Dealmaking the (current) Facebook way

So Facebook have announced that they are intending to acquire Instragram for $1bn. Nothing unusual about this deal on the face of it (pardon the pun). However, a story published in today’s Wall Street Journal tells us what was different when compared with other deals carried out by high profile companies.  Facebook CEO Mark Zuckerberg reportedly spent 3 days negotiating the transaction directly with the CEO of Instagram, Kevin Systrom. Only after he had negotiated the price down by a reported $1bn did he inform the rest of his board and then bring in the team of advisors that Facebook now has in place.

At this point in time, and while Facebook is a privately held company, Mr Zuckerberg - given that he retains the majority of the voting rights - is pretty much free to do what he likes, how he likes and on his timescale. However, once Facebook completes its listing on NASDAQ, such deal making will become nigh on impossible. While it is not uncommon for chief executives of public companies to court each other prior to a merger or takeover, the speed and the freedom with which Mr Zuckerberg was able to move is atypical for the CEO of a listed business.

While the markets are anticipating great interest in the Facebook IPO, the window of opportunity for quick deals like this one will rapidly diminish once the company is listed. But will Mr Zuckerberg’s appetite for doing deals follow suit if it all becomes a lot more difficult?


Filed under: US, social networking