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Companies That Turned Down Buyouts – And Got Even Better

By David Kiger | Small Business

Companies That Turned Down Buyouts – And Got Even Better image shutterstock 92401042Companies That Turned Down Buyouts – And Got Even Better

The goal of any SMB owner is to build a business so successful that other companies want to buy it. Sometimes the business owner accepts the offer and walks away with a significantly larger bank account and sometimes the entrepreneur turns down the money. The latter can be a dicey move, but these three business owners proved that the reward was much greater than the risk.

Young Facebook Turned Down 11 Buyout Offers

Before Facebook became the leading social media site, it turned down 11 buyout offers, including one from Viacom for $1.5 billion. Of course, Facebook founder Mark Zuckerberg went on to become the world’s youngest billionaire and is now worth $19 billion, according to Forbes.

The company struggled through a shaky IPO in late 2012 as shares fell to $17.55, less than half the original asking price of $38 in May. Share prices rebounded, and the company’s market value today is about $100 billion. That’s an increase of 6,566 percent compared to Viacom’s $1.5 billion offer in 2006.

Twitter Fights Facebook’s Charm

By 2010, Facebook had established itself as the dominant social media site, but newcomer Twitter was shaping up to become a worthy competitor. That same year, Twitter received two buyout offers, one from Facebook for $2 billion and one from Google for $10 billion.

Like with Zuckerberg, Twitter’s four founders turned down the offers and prepared their company to go public. Since its first shares sold in November 2013, Twitter’s market value has grown to roughly $24 billion.

Yelp Founder Turns Down $500 Million

The online review site grew quickly after its 2004 creation. From 2005 to 2006, the numbers of users increased from 12,000 to 100,000, and by the following year the site had 1 million user reviews.

In 2006, Yelp founder Jeremy Stoppelman turned down a $100 million offer from an unnamed company. In 2009, Google offered a $500 million buyout. Again, Stoppelman declined.

The company went public in March 2012. Since then, its market value has grown to $5 billion, 10 times the amount Google offered.

So, What Happens If You Get Approached About a Buyout?

The most important part of deciding whether or not to sell is to determine whether you’re ready to part with your business. Money aside, think about the outcome of the buyout. Will you feel relief or regret when you don’t have to go to the office every day?

You should also think about the goals you made when you started the company and your original timeline. If you feel like you’ve accomplished everything and no longer have the opportunity to improve, a buyout might be your best option. But if, like the founders of Facebook, Twitter and Yelp, you think there’s more you can do, your best option might be to turn down the money.

If you decide that a buyout is best for you, there are several steps you must take before signing your business away.

First, make sure that all of your finances are in order. If you haven’t already, contact a lawyer to help you prepare documents dating back three years, including profit-and-loss statements, a complete inventory and balance sheets.

It’s also important to get your company appraised. Too many SMB owners over- or under-estimate their company’s value and end up disappointed after they sell.

Making the decision to sell your company won’t be easy. If you feel pressure to act one way or another, take some time to analyze what the best option is for your business. Only then will you be able to think clearly.

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