Not One To Say I Told You So
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Showing once again that a bird in the hand is worth two in the bush, SafetyTips.com agreed to purchase the scant assets of failed crime news Web site APBNews.com for nearly half the price it offered to shell out just weeks earlier. The suitor initially put a deal on the table to purchase APBNews for roughly $1 million in late August, but APB creditors balked at the offer for a so-called pre-IPO site valued at over $100 million just six months previously. Now the stiffed creditors will have to learn to live with a paltry $575,000 instead.
Despite starring in its very own high-profile going-out-of-business soap opera, APBNews' psuedo-branded online presence still offered little stand-alone value to a potential buyer. After burning through more than $35 million since its debut, APB also carried $8 million in unpaid debt. To the casual observer, SafetyTips appeared from out of thin air to offer a white knight deal to a struggling Web property that was clearly headed for the dustbin barring any unforeseen miracles.
APB's creditors needed only turn on the television to see the parade of unprofitable content sites handing out pink slips to employees or pulling the plug altogether. Even execs from the beleaguered crime beat site tried to reason with their creditors, correctly surmising that a cool million was a pretty fair price to pay for APB's assets. And, who better should know than the worker bees that have their fingers on the pulse in their respective industry?
The creditors refused to listen, instead taking offense to SafetyTips' terms that called for a break-up fee should either party get cold feet and a stipulation that any competing bidder must top SafetyTips.com's original offer by 10%. Rather than sleep on it, legal counsel representing the creditors blocked the deal, and sped off in search of a second opinion on APB's valuation. The group ultimately decided to roll the dice and see what their speculative investment would get at an open auction. When APB's assets opened for bidding, there wasn't a buyer in sight; and the gamble by creditors to dismiss SafetyTips' initial offer out of hand ended up a costly mistake.
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