Facebook and WhatsApp
Introduction
During recent decades many enterprises in the world, and in United States in particular, experience prodigious number of corporate mergers and takeovers, transactions in which one company gains control over another. According to Thomson Reuters, the number of mergers and acquisitions globally in 2012 exceeded 42,000, with a total value of more that $2,6 trillion.
US firms account for more than $733 billion of this number. The goal of any business activity is to maximize owners and shareholders value, so business combination is simply a strategies for growth and competitiveness. Size and scale definitely matters in today’s global business environment. If a large firm can be more efficient in delivering goods and services, it gains a competitive advantage and brings more profits with it to the owners. Although, every firm has its own motives for business combinations, many share one or more of the following characteristics that potentially enhance profitability:
Vertical integration of one firm’s output and another firm’s distribution
Cost saving through elimination of duplicate efforts, facilities, staff, and services.
Quick entry into domestic and/or foreign markets.
Economies of scale.
Increased abilities for more attractive financing.
Diversification of business risk.
Overall, the core motivation for many business combinations can be traced to an increasingly competitive business environment and the number of recent combinations continues to be large.
To mention only a few: Google – Motorola, e-Bay – GSI Commerce, Facebook – Instagram, etc.
Last year, one of the biggest deals in business combinations was Facebook and WhatssApp. The acquiring company (Facebook) went as far as paid astounding amount of $19,4 billions to acquire internationally popular messenger WhatsApp. They paid over $4 billions in cash, $12 billion worth in Facebook shares, $3 billion in restricted stock, and a sit on boards of director of Facebook for Jan Koum, the
During recent decades many enterprises in the world, and in United States in particular, experience prodigious number of corporate mergers and takeovers, transactions in which one company gains control over another. According to Thomson Reuters, the number of mergers and acquisitions globally in 2012 exceeded 42,000, with a total value of more that $2,6 trillion.
US firms account for more than $733 billion of this number. The goal of any business activity is to maximize owners and shareholders value, so business combination is simply a strategies for growth and competitiveness. Size and scale definitely matters in today’s global business environment. If a large firm can be more efficient in delivering goods and services, it gains a competitive advantage and brings more profits with it to the owners. Although, every firm has its own motives for business combinations, many share one or more of the following characteristics that potentially enhance profitability:
Vertical integration of one firm’s output and another firm’s distribution
Cost saving through elimination of duplicate efforts, facilities, staff, and services.
Quick entry into domestic and/or foreign markets.
Economies of scale.
Increased abilities for more attractive financing.
Diversification of business risk.
Overall, the core motivation for many business combinations can be traced to an increasingly competitive business environment and the number of recent combinations continues to be large.
To mention only a few: Google – Motorola, e-Bay – GSI Commerce, Facebook – Instagram, etc.
Last year, one of the biggest deals in business combinations was Facebook and WhatssApp. The acquiring company (Facebook) went as far as paid astounding amount of $19,4 billions to acquire internationally popular messenger WhatsApp. They paid over $4 billions in cash, $12 billion worth in Facebook shares, $3 billion in restricted stock, and a sit on boards of director of Facebook for Jan Koum, the
References: Doorn, P. V. (2014, 10 29). Dont worry about Facebook 's $18,1 billion in goodwill from WhatsAp. Retrieved 05 04, 2015, from MarketWatch web site: http://www.marketwatch.com Joe Hoyle, T. S. (2015). Fundamentals of Advaced Accounting (sixth ed.). New-York, NY, USA: McGraw-Hill Education. 1. Tereza Litsa( 2014, February 24) 5 Reasons why Facebook acquired WhatsApp WERSM we are social media. Retrieved 05 04, 2015 from http://wersm.com/5-reasons-why-facebook-acquired-whatsapp/ Justin Lafferty (2014,February 25). What others are saying about Facebook is acquisition on WatsApp. Edweek. Retrieved 05,04,1015 from http://www.adweek.com/socialtimes/what- others-are- saying-about-facebooks-acquisition-of-whatsapp/298159?red=if Chris Preimesberger (2014, February 20) How much risk is Facebook taking in $19 billion WhatsApp deal? eWeek. Retrieved 05,04,2015 from http://www.eweek.com/cloud/how- much-risk-is-facebook-taking-in-whatsapp-deal.html Kia Kokalitcheva (2015, Jenuary 29) Facebook passes 1.39B monthly active users, $890M daily active users, and half a billion mobil only users. VBnews. Retrieved from http://venturebeat.com/2015/01/28/facebook-passes-1-39b-monthly-active-users-and- 890m-daily-active-users/ Rohit Chhatwal (2015, January 31)Top 5 Facebook acquisitions. Amigobulls. Retrieved from http://amigobulls.com/articles/best-facebook-acquisitions Gordon Kelly (2014, February 20) 5 Key Reasons WhatsApp is worth $19 billion – to Facebook. Forbs. Retrieved from http://www.forbes.com/sites/gordonkelly/2014/02/20/5-key- reasons-whatsapp-is-worth-19bn-to-facebook/