Gurley points out that public mergers have no escrow while private ones typically hold 10 to 15 percent in escrow.
“And one last thing most entrepreneurs probably don't know, when you do a public merger, there's no escrow. And most private ones have 10 to 15% escrow,”
Gurley cites Data Domain and ArcSight as examples of IPO-then-acquisition premium strategy working.
“Another interesting thing is with Data Domain and ArcSight and three part, you've seen companies go public, establish a valuation and then get an M and A premium on top of that.”
Gurley notes public mergers have no escrow while private ones typically hold 10 to 15 percent in escrow.
“when you do a public merger, there's no escrow. And most private ones have 10 to 15% escrow, so that's even another part of the price that doesn't”
Gurley notes public mergers avoid the 10-15% escrow typical in private deals, adding financial advantage.
“And most private ones have 10 to 15% escrow, so that's even another part of the price that doesn't you know, that's advantageous to the public.”
Gurley notes public mergers avoid the 10-15% escrow typical of private acquisitions.
“And one last thing most entrepreneurs probably don't know, when you do a public merger, there's no escrow.”
“I think that creates, I think it should create a rather healthy M and A market, but I also think it helps create opportunities because you know, you look at the Yelp and OpenTable integration with Apple, you know, if there were only one monolith and there weren't five, that probably doesn't happen.”
Gurley explains liquidation preference mechanics where aggregate capital raised can claim majority of M&A proceeds in down-round scenarios.
“And in M and A outcomes, the investor can choose to take the LIC preference and not convert to common so they can get their money back.”
Gurley describes Meta's Scale AI acquisition structure: 49% stake for $15B at $30B valuation to avoid regulatory scrutiny.
“Meta has done this interesting structured deal, they're buying 49% of the company, they're paying a $30,000,000,000 valuation so they're paying effectively 15,000,000,000, they're avoiding regulatory scrutiny, the CEO of scale is going to help lead efforts at Meta.”