hello everyone welcome back to case
studies with the biz doc this week it’s
mergers and acquisitions I’m going to do
maybe three little case studies here to
talk about why companies do mergers and
acquisitions and a lot of this was
sparked by you and thank you for writing
in people wanted to know what’s this
rumor about Disney and Apple getting
together and why does sometimes things
not happen like we hear about mergers
and then they don’t go down I go way
back time and one of my past case
studies we talked about Yahoo getting
together at Microsoft and it didn’t
happen there’s a lot of things a lot of
reasons for that but what I thought I’d
do is give you news you can use as
you’re growing your company or you’re
part of a company that’s growing is the
why do companies merge in the first
place why do we get together so this
week hope I give you two things one what
are the types of mergers and why and
then number two some positive examples
of mergers at work as well as positive
examples of mergers that didn’t all of
that should help you fill your playbook
for the future when it’s time for you to
talk about merging whether you are
merging with a company across the street
or you built something big and you’re
merging with a global player let’s go
first of all it’s growth you want to
grow there’s a couple different ways to
grow first you could get more market
share an example of growing with more
market shares when we saw Wireless
companies the same kind of company just
two different brands selling you and me
mobile phones whether they’re in the UK
or in the United States they get
together and now they have more market
share now that can have a downside for
you and me and that’s why the government
usually looks very carefully when
companies in the same industry are
getting together because they want to be
sure that we still have price
competition and innovation we don’t
suddenly have a monopoly that says
here’s your price forget about it
because they’ve bought all the
competitors that’s the downside of
mergers of similars for growth but
nonetheless it can be very positive
maybe a couple bakeries in town get
bought by the same owner and so now he’s
got more locations and he’s buying
market share there but could have
benefits in the community the other one
is more products or technology for
instance way back in the day you had a
Nokia that made you know mobile phone
they actually bought like a GPS company
well that’s an example of more
technology to go along with the mobile
phone they’re not necessarily going to
have more mobile phone sales they just
hope that technology makes their mobile
phones better and more differentiated so
guess what it results in more sales
because that additional technology or
product helps the core product so that’s
also a growth opportunity then vertical
integration vertical integration is when
suppliers buy you you buy a supplier so
let’s say that you are really really big
and maybe you are Boeing and you make
airplanes and there’s a key supplier of
some parts for your airplanes and
there’s only a couple airplane makers in
the world so maybe you decide I’m just
going to buy that supplier because I get
cost benefits because the profit that
that supplier was making when they sell
the Boeing Boeing now put set in their
pocket so that’s an example of vertical
integration where you go and you buy a
supplier then there’s synergies now
whenever I see that synergies I go hmm
because sometimes CEOs get together in
Wall Street and decide hey we’ll merge
we’ll do something here and there’ll be
all these interesting synergies coming
out of it and you’ll see stock prices
move and you see analysts sitting there
going hmm
well let me have a drink and get back to
you what I think of that you know what
that means that means the market is
suspicious so when you hear the word
synergy and I challenge you to go Google
mergers and acquisitions synergy and
you’ll probably find some stories and
some examples of you know it’s why are
they doing that a lot of times CEOs get
in deal-making mode and moods and they
just go and do it so let’s talk about
now let’s get into some examples of some
positive mergers t-mobile and metro pcs
now that’s here in the United States
this is t-mobile USA buys metro pcs
metro pcs was selling to a lower end
customer a cash-only customer and a you
know buy as you go plan right so you bet
me give me pay-as-you-go plan and that
was metro pcs for his t-mobile was
selling to these customers when we put
them together there is network benefits
because they both had networks to put
together
and now t-mobile has a product like a
prepaid plan a page ago plan for these
customers and also is selling to these
customers so once upon a time t-mobile
didn’t have really good plans for lower
end customers metro pcs is having
trouble reaching up so when they buy
together they get growth market share
that the two products were a little
dissimilar but that’s an example of
something positive so now t-mobile
merged together they have something for
both parts of the market then there was
rumors right now of Sirius and Pandora
now everybody with a newspaper or
anybody that access to the Internet can
see that streaming music has had its
issues and Pandora’s had some
profitability issues trying to figure
life out as you and me are paying or not
paying for streaming music well Sirius
already bought XM because once upon a
time there was two satellite providers
here in the United States for satellite
music that would be in your car or a
satellite music device you put in your
home and later they made available
online so you can just turn on your
computer if you had a satellite a Sirius
satellite subscription in your car and
you can listen in your office because
you’re a paying customer
well Sirius and XM got together and that
was technology the satellite so it was
also market share and now they’re
looking at Pandora and that’s an example
of growth and power through market share
and what they’re trying to find is
cost-benefit so they can finally make a
profit on streaming music and I think
what they’re thinking is with more
customers even if it’s only this much
profit per customer because it’s a tight
tough market that that ultimately could
mean that guess what maybe make profit
on the service so that’s serious in
Pandora now let’s look at another
example of a rumor on the market Apple
and Disney now why on earth would Apple
and Disney merge well there are some
things by it there’s a couple analysts
and people associated with the companies
have pointed out Disney is always wanted
stronger distribution for its content
Apple would give them that they have a
great amount of control with that iPhone
store also Disney owns ESPN ESPN has had
challenges lately so
Disney would love to kind of merge with
someone that would give it strength and
distribution an Apple has long wanted an
internet-based video platform at least
that’s what people say and that’s what
analysts say and every now and then you
hear Tim Cook alluding to it
so together Apple would be buying Disney
and Apple’s got about two hundred
million dollars offshore and everybody’s
saying this would be about a two hundred
and thirty seven billion dollar
transaction apples got about two hundred
billion
offshore that thanks to the current
president they might be able to bring
that home called repatriate the money
back without paying a tax on it well
this would be a way to bring that money
home give it to Disney and bias would be
a lot of things that are in the news
everything from our president and
companies bringing money from around the
world banks back to the u.s. to using
that here there would also be some debt
involved so nonetheless Apple can
definitely afford it it’s not like it’s
a you know a college graduate and they
want to buy a Ferrari as their first car
no no this would be a merger that gives
both of them some very very interesting
opportunities to work together and it’s
a little bit of vertical integration
because Disney would be going up to the
hardware and distribution side and Apple
would be going to the content side so
you know I think this is really really
interesting especially as you see like
Verizon and you know Time Warner and all
of those acquisitions have been made
there which also leads me to Verizon you
know buying Yahoo there’s a funny
two-sided story here remember once upon
a time Yahoo was offered 45 billion
dollars by Microsoft yes
Microsoft was out late drinking one
night and actually offered 45 billion
dollars I think that was the number to
go by Yahoo can’t imagine coming home
hey honey
it’s been a long night what did you do I
made an offer 45 billion dollars to buy
Yahoo you know your wife would say damn
you know sober up and think straight why
would Microsoft buy Yahoo well back at
the day
Yahoo said oh were worth 50 billion
dollars and said no
that’s an example of Microsoft should be
praying to God and saying thank you this
never happened because some years later
you know Verizon by Yahoo for 4.8
billion dollars and then discounted it
because when they were in the middle of
buying it people found out that there is
a data breach and everybody’s passwords
or something for email where were
exposed by Yahoo how embarrassing to
have that happen where you’re trying to
get bought so Verizon said no no no I’m
taking a discount on that and Yahoo
basically had no choice it was a garage
sale and they were just trying to sell
the thing well Bryson’s also bought a o
L and out together
AOL and Yahoo they’re going to create a
company called oath now rise and bought
both of those basically on sale so who
knows but maybe buying both AOL and
Yahoo cheap renaming it oh maybe they do
something that works out is profitable
the guys at risin aren’t dumb so there’s
an example where you look back and maybe
it’s a big company buying table scraps
that something interesting could happen
with so that’s what we’ve got this week
is that whether you’re growing and you
want market share or more products and
technology or it’s vertical integration
buying kind of a supplier relationship
or is just like synergies man we’re
going to have synergies there’s a lot of
reasons for mergers and acquisitions and
I think you can use all of this and
store it your mind as you think about
your company that you’re building or the
one you work for I need the pillow
speaking of merging maybe we should
merge this pillow with another pillow
and make a really cool pillow out of it
there’d be interesting synergies there
anyway I’m Tom Ellsworth thank you for
watching value tainment the best channel
on the internet for entrepreneurial
content I’ll see you next time and until
then I hope I left you better than that [Music]
studies with the biz doc this week it’s
mergers and acquisitions I’m going to do
maybe three little case studies here to
talk about why companies do mergers and
acquisitions and a lot of this was
sparked by you and thank you for writing
in people wanted to know what’s this
rumor about Disney and Apple getting
together and why does sometimes things
not happen like we hear about mergers
and then they don’t go down I go way
back time and one of my past case
studies we talked about Yahoo getting
together at Microsoft and it didn’t
happen there’s a lot of things a lot of
reasons for that but what I thought I’d
do is give you news you can use as
you’re growing your company or you’re
part of a company that’s growing is the
why do companies merge in the first
place why do we get together so this
week hope I give you two things one what
are the types of mergers and why and
then number two some positive examples
of mergers at work as well as positive
examples of mergers that didn’t all of
that should help you fill your playbook
for the future when it’s time for you to
talk about merging whether you are
merging with a company across the street
or you built something big and you’re
merging with a global player let’s go
first of all it’s growth you want to
grow there’s a couple different ways to
grow first you could get more market
share an example of growing with more
market shares when we saw Wireless
companies the same kind of company just
two different brands selling you and me
mobile phones whether they’re in the UK
or in the United States they get
together and now they have more market
share now that can have a downside for
you and me and that’s why the government
usually looks very carefully when
companies in the same industry are
getting together because they want to be
sure that we still have price
competition and innovation we don’t
suddenly have a monopoly that says
here’s your price forget about it
because they’ve bought all the
competitors that’s the downside of
mergers of similars for growth but
nonetheless it can be very positive
maybe a couple bakeries in town get
bought by the same owner and so now he’s
got more locations and he’s buying
market share there but could have
benefits in the community the other one
is more products or technology for
instance way back in the day you had a
Nokia that made you know mobile phone
they actually bought like a GPS company
well that’s an example of more
technology to go along with the mobile
phone they’re not necessarily going to
have more mobile phone sales they just
hope that technology makes their mobile
phones better and more differentiated so
guess what it results in more sales
because that additional technology or
product helps the core product so that’s
also a growth opportunity then vertical
integration vertical integration is when
suppliers buy you you buy a supplier so
let’s say that you are really really big
and maybe you are Boeing and you make
airplanes and there’s a key supplier of
some parts for your airplanes and
there’s only a couple airplane makers in
the world so maybe you decide I’m just
going to buy that supplier because I get
cost benefits because the profit that
that supplier was making when they sell
the Boeing Boeing now put set in their
pocket so that’s an example of vertical
integration where you go and you buy a
supplier then there’s synergies now
whenever I see that synergies I go hmm
because sometimes CEOs get together in
Wall Street and decide hey we’ll merge
we’ll do something here and there’ll be
all these interesting synergies coming
out of it and you’ll see stock prices
move and you see analysts sitting there
going hmm
well let me have a drink and get back to
you what I think of that you know what
that means that means the market is
suspicious so when you hear the word
synergy and I challenge you to go Google
mergers and acquisitions synergy and
you’ll probably find some stories and
some examples of you know it’s why are
they doing that a lot of times CEOs get
in deal-making mode and moods and they
just go and do it so let’s talk about
now let’s get into some examples of some
positive mergers t-mobile and metro pcs
now that’s here in the United States
this is t-mobile USA buys metro pcs
metro pcs was selling to a lower end
customer a cash-only customer and a you
know buy as you go plan right so you bet
me give me pay-as-you-go plan and that
was metro pcs for his t-mobile was
selling to these customers when we put
them together there is network benefits
because they both had networks to put
together
and now t-mobile has a product like a
prepaid plan a page ago plan for these
customers and also is selling to these
customers so once upon a time t-mobile
didn’t have really good plans for lower
end customers metro pcs is having
trouble reaching up so when they buy
together they get growth market share
that the two products were a little
dissimilar but that’s an example of
something positive so now t-mobile
merged together they have something for
both parts of the market then there was
rumors right now of Sirius and Pandora
now everybody with a newspaper or
anybody that access to the Internet can
see that streaming music has had its
issues and Pandora’s had some
profitability issues trying to figure
life out as you and me are paying or not
paying for streaming music well Sirius
already bought XM because once upon a
time there was two satellite providers
here in the United States for satellite
music that would be in your car or a
satellite music device you put in your
home and later they made available
online so you can just turn on your
computer if you had a satellite a Sirius
satellite subscription in your car and
you can listen in your office because
you’re a paying customer
well Sirius and XM got together and that
was technology the satellite so it was
also market share and now they’re
looking at Pandora and that’s an example
of growth and power through market share
and what they’re trying to find is
cost-benefit so they can finally make a
profit on streaming music and I think
what they’re thinking is with more
customers even if it’s only this much
profit per customer because it’s a tight
tough market that that ultimately could
mean that guess what maybe make profit
on the service so that’s serious in
Pandora now let’s look at another
example of a rumor on the market Apple
and Disney now why on earth would Apple
and Disney merge well there are some
things by it there’s a couple analysts
and people associated with the companies
have pointed out Disney is always wanted
stronger distribution for its content
Apple would give them that they have a
great amount of control with that iPhone
store also Disney owns ESPN ESPN has had
challenges lately so
Disney would love to kind of merge with
someone that would give it strength and
distribution an Apple has long wanted an
internet-based video platform at least
that’s what people say and that’s what
analysts say and every now and then you
hear Tim Cook alluding to it
so together Apple would be buying Disney
and Apple’s got about two hundred
million dollars offshore and everybody’s
saying this would be about a two hundred
and thirty seven billion dollar
transaction apples got about two hundred
billion
offshore that thanks to the current
president they might be able to bring
that home called repatriate the money
back without paying a tax on it well
this would be a way to bring that money
home give it to Disney and bias would be
a lot of things that are in the news
everything from our president and
companies bringing money from around the
world banks back to the u.s. to using
that here there would also be some debt
involved so nonetheless Apple can
definitely afford it it’s not like it’s
a you know a college graduate and they
want to buy a Ferrari as their first car
no no this would be a merger that gives
both of them some very very interesting
opportunities to work together and it’s
a little bit of vertical integration
because Disney would be going up to the
hardware and distribution side and Apple
would be going to the content side so
you know I think this is really really
interesting especially as you see like
Verizon and you know Time Warner and all
of those acquisitions have been made
there which also leads me to Verizon you
know buying Yahoo there’s a funny
two-sided story here remember once upon
a time Yahoo was offered 45 billion
dollars by Microsoft yes
Microsoft was out late drinking one
night and actually offered 45 billion
dollars I think that was the number to
go by Yahoo can’t imagine coming home
hey honey
it’s been a long night what did you do I
made an offer 45 billion dollars to buy
Yahoo you know your wife would say damn
you know sober up and think straight why
would Microsoft buy Yahoo well back at
the day
Yahoo said oh were worth 50 billion
dollars and said no
that’s an example of Microsoft should be
praying to God and saying thank you this
never happened because some years later
you know Verizon by Yahoo for 4.8
billion dollars and then discounted it
because when they were in the middle of
buying it people found out that there is
a data breach and everybody’s passwords
or something for email where were
exposed by Yahoo how embarrassing to
have that happen where you’re trying to
get bought so Verizon said no no no I’m
taking a discount on that and Yahoo
basically had no choice it was a garage
sale and they were just trying to sell
the thing well Bryson’s also bought a o
L and out together
AOL and Yahoo they’re going to create a
company called oath now rise and bought
both of those basically on sale so who
knows but maybe buying both AOL and
Yahoo cheap renaming it oh maybe they do
something that works out is profitable
the guys at risin aren’t dumb so there’s
an example where you look back and maybe
it’s a big company buying table scraps
that something interesting could happen
with so that’s what we’ve got this week
is that whether you’re growing and you
want market share or more products and
technology or it’s vertical integration
buying kind of a supplier relationship
or is just like synergies man we’re
going to have synergies there’s a lot of
reasons for mergers and acquisitions and
I think you can use all of this and
store it your mind as you think about
your company that you’re building or the
one you work for I need the pillow
speaking of merging maybe we should
merge this pillow with another pillow
and make a really cool pillow out of it
there’d be interesting synergies there
anyway I’m Tom Ellsworth thank you for
watching value tainment the best channel
on the internet for entrepreneurial
content I’ll see you next time and until
then I hope I left you better than that [Music]
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