While somewhat rare there are holding companies like Jonas Software that buy lots of smaller software companies in various markets then effectively let each subsidiary run without too much interference. Their philosophy seems to be own most or all of the competitors in a vertical market, sell the software for a reasonable (read: non-Oracle) price with ongoing maintenance, and collect the cash. I only know about them because a relative was Director of Engineering at the time they were acquired and is now CEO.

They don't expect any massive changes in revenue with the companies they acquire. They're willing to hire and invest in revamping/improving their products. Their goal is stable revenue by making customers happy enough to keep paying the maintenance.

They seem to be doing OK with that business model.

Thanks for the context. It's crazy that this sounds like a radical investing approach these days. Prosus seems more promising than most potential buyers, so hopefully this isn't the beginning of the end for SO.

Berkshire Hathaway has an exactly the same approach: an acquired company keeps operating in the way which made it successful.

I won't say this approach turned out bad for Berkshire or Mr. Buffett personally.

This approach requires

1. a _huge_ amount of trust and respect for the acquired team to not meddle/interfere, and

2. a huge amount of restraint to not force the acquired team into conforming to whatever standards and norms are present in the acquiring team.

Both of these are exceedingly rare.

I'd say this is accurate for the most part but they bought the first company I worked for out of college and they really tightened the screws on our benefits packages under the guise of "unifications" with their existing stuff. They ended up moving me to a high deductible insurance plan which was absolute nads

Naive indeed. I flew to meet a company we had just acquired and I personally promised them that nothing would change. Even though I believed it at the time of course it didn't pan out that way and to this day I regret saying that.

Wow, yeah, never say that. Even if you believe it's true, saying nothing will change is sort of like waving a red flag in front of the bull. Of course things will change over time, they always do!

Its like fixing the wifi router for your parents and then having them call you to complain that their emails now have a signature at the bottom... "I didnt do that", "Well, you were the last one to touch the internet"

Except that in this situation, you really did put the signature on those emails.

Well to be fair that is how my coworkers (and I) think too. The one with the latest commit get a ping when the top break.

I read this differently -- I think there's a ceiling on just how much money SO will make, and the SO team has realized there's no future in which they are a company that makes $1B or so per year. Which is fine, but hard if you want to play in vc land or go public.

There definitely are companies that will buy something like this to operate it essentially as an annuity.

The risk to the employees there is if SO essentially becomes done and the owners want to put it in maintenance mode and operate it as a run-out.

Also, it's been 12 years. There's probably a bunch of employees that would like some liquidity.

Yep. At best this holds true for 12-18 months. The founders/execs play dumb in the interest of minimizing attrition.

I agree.

Why buying a company if you don’t want to make any change? Investment firms make profits by buying low and selling high, and it is hard to sell higher than the purchase price if things are kept the way it is.

SO being SO has increased it's value year over year. There's no need to change anything, just ride those coat tails to profit.

If the total accumulation of year to year profits was higher than 1.8B, then the current owners of Stack Overflow would've never sold.

Maybe they wanted the cash in hand rather than a high variance company valuation. Or just wanted to transition their money and attention to something else. There are plenty of reasons to want to sell a company in a way that both sides come out ahead.

Also keep in mind that the public SO doesn't even have to change much for there to be "big changes". SO Jobs is where the money is made and they have private Q&A sites for businesses.

Perhaps they want liquidity, a more diverse portfolio, etc.

A bird in the hand is worth two in the bush.

If 1.8 billion in the hand is worth more than 1.8 billion year to year, then Prosus would've never bought.

The only way this deal is advantageous for both parties is if something changes, and unfortunately that something is probably Stack Overflow.

Or you can pump it, promise lots of new technology and "synergies" and profits and then dump it for a huge sum to VC or Big 10 company while it's still promising but you're pretty sure it's time to dump.

Which leaves bigger debt for users to overcome and work past to continue to see even the original value prior to all of this financial activity.

If the burden gets too big, people won't believe it's worth it, and the whole thing dies.

When they do a valuation of a company they also take into account future profits. So all of it should be included in the price.

> Why buying a company if you don’t want to make any change?

To collect its revenue.

> Why buying a company if you don’t want to make any change?

because it keeps printing money which you can use to acquire other companies. That is what Buffett does.

As a financial buyer there are only 3 ways to make money: 1) higher multiple (buy low, sell high), 2) improve cash flow, or 3) lever-it-up with debt (like when you buy a house with a big mortgage). #2 is the only method that really changes the operations and probably the majority of financial buyers are too busy/lazy to be bothered with it. OTOH, some might hire a new CEO 'with something to prove' give him a lot of options/equity and who know what that person will do. But, basically, if the CEO doesnt change, and the CEOs compensation scheme doesnt dramatically change, and no mergers occur, then the company probably wont change.

My employer is owned by private equity companies. Every few years there's a sale and we get told nothing will change... and every time I've seen (which is I think 2-3, over ~13 years) nothing noticeable has changed.

I used to think the same, until the last layoff wave took me out.

I feel like this is basically a cookie cutter declaration you make as part of an acquisition nowadays, not too dissimilar to “sorry we can’t provide feedback for why we rejected you as a job candidate.”

Why is it naive? If you buy distressed assets, sure, but why would you necessarily want to change a working business?

it's naive because it's a common claim that pretty much never plays out that way after a year or two. as to why, i'd say the reasons are poor, but it's because of ego, desire for power and influence, greed

I don’t think holding companies are famous for that.