Comment by qeternity

13 hours ago

Spoken like someone who has never started a business. Brex raised much less than $5b and Capital One apparently thinks it is worth more than that (otherwise they wouldn’t buy it).

This is called value creation.

8 comments

qeternity

Reply
jjfoooo4  3 hours ago

I think the investors who put $300m in at a $12b valuation would disagree

  • qeternity  1 hour ago

    I don’t think you understand how liquidation preferences work.

    They will get $300m back.

    Opportunity cost sure. But zero nominal loss.

pinnochio  12 hours ago

Definitely. No company has ever overpaid for another company. No fraud or FOMO-driven overvaluation has ever occurred in an acquisition. And all acquisitions have always turned out for the best. It's all 100% pure value creation.

  • qeternity  1 hour ago

    Definitely. And some random guy on HN knows the value of Brex to Capital One better than Capital One does.

    Brex can be worth $5b today and also be worth less in the future. These two realities don’t conflict. Acquisitions can and do end poorly. But the vast majority work well. I am not sure what you don’t understand about that?

  • solarkraft  10 hours ago

    Your statement is true on average because the world’s economy is continuing to function.

    • pinnochio  10 hours ago

      Oh wow, I don't even know where to begin with that.

      Like, the world economy can't continue to function even if acquisitions were only 80% value creation on average? Or does the entire world economy depend on companies acquiring other companies with 100% value creation on average, such that it continuing to function logically implies 100% average value creation?

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