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TL;DR 300m + 700m in Facebook shares in April (much less today) was careless and very very very very veryvery shitty deal, for a service with no revenue, albeit hot. So learn from this.
Instagram will go down as being a shitty deal for both sides. An arranged marriage, as it were.
It's hard to imagine that the two sides weren't fully aware of the uncertainties involved during the discussion. These are smart folks. This article seems like it's just an opportunity for the author to show off his knowledge of alternative structures.
TL;DR 300m + 700m in Facebook shares in April (much less today) was careless and very very very very veryvery shitty deal, for a service with no revenue, albeit hot. So learn from this.
Instagram will go down as being a shitty deal for both sides. An arranged marriage, as it were.
Earlier quoted context omitted.
Instagram will go down as being a shitty deal for both sides. An arranged marriage, as it were.
Why do you think this will end up being a shitty deal for Instagram?
Earlier quoted context omitted.
My guess would be the ever-declining value of FB stock.
I assume they sold it right away, though I guess there's no way to know.
This article was definitely interesting reading for someone that knows nothing about acquisitions, not so much for the particular fate of Instagram but for the details of how stock/cash deals can work and the stock collar possibilities...
The buzz was that the owner of the company being bought refused to take any stock and only took cash (smart move), and within a month or two of the purchase, most of the acquired people had already left. The company I had worked for ended up selling the remaining assets for something like 1/40th of what they paid a year later.
Considering my company's stock price tanked on day one of the IPO and continued to go down, the only winner in that deal was the guy who took cash for his company.
The 30/70 split is a nice structure that takes into account the uncertainty of the values involved. Seems like a good deal for Instagram and a sane way for Facebook to do it. Imagine if the stock had shot up to 70, or if it falls to 10. Seems like a great structure to me. It's hard to imagine that the two sides weren't fully aware of the uncertainties involved during the discussion. These are smart folks. This articl…
"It is a lesson for those who strike deals in the heat of the moment — and perhaps too hastily."