6 ms·

A 10% tender offer isn't really an interesting discussion. You should take definitely take 10% off the table unless you're already pretty wealthy. The interes

by mason55 11mo ago

A 10% tender offer isn't really an interesting discussion. You should take definitely take 10% off the table unless you're already pretty wealthy. The interesting discussion is how much you should take off the table if the offer is uncapped.

vlucas 11mo ago
100% correct. Taking 10% away to remove downside risk of the remaining 90% is an absolute no-brainer, especially if it is a meaningful sum of money to you.
- defen 11mo ago
  Indeed; I can't imagine a world where 11% higher gains makes a significant difference. Either that 11% is a large number in an absolute sense, in which case the 89% you retained is also VERY large; or it's not that big of an absolute number and doesn't matter that much anyway.
toomuchtodo 11mo ago
> The interesting discussion is how much you should take off the table if the offer is uncapped. 50% for security, let the remaining 50% run. We can spend countless hours modeling the risk and return delta of various percentages and against non correlated asset classes you might diversify into once liquid, but most of life is luck; you can do everything right and still lose. This makes it easy, imho. (not investing advice, just a rando, n=1) Edit: noir_lord indeed! Good eye. https://www.youtube.com/watch?v=1TCX90yALsI https://www.youtube.com/watch?v=1TCX90yALsI
- deleted 11mo ago
  [deleted]
- noir_lord 11mo ago
  > you can do everything right and still lose. ST:TNG fan? - That was an important lesson for me as a kid. “It is possible to commit no mistakes and still lose. That is not a weakness; that is life.” - Picard
- fencepost 11mo ago
  Another voice in favor of "money today good" (though not from personal experience). I'd even go so far as to recommend putting that money specifically into things that promote your long-term economic stability, e.g. is it enough to let you buy a home that's going to have monthly expenses below what you're paying in rent? There's plenty of economic uncertainty out there right now, but I feel confident in one thing: Even if the entire economy goes into the crapper rent will not go down. In addition the real estate market is pretty soft right now because of uncertainty, so if you're in a position to purchase that may let you basically lock in your monthly housing costs for a decade or more.
  - toomuchtodo 11mo ago
    https://www.youtube.com/watch?v=XamC7-Pt8N0 https://www.youtube.com/watch?v=XamC7-Pt8N0 (NSFW language, first 45 seconds is the relevant part)
collinmcnulty 11mo ago
Growing up around people who lost everything, job and savings, working at Enron, you should take all the money they’ll let you. You are structurally long your company already, because if they struggle you could lose your job. Diversify your wealth away from that concentrated position as much as possible if you’re offered a fair price.
- SCUSKU 11mo ago
  Would you apply that similarly to RSUs at a public company as well? i.e. always sell your stock grant and diversify regardless of the company?
  - ahtihn 11mo ago
    If they gave you cash instead, would you use it to buy stock in the company? That should answer the question.
  - collinmcnulty 11mo ago
    Yes, same principle. And with RSUs you can be even more confident that you’re selling at market rate than you can with a tender offer for illiquid equity.
- saulpw 11mo ago
  I disagree. The answer for me is always half. And then next time, half again. Always take some out and leave some in, and an easy way to hedge your bets is to make both amounts half.
  - collinmcnulty 11mo ago
    You are welcome to your own perspective. I just want to point out to others that having even half of what was presumably a large fraction of your net worth in any single company is not considered well diversified, especially when you rely on that same company for your paycheck.
hshdhdhehd 11mo ago
https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion Obviously you are guessing probabilities to plug in but they can be based on other exits etc. Someone in the know on startup equity could offer this as a consultation service.

by mason55 11mo ago

vlucas 11mo ago

100% correct. Taking 10% away to remove downside risk of the remaining 90% is an absolute no-brainer, especially if it is a meaningful sum of money to you.

defen 11mo ago
Indeed; I can't imagine a world where 11% higher gains makes a significant difference. Either that 11% is a large number in an absolute sense, in which case the 89% you retained is also VERY large; or it's not that big of an absolute number and doesn't matter that much anyway.

toomuchtodo 11mo ago

> The interesting discussion is how much you should take off the table if the offer is uncapped. 50% for security, let the remaining 50% run. We can spend countless hours modeling the risk and return delta of various percentages and against non correlated asset classes you might diversify into once liquid, but most of life is luck; you can do everything right and still lose. This makes it easy, imho. (not investing advice, just a rando, n=1) Edit: noir_lord indeed! Good eye. https://www.youtube.com/watch?v=1TCX90yALsI https://www.youtube.com/watch?v=1TCX90yALsI

deleted 11mo ago
[deleted]
noir_lord 11mo ago
> you can do everything right and still lose. ST:TNG fan? - That was an important lesson for me as a kid. “It is possible to commit no mistakes and still lose. That is not a weakness; that is life.” - Picard
fencepost 11mo ago
Another voice in favor of "money today good" (though not from personal experience). I'd even go so far as to recommend putting that money specifically into things that promote your long-term economic stability, e.g. is it enough to let you buy a home that's going to have monthly expenses below what you're paying in rent? There's plenty of economic uncertainty out there right now, but I feel confident in one thing: Even if the entire economy goes into the crapper rent will not go down. In addition the real estate market is pretty soft right now because of uncertainty, so if you're in a position to purchase that may let you basically lock in your monthly housing costs for a decade or more.
- toomuchtodo 11mo ago
  https://www.youtube.com/watch?v=XamC7-Pt8N0 https://www.youtube.com/watch?v=XamC7-Pt8N0 (NSFW language, first 45 seconds is the relevant part)

collinmcnulty 11mo ago

Growing up around people who lost everything, job and savings, working at Enron, you should take all the money they’ll let you. You are structurally long your company already, because if they struggle you could lose your job. Diversify your wealth away from that concentrated position as much as possible if you’re offered a fair price.

SCUSKU 11mo ago
Would you apply that similarly to RSUs at a public company as well? i.e. always sell your stock grant and diversify regardless of the company?
- ahtihn 11mo ago
  If they gave you cash instead, would you use it to buy stock in the company? That should answer the question.
- collinmcnulty 11mo ago
  Yes, same principle. And with RSUs you can be even more confident that you’re selling at market rate than you can with a tender offer for illiquid equity.
saulpw 11mo ago
I disagree. The answer for me is always half. And then next time, half again. Always take some out and leave some in, and an easy way to hedge your bets is to make both amounts half.
- collinmcnulty 11mo ago
  You are welcome to your own perspective. I just want to point out to others that having even half of what was presumably a large fraction of your net worth in any single company is not considered well diversified, especially when you rely on that same company for your paycheck.

hshdhdhehd 11mo ago

https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion Obviously you are guessing probabilities to plug in but they can be based on other exits etc. Someone in the know on startup equity could offer this as a consultation service.