For what reason(s) does a profitable company typically allow itself to be bought out?


For what reason(s) does a profitable company typically allow itself to be bought out?

In: Economics

Your gonna give me how much money? <Slides over paper> Oh… thats a lot, thats way more than I’ll make running this business myself, even over a long time. You got your self a deal buddy!

The most common one, is that the owners of the business simply get offered a good deal to sell.

Bc most times the people in charge of making that decision now have ‘fuck you money’ for the rest of their lives

If they are in competition with a rival and the rival makes significant strides that can bankrupt them, it’s better to make money and leave than to keep fighting and lose.

This happened when Yahoo tried to buy out Google, Yahoo tried to be cheap, Google wanted more money so the disagreement lead to Google far surpassing and buying Yahoo. If Yahoo bought Google in it’s infancy, they would still be a major internet powerhouse as opposed to what they became.

the company i work for got bought out. the big company paid the original owner $200mil for the company he started from a warehouse 20 years ago. that’s walking away money.

The company I work for got bought out last year. It had been owned by a husband and wife pair, who had been growing the business since the early nineties. It was – and is – making money, and has enjoyed >15% growth year-on-year for the last two decades.

So, why sell?

Well, number one, the buyers offered two billion dollars. And number two, the original founder is now elderly and his health is deteriorating.

Obviously, this is just one example, but I’m trying to illustrate the idea that it happens for any number of reasons, and they’re pretty much the same reasons that anyone sells anything: they want the money more than they want the thing they’re selling.

A company doesn’t decide whether it will be purchased or not. The owners do. And simply, the owners decide to sell because they think they’ll be better off selling. Either because they think they’ll make more money that way, or they’re ready to retire, or they they want to move into a new line or business, or whatever.