That is one of the most spectacularly retarded things I've ever read on a MMO forum. Your whole idea is drivel, but that's a 40-carat gem of stupid in a setting of sterling ignorance.
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Building Websites Strictly for Big Budget Acquisitions
- Thread starter $$DerekDavis$$
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That is one of the most spectacularly retarded things I've ever read on a MMO forum. Your whole idea is drivel, but that's a 40-carat gem of stupid in a setting of sterling ignorance.
While the OP's plan sounds pretty laughable, it's not totally beyond the pale. I buy companies in my day job (not the internet space) and know many other people who also do so in other industries. It is not unheard of for large companies to do deals that either look stupid or are truly stupid. Sometimes it's due to hubris, misunderstanding the market, just plain old deal horniness, or because "capital must be deployed" (i.e. money burning a hole).
Running a scam to sell two-bit shell companies is not an admirable pursuit but it's also not wholly divorced from the sometimes embarrassing reality of big business.
Running a scam to sell two-bit shell companies is not an admirable pursuit but it's also not wholly divorced from the sometimes embarrassing reality of big business.
M&A (merger and acquisition) deals require an insane amount of due diligence. You cannot put together a simple site to sell to a public company. Companies spends millions on lawyers so that they can calculate your site's stand-alone value before an acquisition.
There are generally three types of site acquisitions - talent / ip / revenue. Talent acquisitions happen when a company just wants the tech team behind a site. IP acquisitions happen when a company is interested in your intellectual property. Revenue acquisitions happens if a company is interested in the money your site makes.
A large company would rather lose a few million on due diligence to determine your site's true value than lose a few million on buying your skeleton website.
Even with the billions invested on startup tech sites each year, only a very small number of them get acquired.
There are generally three types of site acquisitions - talent / ip / revenue. Talent acquisitions happen when a company just wants the tech team behind a site. IP acquisitions happen when a company is interested in your intellectual property. Revenue acquisitions happens if a company is interested in the money your site makes.
A large company would rather lose a few million on due diligence to determine your site's true value than lose a few million on buying your skeleton website.
Even with the billions invested on startup tech sites each year, only a very small number of them get acquired.
Totally, there are definitely some stupid deals done that people have got incredibly rich off. Usually where a big company misunderstands the value of a company, places a much higher value on a company because the target has been very smart during the process or because they are part of a rising wave or trend.
Examples:
Aol acquired bebo.com (early social network) for $850 million. Later sold it for $10 million I think.
Don Dodge on The Next Big Thing: AOL dumps $850M Bebo acquisition - Why big M&A rarely works
Friends reunited sold for £175 million in 2005 - they got a hugely inflated price and was only worth £25 million a few years later.
BBC NEWS | Business | ITV in £25m Friends Reunited sale
The common factor in these deals (and much smaller ones) is that the company being bought has *some* value, but that value is overestimated by the "stupid" big company. I.e. they squeeze an extra $50 million when its really worth only $5million.
The difference between these examples and OPs idea of selling awesome legit templates backed by 3 press releases is that his sites have an income of $0 and a similar value, so convincing a big company that they are a threat will take some accounting fraud and/or an M&A team that is actually mentally retarded or made up entirely of 8 year olds.
You're absolutely right. There needs to be some semblance of value... a fledgling product/service, partially developed and differentiated IP, a high-talent team that can be locked up in employment agreements, and ideally some revenue and a demonstrable business model.
Selling early stage companies happens all the time. My team has bought a few- some ended well, some not so much.
What the OP is suggesting is just silly, however. You can't repeatedly sell shell companies with nothing more than a basic website and some press releases, completely agree. Maybe a handful of times -- but the suckers run out, and your reputation, which is critical in the deal world, goes in the toilet.
But people are also overstating it the other direction as well. Of course strategic buyers do due diligence and seasoned M&A professionals will be painfully aware when they are doing deals that don't have demonstrable financial rationale. But big companies are *really* bad at launching new products or businesses outside of their core business, and can be challenged at times in expanding their core (e.g. international expansion, moving into an adjacent space). Most big companies (e.g. Fortune 500) won't hesitate to spend $2M, $5M, $10M, sometimes more on a tiny company to get one of the things I mention above (team, product, IP, etc) or just to add scale quickly. With deals that size, there is no material impact to earnings. Yes, some thrive and some flop, but it's the cost of doing business.
I applaud the entrepreneurs who recognize this and leverage their expertise to quickly build companies tailored for sale. It's a time-honored tradition and there are unending niches to exploit. But as others have said, you have to have real value for sale.
The OP is not that, not now anyway. With such limited detail it's hard to know if his team has some special knowledge in their niche or not. He may not have a sustainable, repeateable idea right now, but his eyes are open and it may help him stumble across something more substantive. It's an idea worth teasing out. People do get rich this way.
I think the OP's team consists of his friend from the school bus and his cat Mr.Fluffy.
whole thread: TLDR
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With that said:
1. Large companies don't look at press releases when considering acquisitions.
2. They're going to want to see EVERYTHING & I MEAN EVERYTHING.
I was approached by BankRate to discuss selling them my biz and I'll be damned if they didn't want to know everything about the business.
In the end I wasn't big enough for them to have an interest in continuing so I highly doubt that companies worth their weight in stock are going to buy a bullshit website just because your press release was great.
Are you sure you don't work for PRWeb?
....
With that said:
1. Large companies don't look at press releases when considering acquisitions.
2. They're going to want to see EVERYTHING & I MEAN EVERYTHING.
I was approached by BankRate to discuss selling them my biz and I'll be damned if they didn't want to know everything about the business.
In the end I wasn't big enough for them to have an interest in continuing so I highly doubt that companies worth their weight in stock are going to buy a bullshit website just because your press release was great.
Are you sure you don't work for PRWeb?