To say that Facebook’s acquisition of messaging provider WhatsApp ranks as the largest acquisition of a private venture-backed company is actually a bit of an understatement.
The agreement announced Feb. 19 is not only the biggest such deal ever, it’s also the biggest by an enormous margin. It is more than twice the size of the next-largest transaction, Cisco’s $7.2 billion purchase of networking equipment developer Cerent in 1999.
If one removes the Internet bubble years from the calculus, the dollars spent look more staggering. Facebook’s purchase could be up to six times larger than the next-biggest acquisition of a venture-backed company in the past five years, Google’s $3 billion purchase of Nest Labs, which was announced in January.
The WhatsApp deal is also more than 10 times larger than the next-biggest consumer Internet purchase of the past decade: Google’s acquisition of YouTube. Back in 2006, YouTube’s $1.65 billion purchase price was considered a staggering sum. Compared to WhatsApp, it looks paltry.
Are we back in bubble territory? Can we say that based on one enormous deal? It’s worth noting that eight of the largest deals in history were carried out in bubble years, most to companies that have since either gone of business or sold for a tiny fraction of their dot-com era valuations.
Photo: WhatsApp seen on a Facebook page. Reuters/Dado Ruvic.
Take your pick!
- Buyouts delivers exclusive news and analysis about private equity deals, fundraising, top-quartile managers and more. Get your FREE trial or subscribe now.
- VC Journal provides exclusive news and analysis about venture capital deals, fundraising, top-quartile investors and more. Get your FREE trial or subscribe now.