The Instagram/Facebook deal could be worrisome for Facebook’s IPO

According to the WSJ the recent Facebook/Instagram deal was done very quickly. Now there is nothing wrong with that. Deals can be done quickly. The details of how it was done are the problem.

Apparently the deal was done without any lawyers. Or financial experts. Or even the board beyond Zuckerberg.

This presents an interesting problem – Normally Wall Street types like to see certain things taking place to vet such a deal. Lawyers and accountants are normally brought in to look at the financials of the potential acquisition to verify there isn’t a problem such as an imminent bankruptcy or cooked books. Not saying that is an issue here but that is what normally done.

Going back to Facebook’s upcoming IPO : this could scare off investors who want all the ‘i’s dotted and ‘t’s crossed. The normal procedures are in place to protect the investors and their money. Any company that doesn’t follow them runs the risk of buying not only something worthless, but something that can drag down an otherwise sound company.


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