Whatsapp and Facebook just agreed to a massive business deal, made headlines, shocked the business world, and made a couple of whiz-kids very very very rich.
But they could have done that for $15.6 Billion, or $21.2 Billion, or even just a lousy 5 or 6 Billion bucks.
How are negotiations handled for such huge sums of money?
I’m trying to imagine how the negotiations were carried out:
Two guys sitting at a table in a rented meeting room at the Ramada Inn hotel:
“I want $21 Billion”
“no, sorry, I can only give you $17 Billion”
“how about 20?”
“well, maybe I can go to 18”
" let’s split it at 19 fricking BILLION dollars"
"Okay, <shakes hands, pulls out his checkbook, signs with a flourish> “here you go…now how 'bout if I buy you a drink in the bar to seal it?”
Most business takeovers have some kind of logic. There’s an analysis of the history and stock earnings of the companies involved. Or it may be possible to compare a proposed deal with similar deals in your industry, or even in other industries.
Or maybe in some situations, it’s a unique case, and there simply is no way to establish a fair and logical value.So somebody just decided to take a huge risk and hope it works out.
But how do they reach the specific numbers? How many people are involved in such huge sums, and how long does it take?