree with your assessment; it certainly sounds like they don't want to sell.

What I would add, though, is that's actually a great position to be in. It means the worst potential outcome of this negotiation is the one they're sort of hoping for. So my advice is this: Treat it as exactly that: A negotiation. Worst case, they say "screw that we're not negotiating!" which it sounds like you almost want. No harm. Best case, you may be able to get any number of beneficial things, just a few of which might be more money and/or more autonomy.

you may think you're gonna change the world... (1, Insightful)

Anonymous Coward | more than 5 years ago | (#27885365)

with your ideals but you're going to have to be realistic, either you're going to take the money or you're not. If you're worth your salt you'll take the money and work on an even better idea.

Re:you may think you're gonna change the world... (0)

Anonymous Coward | more than 5 years ago | (#27885533)

Take the money and run. It's not like humans have morals or anything. Just take the money and run. Or, alternately, string the idiots along and make more money! The idiots will eventually associate your name with declining quality and flee to better venues, but why does any of that shit matter when you have MONEY$$$?

Money will buy you into heaven! So life's lesson is that every person become a sociopathic dog and backstab their way into heaven. We want More. MORE. MORE!

Re:you may think you're gonna change the world... (4, Insightful)

shawb (16347) | more than 5 years ago | (#27885539)

Not to mention, if the Mega-Corp likes the idea, they'll find a way to implement it whether or not you are helping them. You may be in the right, but if they want they can get the product cranked out faster and with more developed distribution channels and contacts. More importantly, they can throw more and better experienced lawyers at defending themselves than you can throw at them.

run! (2, Insightful)

Anonymous Coward | more than 5 years ago | (#27885367)

if it is your dream to see you idea into fruition then be prepared for it to be raped and then brutally murdered.

you will loose any control that you have, and even if you can leave the company you still won't be able to do anything since they own your idea.

all that they care about is profit margin, and the very second that it looks like it won't be profitable, they'll kick your ass to the curb and bury your project in the basement.

finish your product, then decide if you want to sell. you will have much more control over the end result that way.

Take the money. (5, Insightful)

Spazmania (174582) | more than 5 years ago | (#27885369)

If the money's good, take the money. You can always start another business but you can't always find someone willing to pay you for your current one.

Remember: you don't have to be the next Google. It only takes a few million to retire and to *anything you want to do.*

Re:Take the money. (2, Insightful)

joocemann (1273720) | more than 5 years ago | (#27885549)

I think a lot of people with drive, education, and creativity are waiting for that big cash lump sum to fall into their laps.... so they can retreat to some mountain home, set up a work environment they can do on their own time and pace.... and relax...

I know that is one of my dreams.

Re:Take the money. (1)

Clived (106409) | more than 5 years ago | (#27885577)

As they say in the songs, "Take the money and run". you guys can always start another gig

My two bits

Don't Sell (1)

pcjunky (517872) | more than 5 years ago | (#27885373)

Independence isn't something the money can buy you.

Re:Don't Sell (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#27885519)

fuckin sysy boy

Re:Don't Sell (4, Insightful)

cayenne8 (626475) | more than 5 years ago | (#27885547)

"Independence isn't something the money can buy you."

Actually, sufficient money is exactly what can buy you independence.

If you aren't beholden to anyone or any company for making a living, you can do pretty much as you please as long as its legal.

(Not getting into how enough money will actually often buy you legal leeway too at times.)

Fool (0, Troll)

zxjio (1475207) | more than 5 years ago | (#27885375)

Your save the world, fuck the rules, and money means nothing attitude makes me cringe. You may really burn yourself here. Life isn't some television show. Providing for yourself or being broke is not a joke.

Re:Fool (1)

fucket (1256188) | more than 5 years ago | (#27885421)

There are worse things than being broke.

Re:Fool (2, Insightful)

eyepeepackets (33477) | more than 5 years ago | (#27885555)

True: Slavery in all its guises comes to mind.

True, but... (1)

Weaselmancer (533834) | more than 5 years ago | (#27885655)

There aren't many things better than being rich.

Re:True, but... (4, Insightful)

WillKemp (1338605) | more than 5 years ago | (#27885851)

There aren't many things better than being rich.

Yes there are! Being happy. Healthy. Fulfilled. Having an interesting life. Loving and being loved.

Being rich isn't a prerequisite for any of them - and it doesn't bring any of them on its own.

Re:True, but... (1)

Logic and Reason (952833) | more than 5 years ago | (#27885871)

What a sad, sad outlook on life.

When a company wants to buy you... (5, Insightful)

erroneus (253617) | more than 5 years ago | (#27885377)

When a company wants to buy you, it means you are competitors otherwise and they want to stop you or otherwise control your future.

Make it clear what their expected terms are to be and whether or not you will be forced into a non-compete situation. They will bring you on as an employee as part of the agreement and at that point "all your IP are belong to us." You stand to lose plenty. And let's be clear on this -- they will hire you, but that is NO guarantee that they won't turn right around and fire you leaving you with no options for "starting up again" or working for another company doing anything similar -- remember that "non-compete" thing they required you to sign?

They have a PLAN. Make no mistake about it. They have thought this through. You should give this no less thought. Get them to disclose their ENTIRE plan to you at once including their intent to terminate you leaving you high and dry. (Of course they will never say that, but you can get them to state that they never had any such intention AND that in the event they feel they need to in the future that you have a golden parachute and get it in writing.)

Re:When a company wants to buy you... (1)

erroneus (253617) | more than 5 years ago | (#27885465)

By the way, this sounds terribly like one of those "microsoft partner" deals and if this megacorp happens to be Microsoft, just keep in mind that Microsoft sees partnership as "victory for microsoft" and they own whoever they partner with.

In any case, GET A LAWYER and get them to agree to pay your lawyer. They have lawyers too...lots of them.

Hard Call (1)

IMightB (533307) | more than 5 years ago | (#27885381)

I've worked for MegaCorp before I did not enjoy being a number, since then, I've worked for small to medium companies.. Currently I work for a medium sized company ~200 (MX Logic). I joined the company when it was >100.

I may work more hours for less pay than I would at MegaCorp, but at least I feel that the things that I do directly contribute to the company. That I am not just on a hampster wheel is a good thing to feel. Also I know the CEO, CFO and all other execs on a first name basis.

All that being said, I'd say if you have a *good* offer on the table you should consider it. Most likely they'll ask you to stay on for at least a year, after that if you feel like number 49327405-4 in the org you should leave and use the money they bought your small company with to start a new one.

Sell dude (1)

cp4 (250029) | more than 5 years ago | (#27885383)

Life is short...

Depends on the conditions... (4, Insightful)

fuzzyfuzzyfungus (1223518) | more than 5 years ago | (#27885385)

If your primary interest is autonomy/creativity, then it really comes down to what they are actually trying to buy. If they are buying your company to get your product(s); then sell, sell, sell. The more money you have, the easier it will be for you to pursue whatever projects/new startups/etc. you feel like doing in the future.

If they are buying your company to get you, then the situation is less clear. If a condition of the buy is you working for the man for a fair while, then you might not want to do that.

huh? (0)

Anonymous Coward | more than 5 years ago | (#27885389)

take the money and run.
make sure it megacorp sized money tho. a million for each of you should do it.

Take the money (4, Insightful)

StuartHankins (1020819) | more than 5 years ago | (#27885399)

Take the money if it's anything reasonable. You then have some resources to enable you to work on things that make you feel more free.
But seriously, take the money while the offer is there.

rule 1 in business... (0)

Anonymous Coward | more than 5 years ago | (#27885405)

is to never accept the first offer.

"Buy 'em out, boys" (2, Insightful)

xrayspx (13127) | more than 5 years ago | (#27885407)

I see you work for Compuglobalhypermeganet, huh? That was a pretty vague writeup. I'd say advice would be "Decide if you want money or jobs", "Hire a lawyer to try and get you want you want". If you don't feel like you or your technology would reach its potential at MegaCorp, refuse to sell out to them and make your own billions/change the world/improve lives.

If there is a buyer... SELL... (0)

Anonymous Coward | more than 5 years ago | (#27885409)

Ok, money isn't important, but money let you do what ever you want. Like, starting another NEW enterprise, with NEW ideas based on NEW experieces after working with a megacorp...

Or maybe, that kind of money would let you buy a small paradice, a condo or house at of Mexico beach... Buy some stocks, make good savings desitions, put a trust fund to your self...

I've been working for 10 years with my own enterprise. I love it, it works "ok"... but what I really want to do NOW, is to have time MY time... Always is the enterprise first, like if you where married... and there will be a time, when you would like to have more time to do other pleasent things...

Take the money, work less, take A LOT of vacations, doesn't matter if they are exotic or not...

But for god sake, SELL...

I envy you with the most inner deep of my heart.

Think long term (3, Insightful)

Mad Merlin (837387) | more than 5 years ago | (#27885413)

Given that you've started this in the first place, you're almost certainly going to become unhappy with the new corporate environment sooner or later, which means that you're going to come back to this again. The real questions are:

  1. What's the chance you'll come up with another idea of equal or better quality that you can turn into something worth $$$? Keep in mind that this is harder than you might think.
  2. Just how much money are they throwing at you up front? Could you retire on it? (unlikely)

I'd certainly lean towards not taking the offer.

Do it (0)

Anonymous Coward | more than 5 years ago | (#27885415)

Take the money. Make sure you have no legal obligations to the new company to stay long, or to disallow you to keep working on whatever projects you're working on. Then leave when you don't like it anymore and back to doing what you want. You'll have the money, the only downside is they'll have the rights to whatever you've been working on so you'd need to come up with something new.

--Anonymous Coward

Be sure you understand how risky going it alone is (4, Insightful)

cduffy (652) | more than 5 years ago | (#27885417)

I've done a lot of startups, and every one of them failed -- and four out of five times, it wasn't for lack of technical excellence.

Getting sales, marketing, and operational execution right is both critical and very difficult. If the buyout offers you enough money you'll be in a better position next time you want to go start your own company -- think very, very hard about accepting the deal.

Re:Be sure you understand how risky going it alone (4, Insightful)

edwastaken (813099) | more than 5 years ago | (#27885493)

Agree with cduffy. If they are offering you "car" or "downpayment on a small house" amounts, then you may wish to consider going it alone. But if they are offering you F U money, then think very hard about it. Many best technologies don't succeed, and almost as often, the founders donot get much of it because of dilution or getting forced out by the board or any other number of reasons. If you are looking at over $1M or so going to you, then think very hard about passing it up. Even if the money is less, having experience making and selling a company is a huge gold star to any VC or angel investor for your next company. By the way, if you are really serious, get better advice than /. Talk to VCs, your clients and your advisors or mentors.

Shop around (1)

ipX (197591) | more than 5 years ago | (#27885431)

we haven't started having regular sales

So you must have some nice IP that you've developed... or maybe even a prototype of some kind of widget. Shop around, if someone is already interested, there should be more offers waiting for you. Your best option is probably to wait for those competing offers, or to seek them out when your company is ready.

Hope for the best, prepare for the worst (3, Insightful)

johnlcallaway (165670) | more than 5 years ago | (#27885433)

Make sure the cash is enough you won't need a job for a year or two at least, above and beyond what you just want to blow right now. You should be prepared that in less than six months, you won't want to work there and arrange your finances accordingly.

Personally, I would work out some kind of ongoing royalty situation in addition to the buy out just in case it takes off. Stock options are useless unless it is already a public company and you can exercise them within 6 months.

A friend of mine had a great idea. Got some investors, created a company to develop the hardware and software, started getting customers. Then the economy went south, the investor got scared, and no more money. So no more company.

Oh .. and now the investor owns all rights to the product so other than the originator having a high-paying job for a couple of years he got ... zip.

TPS reports (1)

seifried (12921) | more than 5 years ago | (#27885435)

TPS reports. Dilbert. Office Space. Need I say more? There is nothing wrong with being a small company. But it depends, do you want the perceived "safety" and "stability" of being a part of a large company (which in actuality probably isn't as stable or safe as you think it is) or do you want to be in control of things?

#1: Things Change After the Sale (1)

BoRegardless (721219) | more than 5 years ago | (#27885441)

Get a good experienced attorney advisor to make sure that you take into account all the subtleties. You can't learn or appreciate them all from the outside and as young as you are.

Get a good financial advisor (who works on an hourly basis) and make sure he works with the attorney.

The sign is good and bad. Watch your back! (1)

techhead79 (1517299) | more than 5 years ago | (#27885443)

We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead.

It looks like you answered your own question. If you're not in it for the money then don't be in it for the money. But given that later down in the same paragraph you mention being able to make more than you're being offered if you continue along your path...maybe you are in it for the money and you've just filled your thoughts with a virtue instead of a sin (greed is still that if I remember...).

Look, you should take out your emotions from this. Will making a deal give you funding to be the ones to make the rules on another project or idea you may have? It sounds like they are more interested in hiring you than buying you out. Companies look for talent in many different ways. They know the best way to get the real money makers is to get them before they make any money.

Being approached like this is amazing if you haven't been advertizing or selling your idea to anyone. How did they even find out about you or your idea. If you take anything out of this experience that you are soon to have remember...the IT world is like a pack of wolfs. You are either with them or you are food...ok bad analogy but it was given as advice to me once. If you don't agree to their terms you can either expect to be black balled by that company or expect to find yourself in court. If they have approached you this early in the game chances are good they already have a competing product in the works and rather than risking you filing a patent they'd rather just buy you now.

At least tell us a general topic that your product covers?

Sell, take the money. (1, Insightful)

Anonymous Coward | more than 5 years ago | (#27885445)

I was in that situation and did not sell. So advice to you is sell. You can always have another idea and start another company. With money you can do anything you want. Do not wait for the future which may not be there. This company may turn around tomorrow and withdraw their offer and you will be left with nothing.

Sell and decide what to do later.

a possible idea (1)

ILuvRamen (1026668) | more than 5 years ago | (#27885451)

this may sound awful but if it sounds remotely good, it may be the best option. Sell them all the progress so far and let them finish the whole project and take a big lump sum for it. Then immediately start a new project with your people and finish that one so basically you're developing one product and getting paid for two. But if you love the project too much and don't trust them or they want you to finish it yourself under their control, I've got a better options. Trust me, letting them buy you out and basically hire you then tell you what to do will NEVER end well. It always sucks no matter what. They'll insist on some stupid feature or make a dumb decision and then you're stuck with it. Tell them you refuse to ever do that and when you're done with the whole thing, you can license the entire thing solely to them and they can act as your marketing and control and support side and just pay you royalties based on sales.

If they want you bad enough (0)

Anonymous Coward | more than 5 years ago | (#27885455)

Vito will make an offer you can't refuse. Either your signature, or your brains will be on the contract. Sell, retire on the beach, take up knitting...

First clue: you're asking this on Slashdot... (4, Insightful)

Goody (23843) | more than 5 years ago | (#27885461)

You're asking this on Slashdot rather than seeking professional help, so that tells us something immediately. Sell out to the big company now, ride it as long as you can and leave when it's no longer fun. You don't have the business know-how to run this company on your own and have it survive.

Whichever (2, Interesting)

nine-times (778537) | more than 5 years ago | (#27885463)

I understand I'm not answering the question, and what I'm about to say isn't exactly "the truth", but more like one way to think about it: there's no way of knowing.

If your forego the Megacorp money, you might complete your product and end up making 100 times as much money. Or your whole project could fall apart in 3 months for reasons that you have no way of anticipating right now. Maybe one of your team will get hit by a car, or fall in love and move to Tokyo.

On the other hand, if you sell to Megacorp, you might end up being able to make your project into everything you envisioned and find fame and fortune through Megacorp's extensive resources. On the other hand, the corporate culture may strangle your soul to the point where you need to quit and check yourself into a mental institution.

There's no right answer here. Without knowing the particulars of what your project is and which Megacorp wants to buy it, the only real advice I can think to give is to think it over and then try to act from hope rather than fear. And keep in mind that if you're fresh out of college, you can probably afford to make a few mistakes, and still have time to start over. Instead of spending all your time afraid of making mistakes, remember that you want to make the best use of your successes and mistakes by learning as much as you can from them.

Do you want an exit? (4, Insightful)

mosch (204) | more than 5 years ago | (#27885473)

If you want to do *exactly this* for the rest of your life, say no.

But if you're like most entrepreneurs I know, that's not the case. It's likely that you could take the money, and pursue a new idea, developing another company, new employees, etc... and having some extra money in the bank will make all that a LOT easier.

As somebody who has done a few startups now, I can assure you that money matters. Because more money means you can chase bigger ideas with less pressure.

Take the money; hire a good lawyer. (0)

Anonymous Coward | more than 5 years ago | (#27885475)

Having been in precisely this situation, I'll make the following suggestions: 1. Explain that you'll be far more efficient if left alone during the development period. Secure a clear assurance of independence. 2. Accept the financing. Get most of the money up front. Get an experienced lawyer to do the pricing/negotiations if you haven't done this several times. 3. Read the contract, yourself, carefully. You will want to make changes. Insist upon them. 4. Make sure to specify obligations on both sides. If they're not happy they can walk away, but there needs to be a clear path to taking back your work and going forward on your own. This means dollar amounts and dates. And that should do it. Remember, big companies are good at initial commitments, and terrible at follow-through. If you're structuring your work around timely milestone payments, you've accepted a big chunk of uncertainty you can do without. Good luck!

They don't want to buy you... (1)

unitron (5733) | more than 5 years ago | (#27885491)

They don't want to buy you, they want to buy your idea (assuming you aren't BSing us).

Once they have it, it (and anything remotely resembling any part of it) is theirs, not yours.

You'll just be an employee, at least for a while.

You need a damn fine lawyer or 12 to go over anything and everything this company wants you to sign or says that they will sign.

Are you guys even incorporated yet, or do you love living dangerously?

Take the Cash - NOT Stock Options (1)

kstatefan40 (922281) | more than 5 years ago | (#27885509)

Whatever you do, do not accept stock options. Take the cold hard cash - it has real value. I've seen too many small startups get screwed when their genius product was bought out and then the company that bought it went under. Suddenly, they sold the rights to their product for... nothing. Take cash. Upfront.

he knows what the facts is (5, Funny)

syrinx (106469) | more than 5 years ago | (#27885531)

As Steve Miller says: "Some people call me Maurice."

No, wait, wrong quote.

As Steve Miller says: "Take the money and run."

Take the money if its good (5, Insightful)

Da_Big_G (3880) | more than 5 years ago | (#27885543)

I was in the same situation about 10 years ago (yeah, pre-1.0-burst) so I think I have some insight for you...

First, this is a business question you are asking in a techie forum, bad idea. You are running a business, possibly selling a business, go get yourself some business advisers, at a minimum that means an accountant and a lawyer who know (or at least "get") your industry, and preferably some people who have sold companies in your industry, extra points if they sold to the same megacorp and aren't involved with megacorp any more (they can tell you how it all went, but if they're still there, there's a conflict).

Second, and read carefully: TAKE THE MONEY. There's an old expression: No one ever went broke making a profit.

Caveat: after taxes it should be more money than you'd make in 10 years of working the same "job" at average pay. (e.g. if you're an engineer who could easily pull in $125k/yr, make sure you're landing at least $1.25mm cash after taxes, don't take an all-stock deal - bubbles burst) You need enough money to be able to screw around for a few years if megacorp really does turn you lazy.

BUT don't get sucked into a long term contract working for megacorp. A year or two is ok, and if you're stuck with an earnout, make sure you really can see your company meeting those numbers. After a year you could be itching to leave the megacorp lifestyle (no company is perfect) and its best to know you can part on good terms, pick up and travel for a few months, then start your next awesome company.

Third, can I repeat #1? Find a better place than slashdot to get this sort of advice. If you're really strapped, try your college's career center network, or SCORE (.org)

I am SHOCKED and APPALLED (3, Funny)

JeanBaptiste (537955) | more than 5 years ago | (#27885557)

This is not the slashdot I know and love. Where are all the calls to open source the project for all the eleventy billion reasons that F/OSS is superior in every way imaginable?!!?!?!?

everyone here just telling him to sell.

not flamebait, actually +1 surprised.

Take The Money IF... (2, Insightful)

alain94040 (785132) | more than 5 years ago | (#27885569)

The rule is quite simple really. Either they are offering you independence (also known as "f***-you-money"), or they just offer you a glorified salary.

If the offer will truly give you independence (say $1M each?), then take it. You'll be able to start something else just as fun soon enough.

If the offer is $500K to share among 4 people, then I agree with your attitude: it's basically the same as working for a big company and you don't want to do that.

DO IT! (1)

Jethro (14165) | more than 5 years ago | (#27885579)

Oh for gods sake! TAKE THE MONEY AND RUN. Milk it for all you can! To quote Homer Simpson when Bill Gates offers to buy him out, "I put my heart and soul into this business and now it's finally paying off!"

Seriously, get enough money to be comfortable. If you guys end up not liking working for the megacorp, QUIT AND START ANOTHER COMPANY doing something else. Maybe you'll get bought again!

Just make sure you don't sign anything stupid.

Everyone has a price (4, Interesting)

prakslash (681585) | more than 5 years ago | (#27885581)

I think they are not offering you enough money.

Think about it. If they were offering you one billion dollars, would you still be asking this question?
If your answer is "yes, I may still be in two minds about selling", then don't sell.
If your answer is "no, I would sell in a heartbeat", then lower that limit, i.e. would you sell for a hundred million? 10 million? 5 million?

Put a price on what you would be willing to sell for without hesitation. Then evaluate the difference between that amount and the offer. If it is less than 25%, sell. If it is over 50%, don't. In between 25% and 50%, I don't know - but may you don't even fall in that window.

And, lastly, do not sell unless you personally stand to make at least $2 million after taxes. Anything less is hardly worth it. Given the fact you have received a buyout offer with no real sales, you obviously have something of value and hence will easily make at least that much on your own.

My 2 cents...

Accept it if the the money is substantial enough. (1)

multiplezeta (514062) | more than 5 years ago | (#27885589)

When someone offers cash in the current economic scenario, do not think twice. Accept it if it is X times the money and effort you put in it, where X is something you (as a team) are comfortable with.

The next 3 years are going to be really bad from an economic point of view and there is a distinct possibility (Probability > 0.91) that such an opportunity may not come your way again, however good you and your product are. So dilute your expectations, negotiate hard and take cash. Do not take stock or anything equivalent. And execute a good exit strategy. A business is only as good as the cash it generates and the sooner the better.

The rest is polemic.

Good Luck

Be careful of spies and pretenders (5, Interesting)

rollingcalf (605357) | more than 5 years ago | (#27885601)

Sometimes a big business or somebody posing as one comes along offering to buy up a small startup company, when in reality they only want to get inside information so they can copy the ideas and technology.

So you really need to find out if these people are actually capable of buying your company for millions (anything less, and by the time you split it up between all of you and take out taxes it won't be worth it), and that they are genuinely interested in buying the company, before you even think about selling it to them. Then if you think they're real, get a lawyer ASAP with experience in these type of deals, and be very careful of how much information you reveal to the buyer.

You answered your own question (5, Insightful)

CSMatt (1175471) | more than 5 years ago | (#27885611)

Here are the arguments you made in favor of selling:

The money is fair enough, and the employment conditions would seem excellent, since they would enable us to manage good-sized motivated teams,

Here are the ones you made against selling:

but we are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions. We feel that by accepting the offer, we couldn't achieve the maximum of our potential, and one of us joked that if we get in contact with the corporate environment and accept their money, we risk becoming lazy.

Judging by both the quality and quantity of the arguments in both scenarios, it is pretty clear that you really don't want to sell, and are just pondering the benefits of selling rather than seriously considering it. I can understand this kind of dilemma, but it sounds like you really just want someone to convince you that selling is good or bad rather than actually asking about it. You either want someone to go into a detailed rational response in favor of selling, or a simple emotional one against it.

I say do what you think is right for you and your company, rather than listening to a bunch of random Internet users.

Is it a company or a hobby? (3, Insightful)

Lord Byron II (671689) | more than 5 years ago | (#27885617)

The purpose of a company is to make money. The purpose of a hobby is to have fun and experience personal fulfillment. You need to decide which your organization is.

If it is a company, then you need to decide which path will make the company make more money. But, without knowing the numbers, it sounds to me like a big lump sum now plus jobs from Megacorp, Inc., will probably pay better than hoping that whatever it is that you're developing will someday be a viable product.

And if it is a hobby, then generally, I'd say don't sell. But there may a be reason to. Megacorp, Inc. might be able and willing to supply the development teams that you as an individual and a couple of friends cannot. In this case, by selling out, you could enable your product to be on the market that much sooner.

Here's some suggestions (3, Interesting)

Okian Warrior (537106) | more than 5 years ago | (#27885631)

The first thing to note is that the company has put some effort into making the decision. If they don't get the purchase, that effort will be wasted. ...which means you can make a counteroffer for 10% more and they will probably take it.

(The same thing is true with job offers. The company doesn't want to go back to the interview process, so once they've made an offer to hire you, ask to "think about it" for a day. On the next day, come in and ask for 10% more.)

Next, you should decide what your goals are, and whether it's more important to "feel good" or "be successful".

If your goals are to make tons of money, and you think your project has a good shot at that, then don't take the offer (politely) and keep working.

Otherwise, decide whether it's more important to "feel good" or "be successful".

As an example, people who show up at traffic court wearing jeans and a T-shirt with long unkempt hair usually get short shrift. If asked, they would complain something like "it shouldn't matter how I dress - they should see me for who I really am".

Those people have unclear goals.

If it's important to not get the ticket, then you should do everything you can to make it more likely that the ticket goes away, even if it means getting dressed up in a costume and acting as if you are someone you aren't (read: suit and tie). Dressing to your personal philosophy makes you feel good, but it doesn't accomplish your goals.

So for your situation, you must ask the question: "what are our goals"?

If you are well and truly into "not following rules" and other things, then that's your answer right there.

But remember it's easy, even trivial to start another project and get excited about it, and you can even have your existing dev group together to do it.

If your goals are to have fun and go your own way, selling out now could be a stepping stone to that end.

When the situation is framed clearly, as the traffic court example, most people realize that the fleeting "feel goodness" really isn't all that important to them, compared to the value of achieving their goals.

Have a group meeting, decide what your goals are as a group, and write that down. Your decision will flow naturally from there.

The American Dream (1)

cybscryb (530482) | more than 5 years ago | (#27885633)

Is it to sell out? Is it to build a bigger, better business than anyone else. Do you measure your worth by the number of zeroes in your bank account? The kind of car you drive? Or is your personal worth measured by how many people want to work for you? To help you build your dream by buying in? It's the cusp of a new generation. I call it right-brained capitalism. You have to decide.

2 Words (1)

Tjp($)pjT (266360) | more than 5 years ago | (#27885653)

Golden Parachute.

and to keep Slashcode happy on length, a quote from the Python. You bastard. You lucky luck bastard.

Why does the business exist in the first place? (1)

ZendarPC (837897) | more than 5 years ago | (#27885667)

You are going to have to first deeply understand what each of you wants to get out of life and how this businesses helps each of you do those things. If you can survive and want to stay under your own control, then do so, but manage your cash (and by extension, your growth) carefully. "Cash is king" for a reason. It's because profits don't pay the bills; cash literally does. Read "The E-Myth Revisited," "Small Giants," and "No Man's Land." They will give you great insight into how you need to view the management of your business, where you want it to go, and the sort of challenges you'll face based on the course of action you choose. Good luck, and I hope that your choice is the right one.

More info (2, Interesting)

ktappe (747125) | more than 5 years ago | (#27885675)

I agree with those saying you've not provided quite enough info. But there have been some good responses thus far. To wit:
  • Ensure their offer leaves each of you enough to live on for several years. The non-compete clause they'll undoubtedly have you sign may leave you unable to work in your field for a while if things go sour after signing.
  • If they are hiring you, see if you can get a multi-year contract so that they can't fire you next week. (Doubtful they'll go for this, but worth asking for...you never know.)
  • Even better, see if they are willing to allow you to keep working as the team you are now. Perhaps you can stay semi-autonomous so that you still feel free and unfettered and able to allow ideas to flow. Smarter corporations recognize that atmosphere matters and have been known to permit situations like this. Of course you'll need to report into H.Q. regularly, etc., but perhaps that's not the end of the world.
  • Do try to be a wee bit less idealistic. Yes, you want to change the world and be free, but in a few years if times get tough and you're wondering where your next meal is coming from you'll be wishing you had taken the deal. Don't turn it down out of idealism. If you must turn it down, do so for financial or true business-related reasons.
  • Hire a lawyer yesterday.

Good luck!

Not fully satisfyied? (0)

Anonymous Coward | more than 5 years ago | (#27885693)

Not fully satisfied with the offer? Ask for more! Chances are, if it's their first bid, they're actually willing to pay more. Spend some time putting together a pitch to show the company to convince them you're worth more than what they offered.

Depends (1)

cenc (1310167) | more than 5 years ago | (#27885697)

I was say sell the company, get some financial stability under you, quit and start another one. Is it really the only good idea you are ever going to have?

Often the people are more valuable than the idea. There are lots of good ideas out there, but very few people can execute.

That's what makes it a good offer (1)

holophrastic (221104) | more than 5 years ago | (#27885709)

if it's less than you'd make on your own eventually maybe, and more than you'd make if today, then it's a good offer.

The only question you have is what you want to do with life. Which you've answered -- you want to be the boss.

Two perspectives to offer you:
      - think about the offer as though you were simply being offered a normal job, but with a signing bonus and a non-compete. The fact that the money is for your start-up is irrelevant -- it's just another form of signing bonus / expertiese.

      - if you've only just started, and you're working with a few other friends, keep in mind that it's really hard to actually finish a project. I've been there. Most projects don't succeed. Sometimes teams disband. Sometimes actual problems arise. And sometimes it just isn't worth finishing. But in the end, the projects that do reach their end-game cost money. So consider that you may never reach your end alone, and that if you do, you'll be spending money, not making money, until you get there. The offer to buy you is simply someone who thinks that you'll succeed, given the funding. But it's a known gamble to them, and it's only money to them. To you it's work.

So in the end, your decision is this:
    - if you want the risk to be someone else's, and you don't want to spend your own money, and you want to get ahead, even if only a smallish amount, and you really want this to have a good chance, then take the offer.
    - if you want to enjoy life, be your own boss, spend your own money, and fight for your right to party (it's really very rewarding), then turn down the offer. At the same time, figure out what price will change your mind, because there may be another offer presented.

I personally chose the latter. I refused to work for anyone else every again. I had my own money. So I pushed hard, and started a successful small business. Now, 10-15 years later, I've found myself starting up a second company with my remaining no time, and we've spent a crazy unheard of sum of money to get this thing going faster, because neither myself nor my partner has enough time to make this venture take the slow road.

So there you have it. I chose the "go it on my own" the first time, and now this second time I'm buying myself out in order to speed things up.

You can quit, you can fail, or you can finish.

a bird in the hand is worth two in the bush (0)

Anonymous Coward | more than 5 years ago | (#27885711)

what was your initial exit strategy when you started your company? take the money and run. move on to something else.

Sell (0)

Anonymous Coward | more than 5 years ago | (#27885717)

Sell Sell Sell

http://www.toomanyproblems.com

If they offer you decent positions.. (1)

drolli (522659) | more than 5 years ago | (#27885731)

then do it. Try to negotiate that you may run certain aspects (e.g. selecting the team etc.) in the way you want it. I work at a research center of a large company (as a normal employee), and yes, the rules there can de a pain in the ass. On the other hand it gives you access to ressources, connections and people you can not imagine. If you want to give a talk at some institute to get people interested it will be substentially easier to get invited with a name of a big company. At some occasaions, your company may hold own conferences and ask you for recommendations whom to invite - a great occasion to figure out who is good. In my fields (physics) access to many journals is provided and a big library is present.

If You Sell, Plan To Leave (4, Interesting)

dcollins (135727) | more than 5 years ago | (#27885735)

I've worked at two small technology companies (video games, actually) that got bought out by larger corporations.

The wise owner/managers in both cases did this: Work up until required by their contract (1 year in both cases), and leave the next day. The not-so-wise programmers (including me) tried to stick around, make it work, become frustrated, etc.

I now see there's a standard protocol for company buyouts. Step #1 is where big company sends spokesperson on site to give a boilerplate spiel, "We're not changing your working practices; your culture is great, we don't want to change that; etc. etc.". All bullshit. They say that to forestall mass departures, and proceed to make whatever changes they wish, at whatever pace is desirable for them. Now I know: When your small company is bought out, leave ASAP. It's over.

I actually do recommend that you sell and leave ASAP.

JM2C (2, Interesting)

Bob9113 (14996) | more than 5 years ago | (#27885743)

Hi,

Thanks for the interesting question. Hope this helps.

The money is fair enough, and the employment conditions would seem excellent, since they would enable us to manage good-sized motivated teams, but we are very emotionally attached to our development and we place great importance to being independent. We founded our company because we didn't want to follow rules. We wanted to be the ones who make the rules instead. Money really doesn't mean much to us as long as we can do whatever we want while excelling at our passions.

I feel you, my friend. I have not been exactly there, but have been in very similar situations. While I don't know your exact situation, I can tell you how I would think about it. What follows is stream-of-consciousness, late on a Friday evening - take it for what it's worth. :)

If my main goal is to do independent development, I would look for paths that get me to that goal while satisfying my other important needs.

Supposing I were a young hot-shot with a belly full of fire, I would feel confident that I could succeed running my own company, working as a unit of a larger company, or trying something else. That last bit is important -- technology, and technology skills, are highly fluid. If you got to where you are, you can probably get there again, given the opportunity.

Mixing those two ideas together, I would start thinking about how to structure the deal with the big company. What would I want to get out of it? Well, if I want to be independent again, preferably while I still have a belly full of fire, I'd want to think about my exit strategy from the parent company. Do they want me to commit to them for some period of time? Are there golden handcuffs that are going to tempt me to stay after I'm ready to leave? A golden parachute if they take the technology and cut me out?

That would lead me to think about how the payout is structured. There will probably be some mix of cash, immediately vesting stock, and stock that vests over time. Suppose you want to leave in one year -- how much of the total payout would you have to sacrifice? Is the parent company willing to shift to more front-loading? How much back end do you have to give up to get more now?

But why go through all that thinking if your intent were to stay with the parent company and see the product through to maturity? It is entirely reasonable to want to see your product grow, and to guide its development. That is a very healthy way to view system engineering.

The reason to think that way anyway is this: If you can work out an exit strategy that you and your friends can agree on, you don't have to worry as much about whether the relationship with the parent company will remain healthy. That future is an unknown, and there are many examples of your sort of situation going well, and just as many of them going poorly. If it works out, that's great! If not, you and your friends can head off on a new adventure together. As long as you have some front-loading and/or short horizon payout, you have a safe way out. That safe path in case things go awry can give you the confidence to join the company.

Also consider it from the big company's perspective: If they are confident that they will be a healthy environment for you and your friends, they should not be too afraid of giving you some front loading to guarantee that you will come out reasonably whole.

At the same time, don't be rude. You don't have to tell them that you're looking for a reasonable exit strategy -- they will understand that. Just discuss the options of front versus back loading, and then talk with your friends in private to discuss whether the range of options includes something you are comfortable with.

And, honestly, I'd lean toward doing the knowledge transfer to the new company and moving on as soon as it was working for them. Make sure you have the right to work together on non-competing projects in the future. Make sure you have the right to develop independent ideas with each other while you work for the parent company. And put as much of that front-loaded payout in the bank as you can.

Then you spend a year or two helping the parent company put your product to work, and meanwhile you spitball ideas for new projects with your friends. When the time is right, you make an amicable separation with the parent company, and use your payout to found a new venture.

Note that all the above is easier if you can keep the relationship with the big company friendly. Work with them, in a collaborative way, to protect your interests. Usually, if you keep a positive attitude and demeanor, you can protect your own interests while growing a healthy and cordial relationship.

JM2C, of course. Again, my experiences are different than yours, and I do not know your exact situation.

Does the company happen to be.. (0, Offtopic)

Dragonshed (206590) | more than 5 years ago | (#27885747)

Twitter?

one MILLION dollars (0, Redundant)

Hadlock (143607) | more than 5 years ago | (#27885753)

That's what I'd sell out for. A million bucks (take home money, after taxes yadda yadda) plus stock options and some sort of executive position for $180,000 a year plus bonuses and health benefits (WITH dental). You can sell out now for that, or you can build the company to that state in 10 years. If you can't sell the company for what I outlined above, it's not worth your trouble.

U can't predict the Future (2, Interesting)

ElitistWhiner (79961) | more than 5 years ago | (#27885755)

Swallow your principles
Principles aren't worth the paper they're written
Principles are external to the self.

Follow your convictions.
Convictions are internalized values
Convictions define you

Money just keeps score
Take it to win another day

Here's what you do (1)

pvera (250260) | more than 5 years ago | (#27885769)

Let them make an offer, then give them a reasonable counter offer with NDA and covenants to not compete fully understood before you sign on the dotted line. So what if they want to buy you out? Make them pay for the privilege, enjoy the reward for your hard work for a little bit, then move on to your next big thing. It is obvious that you can't start a new business to do the same kind of thing a week after you sell out, but there's got to be something else out there that you can do without blatantly competing against Megacorp.

Alternative approach: you don't sell because after all, the company is your baby and you want to see it grow for a little longer. And you are more than pleased to license to Megacorp whatever it is they are really after. By this you prove that you are in for the business, that you are not just trying to pick a fight with them. What you don't want do to is be petty and tell them something stupid like "stick your offer up your ass, I will never sell out to youse bastards!"

I would propose a partnership, but that makes you rely too much on Megacorp and they can use this reliance to control you, so it is not really feasible. Either sell out, or offer them a reasonable license that gets them what they want, within very strict limits, and you open up one more revenue stream.

It was all a Dream (0, Offtopic)

Ninja Engineer (224395) | more than 5 years ago | (#27885771)

And then I woke up.

This one's easy(-ish) (2, Interesting)

fodi (452415) | more than 5 years ago | (#27885773)

It doesn't sound like they've made you an enormous offer, otherwise you'd be writing this article from your new yacht, right?

Instead, they've made you a sensible offer. Are you at a sensible stage of your life? Do you have commitments and obligations that would suffer if you didn't act sensibly?

If not, don't be afraid to go yourself. Instead, take their interest as a vote for encouragement that your product has serious potential.

Try to raise capital instead of selling out. Offer them a cut as silent partners. Don't be scared if they don't agree initially. Practise your negotiation skills and see if you can't come to a mutually beneficial arrangement.

Perhaps they could take a cut of your business in exchange for funding, office space, access to HR, legal & Financial resources, etc...

The big change in these types of arrangements is that you will have to formalise your processes (read: boring, repetitive, bloated) and start sacrificing some of your product to suit the market. This is not such a bad thing in business and is necessary to allow growth, quality control and delegation.

good luck.

-fodi

Sell. (1)

Animats (122034) | more than 5 years ago | (#27885779)

Sell out, agree to stay with the purchased company for a short transition period only (six months or so), and don't agree to any noncompete longer than two years. Make sure that the buyout payment is independent of any employment arrangement. Get legal advice on tis.

Then, now that you have some money, do something else.

Why? Because you haven't faced the marketing problem yet. If you do it on your own, there's a good chance you'll have trouble selling the product. Especially during a recession. And getting money for marketing may be tough.

Bargain a little, then take the money (1)

haemish (28576) | more than 5 years ago | (#27885789)

If you don't take the money, this is what will happen: you're clearly doing something they want. If you turn down your offer, they'll just have to reinvent it. They'll probably even be ethical and clean about it so you won't be able to sue for IP theft. But you'll end up as a few geeks with principles trying to compete with someone who has real resources. At that point, you're toast.

Take the money (1)

BobandMax (95054) | more than 5 years ago | (#27885793)

If the offer is reasonable, take it. If you do not, they will probably bury you.

Read your post. (1)

fishbowl (7759) | more than 5 years ago | (#27885807)

So you're in a position to make some money by selling your currently operating business.

You want to hire an attorney who has experience in mergers, acquisitions and sales, and you want to hire one or more business consultants to assist with the mechanics of the trade. You will probably want to enlist the help of one or more people with domain-specific experience in your field, if you want to ensure the success of the endeavor.

Slashdot is a good place to start if you want to get to the "First they laugh at you" stage of World Domination.

having been through this experience... (3, Insightful)

blackcoot (124938) | more than 5 years ago | (#27885811)

... let me tell you that going from a company of 30 to a company of 140,030 is still quite a shock, and the purchase went through nearly 18 months ago.

if you decide to go down this path, make sure that:
1) you have definite set dates for _EVERY_ part of the transition, _especially_ for 401(k)s, health insurance, etc. these dates must be part of the terms of the contract with seriously stiff penalties.
2) take a long, hard look at all your groups' bumps and warts. if you're like my group, you have several excellent tech leads and no project managers. make sure that your potential purchaser can either fix or drastically improve all of your failings.

there's a lot more, but for me the biggest items are those 2.

Consult with an Attorney (0)

Anonymous Coward | more than 5 years ago | (#27885819)

Not just for the legal issues involved in IP, sales, business asset ownership, and tax consequences, but because many transaction attorneys are trained in M&A and can help you understand a proper valuation of your business, as well as what an appropriate employment agreement involves. Seriously, get an attorney. You know code, what you want, and your specific business model (maybe?), they will help inform you about the legal, tax, and regulatory consequences of your preferences and get a wider perspective on the situation.

Geocities (2, Insightful)

Spy der Mann (805235) | more than 5 years ago | (#27885829)

Yahoo! buys Geocities and turns it into a piece of shit.

Any questions?

Sell out (0)

Anonymous Coward | more than 5 years ago | (#27885831)

wooot! Island FTW!!!11! Sell out and live a dream life.

SELL! (2, Insightful)

Proto23 (931154) | more than 5 years ago | (#27885833)

Don't listen to any of these armchair socialists. In the real world when someone wants to buy your company you sell. For any amount I might add. Reading your post I guess you are under 30. Sell, sell, sell. Or you will regret it later. You have to look at it this way: your first company is just to proof that you can build a company and sell it. It's like a good grade on your business building CV. Forget about the money. The money is nothing. I hope the big company puts some shares in the deal, or at least options. Shares are good at the moment in this market. The best thing about selling now is that you get an excellent CV. The next time you want to start a company with your track record you can go to any venture capital firm and get enough funding to start a real company with offices, employees etc. Then you sell your second company for the big bucks. After the big bucks you start your third company. This is the company that you keep as it is a combination of a great business idea and work that you really like. So your first company you sell. I am currently doing my third company which you can see here: http://usa.tiouw.com/ [tiouw.com]

Take the $$$$! (1)

Tablizer (95088) | more than 5 years ago | (#27885839)

Speaking as the (ex)owner of 3 failed dot-coms, take the fucken money!!!!

This is silly. (2, Insightful)

Jane Q. Public (1010737) | more than 5 years ago | (#27885875)

You don't tell us what the product is, whether it is software or hardware, or something completely different. You don't tell us what kind of money is being offered, or what you think you might be able to make from it, in how many years, if you don't take the deal.

You have pretty much said "I have a business. Somebody wants to buy it. What should I do?"

And there is no answer, given that much information.

Can you out-compete them? (1)

myxiplx (906307) | more than 5 years ago | (#27885885)

Here's the point - if they're offering to buy you, they may well be doing you a favour. They could almost certainly do this on their own, and out-compete you.

You can tell by this move that they're interested in what you're doing, and if they have the kind of money you're implying to set up a team working on this, that money is there whether you guys come on board or not. So, much as you like being independent, can your little startup compete against a well funded competitor with a big name behind it?

Have a long hard think about that question, and try not to get emotionally attached to your company as you answer it.

As much as you like being independent, it may be better to take this opportunity, and move onto other things if you find it doesn't work out.

What I would suggest is to make a list of the things you really enjoy about being independent, and speak to this company about them. See if they are amenable to you guys having autonomy and control over this project. Find out what their long term goals are for it, and whether they align with your own. Get them to put in writing their commitment to the project and their goals, and to having you guys in charge - that way you should at least have a few years whereby you know where you stand, and can be confident of running the project the way you want, in the direction you want.

If that can work out, see this as a huge opportunity. Firstly you get the money and a bigger team to drive your project forward faster than you could have done before. You'll also get to make some good contacts, and probably learn a lot about how to run things like this, oh, and you get the cash too (depending on how big you think this will be, it might be worth insisting that your deal is partly profit related)

Then, if it does go titsup in a few years, and you don't like the way things are going, you're all in a good position to leave the company and startup on your own with a new project.

dont hesitate (0)

Anonymous Coward | more than 5 years ago | (#27885889)

back in mid 80's I was also emotionally attached to my work and didnt take their money. After 20years I realized that it was the greatest mistake of my professional life. Yeah, I didnt like the rules and be my own boss. Now I am my own boss and still dont have the money that they actually made with someone else. You are not gonna be getting offers for ever. Maybe not even a second time. Take the money. now! You can always make another company of your own in a few years.

My experience with megacorp (0)

Anonymous Coward | more than 5 years ago | (#27885899)

I worked for a medium-sized business that was recently purchased by a company ten times larger. The mega-conglomerate had a subsidiary in our industry that was roughly the same size. They paid a substantial premium for us.

One of the first moves megacorp made was to compare our operating platforms. Megacorp had a platform which they had stopped all improvements on and outsourced maintenance to India. They put it up against our system. The customers were calling the company up telling megacorp to go with our system. Our platform was demoed to the business leaders who then unanimously agreed to use our system. Our system had features that megacorp had twice tried and failed to implement! Our US operations have consistently maintained a 30-40% profit margin. In short, our platform put megacorp's platform to shame.

Megacorp understood this and decided to switch the company over to our system. That was the last intelligent decision megacorp has made.

Our platform developed because the company had a culture that brought the right people together and encouraged improvements to the system. Instead of learning from this, every move megacorp has made since the acquisition brings us one step closer to the operating model that developed megacorp's inferior platform.

  1. They've switched us over to cost-accounting. Now instead of encouraging us to create reusable code, they want everything compartmentalized so they can quantify how much it costs to develop and maintain software for each department.
  2. Our systems management people are very good at their jobs. Nevertheless megacorp is outsourcing our data center knowing full well it will cost 30+% more than keeping it in-house. Some of us suspect a faceless higher-up is taking kickbacks to do this (I'm sure corruption of this sort is not unheard of in large companies).
  3. Like our systems management people, our help desk is also very capable. Megacorp is outsourcing the help desk to the same company that handles the rest of megacorp's help desk calls. The outsource provider has a reputation of providing horrible support, so horrible that end-users don't even try to call the help desk. Users instead use inefficient work-arounds on their broken computers.
  4. Megacorp is outsourcing our network management to a company with a reputation for taking two weeks to open a firewall port.
  5. Megacorp cut off the bonuses our company had been paying to encourage employees to improve their skills.
  6. For company travel they require us to use a travel company that costs three times as much as our previous travel company. They will not reimburse us if we buy our own ticket, even if we can get a ticket at a fraction of the price.
  7. Since megacorp outsources anything it can we have to maintain a username and password for each outsourced service.
  8. The company is so pathetic they even outsourced spam filtering! Now we have to log into a separate system with a separate username and password to find out what was blocked by the spam filter.
  9. They are going to outsource email to another company which will require yet another username and password.
  10. Just days after opening our network to megacorp we started receiving spam on service accounts that have only been exposed to a few select people in the company.

In short, if you want your soul crushed while being assimilated into a bureaucracy where you spend 30% of your time following useless rules, then by all means, sell.

As others said, think money. (2, Informative)

houghi (78078) | more than 5 years ago | (#27885913)

If it is a business, it is about money. Otherwise it would be a hobby.

Also if they buy you and employ you, you would be an employee and can be fired. The moment you sell it, it isn't your baby anymore. If there is a potential of big money, perhaps selling is not the way forward, but rather selling part of it. Think Dragons Den [wikipedia.org] .
The advantage for you is that you get the power of the big company. The advantage of the big company is that you still be financialy comited to the product so you will work harder and won't quit if something else comes along.

You also say it is a group of friends. Realize that in the long run working with more then 3 people will be very unlikely and even 2 won't be always easy.

What also could be possible is that the company wants to buy you to put it on a shelf and let you rot there.

Depending how many people are involved, I would look at selling shares and if there are more then 3 friends, sell the whole thing, take the money and then see if the offer to work there is good as an employee. I would realize that I should be making a LOT of money, as I would be one of the experts on the product.

And also look at how the shares are now devided compared to the workload and what ig corp has to offer. Are you all geeks and no sales people? Is everybody developing and nobody reasearching? Is everybody pulling their weight? If the latter is also not true, sell, because it won't change and it will be much more frustrating along the line then now.

And one last word. If you sold it, it isn't yours anymore. It will be Big Corp who owns the next Google or Playboy, although I am sure they will never let it grow that big. What makes things grow big most often is one individual behind it. (Microsoft is an exeption, but that is a marketing company)

Don't sell (0)

Anonymous Coward | more than 5 years ago | (#27885923)

Think about this: Why would Megacorp want to buy whatever it is you're making unless they thought they could use it to make tons of money? It may take longer, but if you believe that the work you're doing will result in a successful product then there is FAR more potential for wealth in that than there could possibly be in selling at this early stage. People do not gain real wealth by working for others. Real wealth is created by working to make yourself rich, not some megacorp. Believe me, if you have something truly extraordinary, the money they will pay you is much much less than the money they will make selling it to others.

Keep in mind the history of the industry. For example, Microsoft is built on the process of buying work from small-time operations and using those products to make billions in revenues. In fact, the company essentially got started by doing that.

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