A guest post, from Shawn, in response to the NY Times article titled Goldman Sachs and a Sale Gone Horribly Awry…
They made two mistakes. The first, and smallest, was paying $5M to GS without understanding what they were getting in return.
The second, and major mistake was doing an all-stock deal. Or else, in exchange for stock, they should have granted an exclusive license instead of selling the technology outright.
Frankly, I side with GS. They hired GS to make a deal and GS made a deal that they accepted. The fact that the deal turned out to be a bad one is not the fault of GS. That whole due diligence kerfluffle is what you, yourself, would call 20-20 hindsight.
My point:: An existing product is a mostly sure thing and stock is a gamble. You don’t trade a sure thing for a gamble. You might trade a mostly sure thing for cash and a small wager.