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by beamatronic 3454 days ago
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.
3 comments
akiselev 3454 days ago
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.

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adventured 3454 days ago
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.
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manquer 3454 days ago
i think founders / promoters using stock as collateral also have to tell the regulator ?
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vladd 3454 days ago
>> 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... ).

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regulation_d 3454 days ago
IIRC, this was still before the IPO, so FB shares were much less liquid.
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