Upfront cash is the only real financial risk for acquirers
Vivek Bhaskaran · He Acquired Companies through Whatsapp. Bootstrapped with $30m in revenue today. · May 3, 2022 · at 18:41
QuestionPro founder Vivek Bhaskaran explains how he structures low-risk acquisition offers by heavily weighting valuation into contingent deferred payments.
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“Whatever price tag you give, you can divide it between what you pay today, and what you pay tomorrow, and what you pay the day after. And whatever you pay tomorrow and the day after usually has some contingencies, right? If you think about it, like, yeah, I mean, you are in the shared boat at that point. So your risk on that money is nearly zero. In fact, it is zero. So the real risk you're taking is, how much are you gonna pay cash up front today? That's it. That's the only number that you really care about that's at risk to the conversation.”
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