_{BUYSIDERS M&A HALL OF FAME (AND SHAME)}

The GOATs and the WOATs of M&A All in One Place

Since it’s the end of summer, we’re keeping things light so you can coast straight into DJ D-Sol’s LDW bash at Surf Lodge before we return to our regularly scheduled programming.

Agree with our hall of fame? Great. Work on our wall of shame? Hopefully you got your fee before the bust up.

🏆 Buysiders Hall of Fame 🏆

Deals that actually worked, created insane value, and made the MD‘s that pitched them look like geniuses.  

1. Disney Acquires Marvel ($4 billion, 2009) | Bankers…..Assemble!

   1. What looked like a risky comic book gamble turned into one of the most lucrative IP farms in history.

   2. For $4 billion, Disney got 30+ box office hits, enough spin-offs to make your head spin, and a theme-park pipeline for the rest of time.

   3. Disney can chalk this one up as basically an infinite return, but at a minimum, they have created a $50 billion IP machine that has continued to print cash since acquisition.

   4. The odds of Disney ever selling Marvel are basically zero. I mean, why would you ever sell your golden goose? But, if they did, it is safe to say that they would clear whatever their underwriting thesis was by a wide margin.

   5. $4 billion for Iron Man…or as Disney calls it, the cost of one bad Star Wars sequel (of which they’ve made plenty).

2. Facebook Acquires Instagram ($1 billion, 2012) | Throw me a like (and a bill) would you?

   1. Before Zuck was public-alpha Zuck, he was privately alpha Zuck. Not many people probably told him that buying a photo sharing app with 13 employees was going to revolutionize his company.

   2. Since acquisition, Meta has scaled Instagram into a $200+ billion advertising juggernaut and one of the largest social media platforms out there.

   3. The acquisition of Instagram, similar to our number 3 entry, defined a new era of acquisition strategy, especially in tech… “buy it before it kills you.” While that has come under some antitrust fire recently, the amount of value created will certainly make investors happy if a split up were to occur.

   4. I wonder if Zuck knew that he could just download the app for free if he wanted to drop a filter on his morning avocado toast.

3. Google Acquires YouTube ($1.7 billion, 2006) | Never underestimate how much a cat video can generate

   1. Similar to the Facebook/Instagram deal, this was one of those deals that everyone judged until they saw their unrealized gain on Alphabet shares.

   2. YouTube has become the second-largest search engine in the world, and generates over $30 billion in revenue per year.

   3. In an age where short form content is thriving, YouTube continues to be a steady business for Google. Additionally, YouTube is the largest TV provider in the US according to Nielsen. Not bad Google, not bad.

   4. Turns out that ‘Charlie Bit My Finger’ had better margins than SaaS after all.

4. Microsoft Acquires LinkedIn ($26 billion, 2016) | Here’s what reading Buysiders has taught me about B2B sales…

   1. What was initially mocked as the nerdiest deal of all time has grown into one of the strongest recurring revenue drivers for Microsoft.

   2. LinkedIn is, unfortunately, very popular with 310 million monthly active users, and it has become a strong, reliable source of ad revenue for Microsoft.

   3. In addition to the billions generated by LinkedIn revenues, it also has a relatively low churn rate, which means customers are generally locked in for a while (probably because most of them are too old to figure out how to delete their profile). A low churn rate with a high audience does spell a cash cow for Microsoft, even if they paid a crazy high valuation at the time.

   4. Where EBITDA lives forever but résumé’s go to die.

💀 Buysiders Hall of Shame 💀

Deals that shouldn’t have left the pitch book, or your MD’s email drafts.  

1. AOL Acquires Time Warner ($165 billion, 2000) | Dot Bust

   1. Billed as the largest merger in US history at the time with a $165 billion stock swap, things did not stay that peachy forever.

   2. Within two years of the acquisition, AOL Time Warner reported a $99 billion loss, the biggest annual corporate loss ever recorded. Ouch.

   3. By 2009, AOL was spun off, and Time Warner was unwinding, with $100+ billion in shareholder value evaporated like your dial up router.

   4. A marriage built on dial-up speeds and cable bills is destined to fail.

2. HP Acquires Autonomy ($11 billion, 2011) | Hewlett should’ve Packard this one up 

   1. I’ll be honest, I had to remind myself of this one but it is a pretty wild one. HP paid a 79% premium for UK-based software firm Autonomy, valuing the firm at $11 billion.

   2. Within one year, HP wrote down $8.8 billion, accusing Autonomy of “serious accounting improprieties.”

   3. The deal quickly became one of the fastest and largest write-offs in tech history, and a lawsuit that dragged on for north of a decade. After all, the lawyers must always earn their fee too.

   4. Everything is fair in love, war, and write-offs.

3. Daimler and Chrysler Merge ($36 billion, 1998) | Merger of equals, divorce of equals

   1. Daimler and Chrysler touted a merger of equals valued at $36 billion to create the world’s 5th largest automaker.

   2. Instead of the home run they expected, a culture clash tanked performance, with Chrysler’s US sales dropping 30% by 2006.

   3. Daimler sold 80% of Chrysler to Cerberus in 2007 for a meager $7.4 billion as part of their nasty divorce.

   4. Sometimes, things just aren’t meant to be sweetie.

4. eBay Acquires Skype ($2.6 billion, 2005) | Now accepting bids for Skype. Bidding will start at $1

   1. It’s one thing to sell the dream, it’s another to sell something so farfetched it should remain a dream. That was the issue with the eBay acquisition (probably thanks to some banker). eBay bought Skype for $2.6 billion in hopes that buyers and sellers would video chat…because that’s everyone’s favorite part of bidding, right?

   2. Shockingly, adoption was basically zero. By 2007, eBay took a $1.4 billion write-down. Two years later, in 2009, they sold a 65% stake to a private equity group at a $2.75 billion valuation, only a small bump over their original purchase price.

   3. Microsoft later came in with an $8.5 billion deal for Skype, but by then the upside was long gone for eBay.

   4. The only people using Skype for auctions were the bankers as they worked to spin it out.

_{NEWS ROUNDUP}

Top Reads

• Dealmakers top $1 trillion in M&A with busiest August since 2021

• Keurig Dr Pepper acquired JDE Peet’s for $18 billion

• Canada Goose draws take-private interest valuing it at $1.35 billion

• Sompo Holdings bought Aspen Insurance for $3.5 billion

• US Government Takes 10% Stake in Intel

• Carlyle Acquires Intelliflo for $205 Million

• Blackstone Acquires Shermco for $1.6 Billion 

• Guess? Taken Private In A $1.4 Billion Deal 

• DayForce Taken Private by Thoma Bravo for $12.3 Billion 

• Nuveen Raises $1.3 Billion for Second E&P Credit Fund

• DigitalBridge and Crestview Take WideOpenWest Private for $1.5 Billion

• Apollo Buys Kelvion for $2.3 Billion

• Advent to Acquire Sapiens for $2.5 Billion

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_{BUYSIDE CONFESSIONS}

Me Too Man, Me Too

Have you ever felt like an absolute idiot when doing your job for a mistake you’ve made? Well don’t worry, here are some anonymous confessions we’ve received from people like you about screw-ups they’ve made.

So, come my child, take a seat and confess your finance sins…or at least hear about someone else’s.

1. Sometimes when I find a model bust, I make an offsetting adjustment to a different number within reason to keep the returns consistent so I don’t have to flag the bust.

2. I still don’t know what a sale leaseback is and we do it with every portfolio company.

3. I thought that the “PIK toggle” was an excel setting for my first six months.

4. I still sometimes google the bridge from enterprise value to equity value

5. I once plugged equity in a model that went to IC and no one noticed.

6. I have double (or maybe triple) counted synergies before and it went all the way to the client before someone noticed.

7. I once thought that mezzanine financing was literally a loan you took out on the second floor of someone’s office.

8. My VP still calls me “Costs of Good Stuff” after I wrote that in a deck for COGS.

9. During my intern project, I presented on the wrong company because I fat fingered the ticker.

10. My analyst showed me the best deal in history, over 100% accretive, infinite IRR, infinite MOIC. Turns out he forgot to include the purchase price.

11. I sent a management presentation to a client with the wrong management team in it. Wasn’t a great drafting call after that.

12. Once I built a model that cleared every return threshold and went to IC, until someone realized the waterfall was from a past deal.

The truth is, we’ve all been here. If you haven’t, you probably haven’t opened Excel yet or you’re just lying.