RE: sng29 Jul 2020 20:34
Matt... how i think about it is as if it was me running a business. So, im knackered' working 20 hours a day; never see family or have holidays; im constantly slightly worried that if the company goes tits up, the staff might have to be laid off; i cant easily take any money out of it. BUT its my baby, i have invested years in it, i'm not (only) driven by the money; the satisfaction i get is all mine and i get off on it. But i know i have a one in a life opportunity to get my baby to walk. Thats now. Miss this opp, and im still working 20 hours a day bla bla bla. Now i have a conundrum. I know its worth a bloody fortune but have i got the energy to keep doing this year after year to grow it. SO two options: a) dont sell, raise more money somehow. die of heart attack, get divorced etc etc or b) sit down in cold light of day and think how much do i need to have a great life rather than how much is it ultimately worth. So if i choose, b) then a company might come along and say " we get that this is your baby. We will take amazing care of your baby and you can still look after it but the pressure will be off you. Instead of working 20 hours a day, you can work 12. You can cash in your options now, which will give you £12m plus (for RM) and we will pop it on a multiple of the upside so over the next 5 years you get x multiple (potentially ? £100m)... bit like Man U doing the deal for Bruno Fernandes... they now need to pay more due to getting in Champions League. YOu know this is a once in a lifetime opp. Why are you going to turn it down? You get to bring it to market, you get a ton of dosh, you lose a lot of worry, you dont need any more and you get to see your wife. Bruno knew he had this opportunity NOW...
So then in option b) you are negotiating price and that has to be at a level above current share price so i reckon yeah, 50% above where it is now is very very hard to turn down. Unless they are all mad workaholics who want to die on the job. Thats just my logic. Nothing to do with valuation of the ultimate product. Just how people who have run businesses for a long time think. They ultimately need to exit. The original founders are in their 70's. The youngsters have guaranteed jobs if bought. The upside could still be enormous and they can still bring it to market.
I might be entirely wrong but no-one has played devils advocate enough yet to convince me otherwise. So i am trying to work out who is most likely to buy as some of the huge upside will go there.
Simply my take. Might be right might be wrong. Who knows. Just my logic thats all.
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