[drum]

I admire Mark Zuckerberg's confidence to pull the trigger on an acquisition like this, especially doing it without consulting his board. My initial thoughts was that he has a visceral feel for the rate of growth that makes a social network successful, having gone through it himself. He could probably tell just by their publicity of growing to a million users within 2-3 months that they were going to be huge.

[chiph]

To be honest, if the board had objected, he might have said: "Fine. I'll just write a personal check for it then."

[beamatronic]

Not to pick nits but there's a good chance he would have to liquidate some stock in order to do that, which if done improperly, would have the effect of depressing the FB stock price, thus affecting the board and all the other FB investors.

[akiselev]

As one of the wealthiest people on Earth, wouldn't he just put up some stock as collateral for a loan? I bet there'd be lots of big banks willing to take the risk that $1.2-1.5 billion of FB stock would still be worth more than the loan in case of default, especially given the loan payments in the meantime and low risk that he'll be unable to repay.

Either way, acquisitions this big have complex financial structures in place that would easily accommodate a payout over several years. The Roche acquisition of Genentech took more than 20 years, although the latter was already public at that time.

[adventured]

The Genentech deal wasn't a 20 year structured agreement that was pre-agreed to culminate in a full buyout (Genentech tried to prevent the acquisition and held off Roche for eight months). I don't see how it compares to the example in question; it didn't actually take 20 years to complete, as there was no on-going acquisition process occurring during that time.

[manquer]

i think founders / promoters using stock as collateral also have to tell the regulator ?

[vladd]

>> he would have to liquidate some stock [...] which would have the effect of depressing the FB stock price

Depressing the stock is not the main problem of that. Insider trading is (he cannot liquidate FB stock on short notice as he has material undisclosed information pertaining to it).

He might elect to use a 10b5-1 plan (which basically empowers the broker to make the sell decision autonomously in the future based on a target price), but if you want that cash tomorrow, borrowing against the stock is more appropriate (see for example http://www.businessinsider.com/larry-ellison-has-a-10b-credi... ).

[regulation_d]

IIRC, this was still before the IPO, so FB shares were much less liquid.

[basch]

Does the board even matter? I thought in facebook's case, it was symbolic, a nonbinding suggestion factory.

[will_brown]

It's an interesting question...

Let's assume for purpose of shareholders, I believe Zuckerburg (famously) has majority interest in voting shares.

In practice that should mean he controls who is on the board should they not vote in alignment with his preferences; however, certainly there could be other agreements/contracts the guarantee board seats here and there, that should all be available as a public company I just haven't looked.

At minimum, one would "assume" Facebook required board approval of a $1B+ acquisition.

[basch]

I dont think he needs to consult the board. I think he has a board to bounce ideas off, because he values feedback.

[thewhitetulip]

I don't think the board would object to his proposals, we have seen enough of that the last year, they created a special stock option thing so that he can take a break from fb for 2yrs to work for govt. I get it that theybare visionary CEOs but they have to realize that there is a reason why companies go public and they got to tone their ownership down, it is just a private company where people happen to own stock

[kkhire]

lol, I have no idea after what we witnessed this past election, why Zuck is interested in potentially pursuing a political position. perhaps he'd still have access to FB data?

if so, what would be the legal ramifications? I mean facebook is basically mind control for so many voters, they can push any info they want

[thewhitetulip]

The idea would be to hold out on his control on FB via the complicated stock thing until he comes back from the govt. No clue what's up with them anyways.

[qq66]

That would have caused endless conflict-of-interest headaches.

[sheldoan]

Facebook had a great deal of insight into Instagram's growth due to Facebook Connect. They could see internally how many people were signing up for Instagram, how many people from their networks they were inviting and connecting with, and other indicators of activity.