InSight

Exit and Growth Strategies for Middle Market Businesses

Facebook – Is it really that hard to play fair?

By David Sinyard | May 24, 2012

Facebook ChartAre there any lessons business owners can learn from the recent Facebook IPO?  If nothing else… it should teach us the importance of due diligence and fair play.

For months, Facebook’s IPO has been the dominant story in news media all around the globe and the more you read or view, the more interesting it gets.  The taking public of a private company is just one way for the initial investors in a growing concern to create a liquidity event.  But when your liquidity strategy involves government regulated entities, such as the public markets, you’d better do it by the book.  No shortcuts, no surprises.  And should anything surface that indicates a change in the economic picture of the company, you better let everybody know about it, and yes, all at the same time.  Unhappy investors are not usually investors for long.

As M&A professionals, we work on behalf of one party in a given transaction, and the goal is when all the dust settles, both parties in the transaction are pleased with the outcome.  Happy seller… happy investor.  That wouldn’t happen if one of the parties was acting on information that was inaccurate or untrue.  We stress a thorough due diligence process and the need to keep all parties informed of material changes in information, financial and otherwise.  No one wants to see surprises at the end of a deal.

The story of the Facebook IPO is certainly not over yet.  We’ll soon see how the inevitable investigation into who knew what when pans out.  Bottom line…would it really have been that hard to just play fair?

Posted by David Sinyard.


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