Equity Why did the Zoom-Five9 deal eat %#*& and die?
Oct 2, 2021
The podcast dives into the sudden collapse of the Zoom-Five9 acquisition, exploring the reasons behind this surprising turn of events. It discusses the risks associated with all-stock transactions and potential anti-trust issues that plagued the deal. The hosts reflect on the implications for mergers and acquisitions in tech and share insights on Zoom’s impressive earnings amidst growing competition. They also talk about the challenges tech companies face in navigating mergers while dealing with increasing regulatory scrutiny.
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Five9 Dumps Zoom
- Five9 shareholders rejected Zoom's acquisition offer, similar to getting dumped in a relationship.
- The "mutual termination" was Five9 declining to move forward, forcing Zoom to accept.
Why Acquisition Premiums Exist
- A premium is necessary when acquiring a public company because investors expect compensation for potential upside.
- Selling shareholders want some of their anticipated future gains, or they won't agree.
Strategic Rationale Behind the Merger
- Five9, specializing in customer contact solutions, was an attractive target for Zoom to expand beyond video conferencing.
- The proposed merger aimed to combine Zoom's video with Five9's voice capabilities for a comprehensive communication platform.