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What ever happened to the "going concern" principle

If you read the literature, look at the help wanted ads or just plain talk to people in the industry the buzz is "we're looking to go public". A close runner up is selling to a PE firm within a few years as an exit strategy. While this may maximize shareholder value in the short-run, it usually doesn't serve the Employees or the Customers that well (or for that matter the Vendors). What ever happened to running a business, developing that business, exceeding your expectations to the point you need to hire "professionals" with more refined skill sets to run your business and then years later taking an exit strategy? Would this not give more stability to the overall marketplace?

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

I look at it this way. The corporate lifecycle is getting shorter and very few companies become "legacy" corporations. Because of the search for "value" (and profit, ie. cashing out) companies are either sold off, broken into pieces, or merged with bigger companies. The entrepreneural stage of companies become very short and the company gets handed over to "professional managers" (or bigger corporations) who then continues the vicious cycle or maybe the "victims" of this cycle themselves.

This shortened lifecycle is more pronounced in the tech startup world where entrepreneurs would work on ideas for several months (yes....months) and then sell off. Those ideas add more value to the "buying" entity. Sometimes, the ideas get tossed out and just the entrepreneurs get "eaten" (acquihires).

It is more like a corporate biosphere. It is no different than in nature where "insects" are food to larger insects or animals and very few insects live long lives. It is also one of the main reason why Silicon Valley has been successful. The ecosystem.

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