[nachox999]

I believe the complete opposite. If someone is willing to buy your business, no matter the amount, it’s because it’s worth MUCH more than what they’re paying. It’s illogical for them to pay less than its real value. It’s even illogical to think they’d pay exactly what it’s worth. Why would somebody bother buying a company if they were only going to break even?

[arjvik]

This assumes risk appetite is the same. For instance, insurance works this way - in expectation you’d pay less yourself, but a 3 sigma event can bankrupt you. You willingly pass on this risk for a price.

[nachox999]

great example, thanks

[wat10000]

The reason anybody is willing to buy and sell anything is because there's no single "real value" of anything. Value is contextual. When the grocery store gives me a cake in exchange for $20, it's because the value of the cake, to them, is less than $20. Conversely, the value of the cake to me is more than $20, otherwise I wouldn't be buying it.

If you sell your business, it's because the value of the business to you is less than the purchase price. Likewise, the value to the buyer is greater than the purchase price.

[pavon]

No, it means they buyer thinks it is worth more than what they are paying. It doesn't mean they are right. It also means that this is the only buyer who thinks the company is worth that much, because if someone was willing to pay more, the company would be selling to them instead.

Ideally startups are about creating value, and making a return on that value, but more and more they look like they are instead selling hype to a series of investors who are trying not to get stuck with the hot potato.

[driverdan]

I worked for a company that had a buyout offer for 8 or 9 figures that they turned down. After I left the company ended up collapsing with no exit. It happens frequently.

[apsurd]

Everything you said is true. It doesn't refute that you should sell the 10% though. You're describing commerce.

not getting it.

[charcircuit]

You are ignoring the risk aspect. There is a chance that it is worth more than they are paying, but there is also a chance it will be worth less.

Selling a part of your business can help spread risk to a new investor reducing your own personal risk.

[nachox999]

what I'm saying is the buyers are subject to the same risks, I'm not ignoring them

[AstroBen]

what if the buyer has something that can add value to the business?

[tyre]

Almost all startups go to zero, meaning every cent what VCs paid for stock, at any price, did not end up being worth more than they paid.

[nachox999]

Sure, what I'm getting at is that in your hands, or in the buyer's, the value can go to zero or multiply. If they buy, it's because they assess that the chances of it multiplying are greater than it going to zero. Why sell in that case?