Profit isn't the only measure of value. Startups by definition are experiments in business models and scaling quickly. Maybe they build something that fails to sell but are still worth something to the acquirer. Remember there are 1000x more startups that fail completely and generate no value at all.
If you want regulation then it should be for the acquirers from getting too big, usually called anti-trust laws, but I dont see what's wrong with people putting some money together to try and make something to sell.
Pardon if I missed something in economics 101, but a large amount of mergers and acqusitions lead to market distortion, which drives the market into the opposite direction of what is good for customers. Cartel law tries to limit the damage, but more often than not prevents monopolies at the cost of tolerating oligopolies.
> Remember there are 1000x more startups that fail completely and generate no value at all
Maybe that number would be lower if startups optimized for stable income rather than acqusitions? Because then, a startup that is "merely" able to earn a living for a few people is considered a success path, rather than a failure path to avoid early on.
Sustainable income? If you're getting a check for $10 million, do you care?
Depends on the kind of values you have.
Aggregate economic decisions are not based on values, they are based on systematic incentives.
If society operated on altruistic values, it would have never invented government.
This assumes there are no coordination, planning and other services that the government offers.
At best, society would never had invented the police.
Edit: Since it appears that I wasn't clear enough, I'm saying that misrepresenting the value of a business to employees, customers, and investors is unethical. If everyone involved knows the venture is doomed to fail and you can still retire off the profits, I don't see a problem with that.
It's one thing to misrepresent, but that's fraud so that scenario is taken care of. Not sure why there's so much moral judgement going on here or who gets hurt when a company is sold, giving its workers money and opportunity rather than going bankrupt.
I can sell a company that has a business model that will expire in a few years because of new tech or laws or some other reason - if a buyer still buys the company from me then what's the problem? Who gets hurt since that's what you said would happen?
There's nothing invalid or unethical about this strategy nor do I care if the acquiring company just executes badly and ends up wasting the money.
yes.
Mark Cuban became a billionaire by selling a domain name to Yahoo.
Now he is a reality TV star.
https://www.inc.com/will-yakowicz/mark-cuban-forces-shark-ta...
You can have an exit-strategy, or become a billionaire, or a reality tv star, and achieve it by acting bad.
Call it option 3. The exit for the board is either sale or bankruptcy.
If option 2 will become illegal in the future, would that mean that startups would have to optimize to turn into real companies? You know, that kind of company that need to be profitable on their own? And perhaps, but only perhaps, with a sustainable income?