Facebook $15bn valuation a cruel trick by Microsoft?

There’s a reason I’m not a big-wig business guru richer than Bill Gates: I’m not smarter than him (yet).

I’m also not smart enough to have called this myself, although I’m sure it’s not really news to a lot of people who have seen this space before. But Deal Radar has a post up today explaining how it’s quite probable that Microsoft outmaneuvered Google, Yahoo!, and Facebook, and they win regardless of what happens to Facebook (sink or sail):

Microsoft thought to itself, “Google must not acquire Facebook. Neither should Yahoo. Let’s play to this kid’s ego, and by sprinkling $250 Million on the exercise, we can establish an artificially high valuation that would bring their options of exit down to zero.”

And they did.

On the receiving end, 23-year old Mark Zuckerberg was thinking, “I must be a real stud, I’ve now got Microsoft eating out of my hands!” If some adult at the investor table tried to mumble that this valuation may cause some problems, he was appropriately silenced by the euphoria of the $15 Billion.

Of all the explanations and justifications of Microsoft’s no-longer-as-recent investment in Facebook that I’ve seen, this is the one that rings most true to me. I already sort of knew that Microsoft wanted FB in their pocket as opposed to anyone else’s, but I didn’t really understand why they pushed the valuation so high until now. It also limits Zuckerberg on IPOs.

Live and learn. And hope you’re not always on the learning end, I guess.

Welcome to our community! If you like what you see, you may want to subscribe to our RSS feed!