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Are Google, Twitter, And Facebook Losers?

M&A Daily

Welcome to the Congratulations, You're a "Winner"! issue


Investment bankers are paid based on whether a deal closes, not whether it is a good idea. Even a highly acquisitive CEO is unlikely to have been through nearly as many deals as these high priced helpers, so the bankers are treated as authorities on M&A. In this role, they encourage the idea that auctions for assets such as Yahoo! (NASDAQ:YHOO) are competitions with winners and losers. Corporate chieftains, even the mediocre ones, are a competitive bunch. If there is a game with a winner and losers, they often bid to win. This can be stupid.

It is unsurprising that Berkshire Hathaway (BRK.A/BRK.B) CEO Warren Buffett refuses to participate in auctions. He wants nothing to do with the animal spirits that can be unleashed in such competitive, testosterone fueled battles. On the other hand, I love bidding wars whenever I own shares in the target because I simply love to get overpaid.

In the current case, Yahoo! bids are due less than a week from today. It appears that Verizon (NYSE:VZ) is bidding to win it versus the Daily Mail (OTCPK:DMTGY) and others that might include IAC (NASDAQ:IAC), Microsoft (NASDAQ:MSFT), KKR (NYSE:KKR) and CBS (CBS/CBS.A). But the ranks of suitors are already thinning. Google (GOOG/GOOGL), Twitter (NYSE:TWTR) and...