The best answer to Yahoo’s woes may not involve a sale of the company.
Yahoo is currently valued at about $20 billion by the public market.
To make a bid for the company with an attractive takeout premium, therefore, would require a bidder to come up with about $25-$30 billion.
That’s real money, even these days.
Yes, the buyer could eventually sell off Yahoo’s Asian assets–or Yahoo’s core business–and therefore quickly get some of that money back.
But still… It’s real money. And it would be a complicated transaction.
And there’s actually a far simpler solution that has emerged in recent days.
It has been reported that Silicon Valley VC firm Andreessen Horowitz has been looking at the Yahoo opportunity. For the reasons we outlined here, we think getting Andreessen Horowitz involved would be a great outcome for the company. (These reasons boil down to the firm having the technical, operational, product, and domain expertise that the company desperately needs.)
So here’s the answer:
- Andreessen Horowitz meets with major Yahoo shareholders and Yahoo’s board and presents a plan to fix the company
- Andreessen Horowitz and Silver Lake Partners (another Silicon Valley firm) buy a total of 10% of Yahoo’s outstanding stock for ~$2 billion, thus putting skin in the game
- Andreessen Horowitz selects a new Yahoo CEO–either one of its partners (probably Jeff Jordan or Ben Horowitz–we doubt Marc Andreessen would want the job) or an outsider. The board then appoints this person CEO.
- The new CEO begins to turn around the company’s core business. (It’s not rocket-science)
- The new CEO decides whether or not to divest the company’s Asian assets (or divest the core business–or neither).
- Over the next couple of years, the company’s feckless board is reconstituted.
There–that’s it! Simple and quick. No private-equity chop-shop and fire sale. No short-term dressing up of the company for a sale. No loading up the company with billions of dollars of debt. No rushed spin-off of the Asian assets. No more lost time. And the opportunity to revitalize one of the world’s leading Internet brands.
As of this moment, this looks like the best scenario for Yahoo’s shareholders and employees and customers.
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