{"id":7468,"date":"2021-08-10T09:01:46","date_gmt":"2021-08-10T09:01:46","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=7468"},"modified":"2021-08-10T09:01:48","modified_gmt":"2021-08-10T09:01:48","slug":"a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/","title":{"rendered":"A Comprehensive Analysis on eBay Acquisition of Skype Deal"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Mergers and Acquisitions are also attractively because they can close effectively and swiftly without much interrupting current operations. But, there have been many cases where Mergers and Acquisitions deals did not work out, and the primary evil behind such failure is that the entities are unable to meet post-closing integrations; hence, not able to achieve and ascertain synergies, supportable growth and value creation, which generally motivates <strong><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\" class=\"text-primary\">Mergers and Acquisitions<\/a><\/strong>. In this article, we are going to know the failure of the eBay Acquisition of Skype deal.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2b162cd1ebd\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2b162cd1ebd\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/#What_is_the_Background_of_eBay_Acquisition_of_Skype_Deal\" title=\"What is the Background of eBay Acquisition of Skype Deal?\">What is the Background of eBay Acquisition of Skype Deal?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/#What_is_the_Primary_Aim_of_the_eBay_Acquisition_of_Skype_Deal\" title=\"What is the\nPrimary Aim of the eBay Acquisition of Skype Deal?\">What is the\nPrimary Aim of the eBay Acquisition of Skype Deal?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/#What_is_the_Result_of_this_Deal\" title=\"What is the\nResult of this Deal?\">What is the\nResult of this Deal?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/#What_are_the_Reasons_Behind_the_Failure_of_eBay_Acquisition_of_Skype_Deal\" title=\"What are the\nReasons Behind the Failure of eBay Acquisition of Skype Deal?\">What are the\nReasons Behind the Failure of eBay Acquisition of Skype Deal?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/#Vital_Points_that_are_required_to_be_considered_after_M_A_Integration_Successfully\" title=\"Vital Points\nthat are required to be considered after M&amp;A Integration Successfully\">Vital Points\nthat are required to be considered after M&amp;A Integration Successfully<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/a-comprehensive-analysis-on-ebay-acquisition-of-skype-deal\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Background_of_eBay_Acquisition_of_Skype_Deal\"><\/span>What is the Background of eBay Acquisition of Skype Deal?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>eBay was founded in 1998 in California, USA, and it is an e-commerce company with an aim to connects buyers and sellers around the globe via a digital platform. Skype Technologies is a company that enables an individual to make free phone calls and video calls via a <strong><em>VOIP (Voice Over Internet Protocol)<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Voice_over_IP\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup><strong><em>.<\/em><\/strong><\/p>\n\n\n\n<p>In\nthe year 2005, a digital e-commerce company eBay acquired Skype, A European\nBOIP provider, for 2.6 Billion US Dollars. This eBay Acquisition of Skype deal\nbecomes one of the crucial points at that time as the price on which Skype was\npurchased was tremendously high, given that Skype directs to produce 7 Million\nUS Dollars in revenue.<\/p>\n\n\n\n<p>The\nrationale behind the eBay Acquisition of Skype deal was to encourage the\nsynergies between the companies &amp; to put together the technology of both\nentities to increase and develop user growth engine assets &amp; eBay\nalliances.<\/p>\n\n\n\n<p>But,\neBay had been flourishing with dealing with PayPal in the past, as PayPal was\nacquired by eBay in the year 2002 for 1.5 Billion US Dollars which was another\nmost costly investment made by eBay. However, at the end of 2004, eBay\nsucceeded to mix PayPal into their business model. In the year 2005, with the\nsame idea in mind, as to increase its business operations through means of VOIP\nCommunication, eBay approached Skype to fulfil its vision &amp; get Skype in a\nhigh price auction.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Primary_Aim_of_the_eBay_Acquisition_of_Skype_Deal\"><\/span>What is the\nPrimary Aim of the eBay Acquisition of Skype Deal?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare the aims of the eBay Acquisition of Skype deal:<\/p>\n\n\n\n<ol><li>eBay intended to combine Skype\ninto its commerce world with the purpose of boost digital users experience as a\nfast way of communication;<\/li><li>eBay saw Skype as a means to\nraise the numbers of members into eBay&#8217;s business framework as Skype has 10\nmillions active users;<\/li><li>Skype was bought for eBay\u2019s\nusers as this would aid in creating more client loyalty and would raise the\nvelocity of the trade among its users;<\/li><li>As Skype appeared as a\nwell-liked means of communication via VOIP, eBay saw this technology as it can\nattract many new members into their area, and such means can act as a robust\nway of communication between its members for selling &amp; buying.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Result_of_this_Deal\"><\/span>What is the\nResult of this Deal?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>EBay&#8217;s\nusers declined the technology of Skype as a way of communication &amp;\nconsidered as needless for communication between their users. eBay was not able\nto combine Skype into its business framework. After getting the Skype, eBay\ndoesn\u2019t design a plan to use the Skype, as there was no information with the users\non how to utilise the Skype, except for the option to contact via Skype and the\nSkype users have no information that eBay and Skype were associated. <\/p>\n\n\n\n<p>Moreover,\nafter two years of eBay Acquisition of Skype Deal in 2007, due to the failure of\nthis deal, eBay bring out an option to write down the value of Skype by 1.4\nBillion US Dollars. But, Skype continues to act alone as its revenue increase\nto 170 Million US Dollars with a growth of 25% and added more than 37 million\nusers in their VIOP, reaching 480.5 million registered users.<\/p>\n\n\n\n<p>In\nthe year 2009, eBay gets up intending to divest Skype because of the lack of\nsynergies between Skype &amp; eBay and to concentrate on its core business. A\nmeanwhile the Skype was also facing different challenges &amp; Intellectual Property\nLitigation. eBay was able to sell most of the stake in Skype to an investor\ngroup for transaction value totalling 2.75 Billion US Dollars, and eBay\nmaintains a significant minority stake in Skype.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Reasons_Behind_the_Failure_of_eBay_Acquisition_of_Skype_Deal\"><\/span>What are the\nReasons Behind the Failure of eBay Acquisition of Skype Deal?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Mergers\nand Acquisitions are always considered an inorganic plan that creates synergies\nbetween the entities intended to accomplish growth that is much more rapid than\norganic growth. But, it will also invite some significant amount of risk, and\nit can lead to the failure of such types of deals and destroying the value of\nshareholders. Similarly, the eBay Acquisition of Skype Deal failed because eBay\nwas not able to combine Skype into their business. eBay has overstated the\nsynergies, and the price of purchase for Skype was enormously high, including\nits revenue only amounts to 7 million US Dollars. <\/p>\n\n\n\n<p>Following\nare the main reason behind the failure of eBay Acquisition of Skype Deal:<\/p>\n\n\n\n<ul><li>Poor Integration;<\/li><li>Absence of a Strategic Plan;<\/li><li>Inadequate Due Diligence;<\/li><li>Overpaying;<\/li><li>Misinterpretation of Target\nCompany;<\/li><li>External Factors;<\/li><li>Cultural Dissimilarities;<\/li><li>Overestimating Synergies;<\/li><li>Deficiency of Management.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Vital_Points_that_are_required_to_be_considered_after_M_A_Integration_Successfully\"><\/span>Vital Points\nthat are required to be considered after M&amp;A Integration Successfully<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following\nare some vital points that are required to be considered after M&amp;A\nIntegration successfully:<\/p>\n\n\n\n<ul><li>Value Construction:<ol><li>Cost &amp; revenue goals;<\/li><li>Recognition of cost &amp; revenue synergies;<\/li><li>Customer Transition Plan.<\/li><\/ol><\/li><li>Resolving the power and individual issues rapidly and appointing the Post-Acquisition Integration Team.<\/li><li>Setting up Communication Strategy.<\/li><li>Developing a complete integration plan.<\/li><li>Fulfilling compliance, antitrust issues, and regulatory.<\/li><li>Sewing the actions in such a manner is in the line-up with the deal&#8217;s nature.<\/li><li>Committing to Cultural Alignment.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nprimary objective of the Mergers and Acquisitions deal is to control the\nsynergies created through the combination of two entities. But, sometimes\nMergers and Acquisitions\u2019 could break or make a company because of the risk\nlinks with such inorganic growth. Hence, if an entity did not integrate both\nentities, the M&amp;A will fail. eBay had invested in Skype to leverage the\ntechnology use of Skype for increasing their commerce business, but eBay was\nnot able to combine both businesses, which outcomes in an enormous write-down\nof the Skype value.<\/p>\n\n\n\n<p>Hence, it is vital to bring out the integration plan and to make a strategy that can alleviate the risk connected with the Mergers and Acquisitions deals. So, different factors should be considered while going into a deal &amp; growing a productive plan to combine the business.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/vodafone-india-and-idea-merger\/\">All You Need to Know About the Vodafone India and Idea Merger<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mergers and Acquisitions are also attractively because they can close effectively and swiftly without much interrupting current operations. But, there have been many cases where Mergers and Acquisitions deals did not work out, and the primary evil behind such failure is that the entities are unable to meet post-closing integrations; hence, not able to achieve [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":7469,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[68],"tags":[801],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7468"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=7468"}],"version-history":[{"count":7,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7468\/revisions"}],"predecessor-version":[{"id":7477,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7468\/revisions\/7477"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/7469"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=7468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=7468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=7468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}