Larry from Reverie here.
To be as transparent as possible, I should note that Iâve been a Rari tokenholder since the early days. In addition, I know and have a great deal of admiration for Jai. In short, while Reverie has no exposure to either RGT or TRIBE, I personally do.
I should also note that in my opinion, for matters such as these, neutrality is overrated. The neutral third-party typically has only one incentive: to make a deal happen and get paid, even if the deal is a bad idea for one and/or both parties. Instead, I think we should seek advice from stakeholders who have skin-in-the-game and a neutral state of mind.
Finally, Iâll note I have some experience with traditional mergers/acquisitions from my time at Digital Currency Group. We acquired companies while I was there, and had more than several portfolio companies go through this process too. Having said that, token-for-token transactions are new; there are some differences between a traditional merger and a token-for-token one, so I suggest treading carefully (and humbly).
Back to the topic at hand. First of all, Iâm still wrapping my head around the proposal. While the high-level details are relatively simple to understand, details like the longer-term repercussions of the transaction for both projects, transaction price, and post-transaction reporting and incentive structures will take time to fully absorb for both groups of stakeholders. As Tupac would say, âIt ainât easy.â
While the above details will take time to grok, for the sake of expediency, Iâll share my gut thoughts below:
Strategically, the merger makes sense. Both Fei and Rari stand to benefit directly from merging. That said, itâs not yet clear to me who stands to benefit more. In general, the party that more greatly benefits from the merger should pay the higher price. For example, if Fei benefits more than Rari, then it should pay a premium for the merger. In contrast, if Rari benefits more than Fei, RGT tokenholders should be willing to be acquired at fair market value. As a next step, I would suggest both Fei and Rari appoint a representative to clearly explain the benefits of the merger to their respective tokenholders. This would allow both groups of tokenholders to understand the benefits of the merger in more detail, which in turn, would help us evaluate the fair price for the transaction.
Most deals fail for simple human reasons. You can have the most strategically-aligned deal in the world and still have the thing end in tears when all is said and done. Simple things like âwho reports to who?â post-transaction and âhow much does everyone get paidâ are awkward to talk about, so many deals get done without the parties having the tough conversations. The right thing to do is to confront the elephant in the room and speak through these details before the deal happens. In this case, questions like (i) how would Joey and Jai (âJ&Jâ) split responsibilities, (ii) how would the Fei and Rari teams work together post-transaction, and (iii) how would core contributors for both projects get paid to be incentivized over the long-term should be discussed in detail.
What happens if the deal falls through? It would be helpful for both groups of tokenholders to understand what happens if the deal doesnât happen. Will Fei and Rari still be partners, albeit less formally? Or will both projects look for other merger/acquisition targets? If the latter is true, then both groups of tokenholders should understand all the merger/acquisition options.
Candidly, I have more questions after writing this response than what I had prior to writing it. Thatâs not a bad thing, but it does mean both communities probably need more information to make an informed decision.
I/Reverie are happy to help in the process in whichever way the community wants.
