A board's duty to maximize shareholder value is an expected value calculation. A $100B offer with a 75% chance of closing is valued at $75B, making an $80B offer with 100% certainty more attractive. Boards weigh financing and regulatory risks heavily against the headline price.

In 2013, BuzzFeed's founder rejected a $650 million acquisition offer from Disney while chasing a higher valuation. Over a decade later, the company sold for just a fraction of that price, a cautionary tale for founders who hold out for a perfect exit.

In a competitive M&A process where the target is reluctant, a marginal price increase may not work. A winning strategy can be to 'overpay' significantly. This makes the offer financially indefensible for the board to reject and immediately ends the bidding process, guaranteeing the acquisition.

VCs may analyze an acquisition based on a 3x return over their last round. For a founder, the math is different. A life-changing financial outcome is only worth passing up if they genuinely believe they can build a company 10x larger. A potential 3x increase isn't enough to justify the immense personal risk and multi-year effort.

A key risk for undervalued companies is not just a low stock price, but being acquired via an unsolicited bid at a price that is still far below intrinsic value. Passive boards effectively gift value to acquirers by not proactively managing their company's valuation.

M&A opportunities are fleeting. The internal champion for a deal might leave or company priorities can shift dramatically, killing the opportunity. The OpenAI/TBPN deal likely wouldn't happen post-'Code Red'. Time and management turnover are the enemies of all deals, making it crucial to seize good offers.

For companies that are not generational outliers, the first serious M&A offer is usually the best one they will receive. Lair Hippo's philosophy is that founders should take these initial offers extremely seriously, as trying to run a lengthy process often fails to produce a better outcome and risks the original deal.

After skillfully negotiating two offers and nearly doubling the price for SiteAdvisor, Chris Dixon felt he had maximized the deal. However, the acquiring CEO later revealed his board had authorized a price twice as high, a humbling lesson that a seller rarely knows the buyer's true willingness to pay.

A board's fiduciary duty is to maximize shareholder value, which is an expected value calculation (Offer Price x Probability of Closing). An $80B all-cash offer with 100% certainty is superior to a $100B offer with only a 75% chance of regulatory approval, as its expected value is higher ($80B vs. $75B).