Making Sense Of Diller's IAC Breakup: Buy Low, Sell High

from the keep-making-deals dept

For years, we've joked about how Wall Street's dealmakers don't care if they're merging companies or breaking them apart: they have a script for both. When there are merger opportunities, it's all about the "synergies" of companies working together. When it's time to break them apart, you talk about "releasing shareholder value" that is hidden within the larger company. All it really means is another opportunity for another deal -- with the Wall Street folks taking their cut whichever direction things are going in. The latest to go through this pendulum is Barry Diller's IAC -- which has always been an odd conglomeration of internet companies. For years, we've wondered where all the synergies were that Diller promised the world when he started putting them all together -- and the latest answer apparently is that even Diller doesn't know. He's going to break the company up into five separate pieces in order to, yes, you guessed it: "increase shareholder value." While some are saying that this is classic Barry Diller -- a sign that he's more of a dealmaker than an executive, the timing of this might not be so crazy. After all, Diller did most of his buying during the dot com downturn, when many of the properties were undervalued. These days, with all the talk of the new bubble, and new enthusiasm on Wall St. for internet plays, the opposite is true. So while we tend to snicker at the "merge 'em up, break 'em down" thought process that goes into these efforts, in this case, it might actually make sense.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    mike, Nov 5th, 2007 @ 9:46pm

    IAC

    The break up certainly makes since for Diller but
    investors, not so much. I am somewhat suprised he
    left any value as he never saw a dollar he didn't think was due him as compensation.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Anonymous Coward, Nov 6th, 2007 @ 5:06am

    "I will tell you a secret: Deal making beats working. Deal making is exciting and fun, and working is grubby. Running anything is primarily an enormous amount of grubby detail work...deal making is romantic, sexy. That's why you have so many deals that don't make sense." --Peter Drucker quoted in 'The Essay of Warren Buffett'

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    anonymous coward, Nov 6th, 2007 @ 9:14am

    if that hodgepodge of second and third-rate internet companies that is IAC is worth a dime more than their purchase price it is a signal of a new bubble about to burst and it is time to dump tech wholesale.

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
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  5.  
    identicon
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