Be Wary of Strategic Partnerships. Be Very, Very Wary
Building strategic partnerships is a very important part of building a strong and enduring business. But these waters are also filled with sharks, and you have to be very careful about who you get involved with. Of course, sometimes you don’t have a choice.
Case in point … last year, my neighbor had a massive problem with a partnership deal that almost ruined his business. All because he failed to isolate the deal process.
And when it comes to playing with billion dollar companies; the market leaders … the rules they play by are pretty simple. Sooner or later, they will own you or kill you. That’s their goal plain and simple, and I saw a lot of that when I was in the water bottling industry.
So let’s look at a really big deal that’s unfolding right now …
The Microsoft-Yahoo Chess Game
When Microsoft first made a bid to buy Yahoo, there was something nagging at me that I just couldn’t put my finger on. As more details surfaced it became abundantly clear; Microsoft is playing an own-it-or-kill-it game.
Emphasis on the kill-it part.
First, Microsoft made a bid that was far above Yahoo’s share value. And they did it very publicly. That doesn’t make much sense except to get Yahoo’s shareholders salivating over a big payday. Here’s where it gets interesting …
During the negotiations, Steve Ballmer basically didn’t negotiate. He did raise his offer by $1/share, but that was verbally and not on paper. So there was no room for negotiation. And that’s just not done in business. Not at this level.
So it got me wondering, ‘does Microsoft really want Yahoo’? The answer to that question came today.
If you’ve been following the saga you know that corporate raider Carl Icahn has bought up some shares and threatened to oust Yahoo’s board to try and force a sale to Microsoft. And if Icahn gets his board nominated, one thing is clear: Icahn can not run Yahoo as well as Jerry Yang can. Period. So a sale has to happen or the company will whither and die.
And today, Microsoft announced that it will re-enter negotiations if … IF … Icahn’s board is elected. And if that happens, it puts Microsoft in the driver’s seat to either pick the company up cheap or leave it to die.
Check. And mate.
The game’s chess, not checkers.