In an interesting deal today, Facebook hired Amin Zoufonoun, former Google executive, who is expected to run Facebook’s Mergers and Aquisitions team. Traditionally, Facebook has focused on takeovers of small start-ups, rather than major players in the industry. This today’s move may indicate Facebook intends to change that. But who would their potential targets be? Companies in freefall, like Yahoo and MySpace would likely still want far more for a takeover bid than Facebook would ever consider economically viable. With Facebook expected to go public later this year however, expectations for growth may force their hand once the initial hysteria of its IPO wears off. I think Facebook will continue to search for young, growing, more innovative companies, as opposed to more senior, established online firms, but at some point they will need to find more mid level companies that will provide synergies.
This begs another question: does Facebook really need to grow via acquisition right now? Although detailed information won’t be available until the company goes public, their growth rates seem to be better than most other online companies right now. It seems like a merger with a major player would be more detrimental to growth. One of the few benefits I can see it providing is elimination of competition.
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