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Entries tagged “Merger”

No Smooth Road for Tech Giants

Insight September 08, 2009

Oracle’s takeover of Sun Microsystems is facing the European Union’s competition regulator’s investigation, and the prospect of Google’s ambition of building a digital library is still unclear because some publishers and writers reckon the accessibility of large volume of online books will damage their economic interests. While small tech companies and start-ups are worrying about their sources of capital and the outlet of their products, the big tech companies are also undergoing tough scrutiny from both the governments and their competitors.

Oracle’s deal is a typical M&A deal among two tech companies in order to complement each other and expand their market shares, and it is not uncommon to trigger the anti-trust examination. Google’s “monopoly” is sort of untraditional, since the platforms of the competition are not overlapping: one from the physical word, i.e., the physical books, and the other is from the virtual word, i.e., the books on the internet.

I do like Google’s fantastic idea of making millions of books digitally available to the general public, and do admire its ability of making it true. While creation is the life of a tech company; having a good idea and making it good is the key to the success of a tech company, no matter it is only a startup or a giant.


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Tough Marriage?

Insight September 02, 2009

On September 1, 2009, Ebay announced that it would sell 65% of Skype, an internet calling service to a group of investors which includes Silver Lake, a private-equity fund, and a venture-capital firm started recently by Marc Andreessen, founder of Netscape. The price was $1.9 billion in cash, higher than previously expected. Skype was purchased by Ebay in the year of 2005 and was targeted to strengthen the communication between buyers and sellers of Ebay.

The situation is not uncommon in the mergers of the technology companies. As early as in 2000, analysts had already pointed that the problem in the corporate alliance is especially rife in the tech industry, where executives working quickly on “internet time” often rush deals before assessing whether the companies fit well together. In order to determine whether the two companies match each other, merely prior transaction due diligence is not enough.

Reasons why some acquisitions fail, among other things, might be the unfitness of the technology developed by the acquired company to the acquiring company, corporate cultural clash, and disenchanted key employees of the acquired company who finally left the company. A competent law firm or lawyer can add value to the companies by doing adequate intellectual audit and designing an employment package to detain the key employees.

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