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Bikini season

I’ve now talked with a lot of people who’ve been watching Linden Lab’s manoeuvres this year, and who come from a wide variety of business backgrounds. The overall general consensus seems to be that it’s bikini season for Linden Lab.

Swimsuit weather is fast approaching, and the old girl wants very much to lose about an inch off her hips so she can get into that bikini and have someone pick her up.

That’s the metaphor.

While I was sceptical about it for some time, I do not find myself in any doubt now that Linden Lab has been positioning itself for a sale. Either that, or the Lab has some serious problems that it has not divulged.

A suitor is not looking for something with too much weight on its hips, or much in the way of special needs. Prospective suitors are either looking for a trophy wife… or for a source of valuable organs.

For that process, she’s got to lose excess baggage and drop encumbrances.

That means lean to the point of anorexia. To the point where the business becomes almost unable to function. Staff reductions, team elimination, making sure all your obscure licenses are not in breach, not even slightly. It means reducing paperwork, overhead and special deals, rechecking your intellectual property inventory, update the terms of service and so on.

It means becoming as simple as possible. Every single complication or special case that requires documentation beyond GAAP, or a meeting is going to knock a million dollars or more off the company sale price. That would also include all manner of contractors, messy overseas assets and payrolls, and special people like newly-hired CEOs. The current interim CEO doesn’t really represent that level of complication.

It means doing all the things that the Lab has been essentially doing in 2010.

That’s a trajectory – moreover, it’s a blindingly obvious one that I really should have given more credence to earlier, having been there myself on more than one occasion.

Would you buy the whole shooting match at the end of that trajectory? Who would, do you think?

Someone surely would. There have been offers.

Depending on who the winning suitor would be, the operation could be a going concern largely as it is at the time of acquisition, it could have staff slashed to eliminate duplication, or it could simply be shut down and gutted for technology, assets, and saleable body parts. There’s no way to tell.

As long as the board members are happy with the sale, it’s not their problem anymore.

The problem with a position-for-sale trajectory is there is really only so long that you can hold it together before you have to sell, or the business falls apart from running too lean. If people are coming to you with potentially acceptable offers that’s one thing, but if you’re spending all of your time posing seductively on a divan, you’re not really getting the work done.

A clarification: Bikini season isn’t actually the time when you’re wearing the bikini. It’s the protracted period where you’re trying it on, eyeing the scales with undisguised venom, and trying to diet and exercise.

The process of positioning a business for sale is a lengthy one, at best. I’ve never personally seen it done in less than six months, and 18-24 months is more usual. I used the word trajectory. The terminus of that trajectory is probably at least several months away. If the Lab is pitching for a sale, then my impression is that it will be ready somewhere in the vicinity of March/April at the current velocity.

Got a news tip or a press-release? Send it to [email protected].
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