Maximizing Valuation – The Perfect Storm

I read a great article recently on several examples of how to manage a transaction really well. The first example was the sale of the LA Clippers to Steve Ballmer for $2B, a team that had been valued by Forbes at $575M. The other example is the sale of Instagram, a company with no revenue, to FaceBook for $1B after receiving an offer from Twitter of $300M in a stock and cash bid.

Why did these two firms get such an accelerated valuation? Ego, Need, Scarcity, and a Tight Auction.  Your company may not be the next Instagram or be as highly sought after as an NBA team, but the same principles apply: the absolutely best way to get maximum value in a sale is to get multiple interested and qualified buyers submitting offers at the same time.

The original article can be found here.

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