A Few Notes On Acquisitions (Money Talks)

Of course the big news today is Cisco’s abandonment of their $590 million Flip acquisition. Yeah, it’s a disappointment (which we saw coming) and somewhat perplexing that a buyer wasn’t lined up – the brand retains significant value even if the recent and unreleased products don’t.

Over on Twitter, I had an interesting exchange with former Wired reporter Priya Ganapati:


(read from bottom to top)

Priya wonders how Flip’s founders feel, in retrospect, given the situation. I assume they’re wistful… but driving nice cars. I also assume that the decision wasn’t entirely theirs to make. More often than not, the investors are the ones calling the shots. And they successfully nurtured Pure Digital and then liquidated for a handsome profit.

As I said on Twitter, each of my previous employers has been acquired. Some were financial wins, some were financial losses. The various parties usually talk ‘good fit’ and ‘synergy’, but ultimately deals are done based upon who offers the most cash at the right time. Just ask Palm. Er, Elevation Partners.

4 thoughts on “A Few Notes On Acquisitions (Money Talks)”

  1. Dave, do you remember what was the reason for Google not going through with Digg purchase? IIRC, they pulled back at 11th hour.

    Groupon not taking 6 billion is plain crazy especially as daily deal sites are becoming dime-a-dozen and number of local businesses stays finite. Not sure about everyone else, but I’ve noticed a huge decrease in interesting offerings on Groupon. last two deals I bought were eBay (Groupon) and Fandango (LivingSocial).

  2. Google drives up valuations on purpose sometimes as a competitive move, perhaps never intending to do a deal. Digg, Wireless Spectrum, Groupon, etc… But the issue with groupon was that the deal might not have closed and groupon wanted a huge cancelation fee if it didn’t close. Big regulatory risks.

    Groupon is an awesome business, but will regret not cashing in I suspect.

    The demise of flip is mind boggling. I wouldn’t be surprised to see someone make an attempt to buy the IP / Brand.

  3. You’ve got the correct take Dave. The founders (single digits number of people at Pure), the VCs who funded them, and the bankers are all perfectly happy with how this turned out. They made out like bandits.

    Now the employees of the Cisco/Flip business that just got axed aren’t so thrilled. And of course neither are Cisco shareholders who must be left asking why Cisco threw their money down the toilet.

    And as much as you have to blame Chambers for this fiasco, you also have to look at Kaplan who clearly couldn’t be bothered to try and keep his baby alive once he’d cashed in. What an anemic performance by the Flip people after the acquisition. I’m not saying that doing ANYTHING AT ALL would have saved them, but given how little they did do… And yes, I lay almost all of that at Kaplan’s feet.

    Boy there’s a lot of clueless executives who are doing fine today…

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