Conspiracy Theory: Every massively overvalued acquisition of technology companies is a tax shelter play. Follow the money and you’ll find the same players on both sides of the deal.

I would like for you to explain what you mean further, as your theory sounds interesting. Often times when we do see a large acquisition, most of the money is in stock of the acquiring company, which a shareholder will not be able to sell all at once. So, for instance Facebook purchased Instagram for $1 billion in cash and mostly stock.

Because Facebook’s stock tanked after it went public, the final purchase price ended up being something like $750 million instead of a billion. Of course, they could hold onto that stock and wait for it to go up, which Facebook’s stock did, but that’s not always guaranteed to happen.

I mean just look at companies like Zynga or Groupon, who are now worth tiny fractions of their price on their respective first days of trading.

My theory is simpler. C-level execs and Boards of large tech companies are often filled by the very people that VC’s made rich. So they have the obligation to “reward” their benefactors either by buying successful startups at outrageous valuations, or by “acqui-hiring” obviously failed startups that are worth zero at multi-million dollar valuations.

This absolutely happened with the Instragram acquisition. Many of the same investors on both sides. The week before the acquisition was announced, Instagram had just raised a round from these same investors at half the valuation.

I think with the impending IPO, they saw it as a way to make good on both sides of the deal, while Joe Public financed it.

This is essentially an intricate system of bid rigging.

The investment banks scammed municipalities more than a billion dollars through bid rigging the muni derivative market. Through collusion, their pie expanded, but it did so at the cost of the obligors.

The VC’s are colluding to inflate the valuations of technology companies. These inflated valuations then carry over to IPO valuations, realizing huge pay days at IPO. Eventually the valuations come back to earth as analysts finally scrutinize their business, but by then the investors are left holding the bag.

The Giving Pledge

Can someone explain this to someone not as smart with the terminologies?

Anonymous says:

March 5, 2014 at 6:22 pm

Pump and Dump

Reply

This is also true for smaller companies! When you look at the investors in our company (and at the background of our “sales” team), you’d see companies that are apparent competitors. Follow the money back, and you’ll see that they’re all more or less owned by the same capital management firm.

I heard this is exactly what happened when facebook bought Whatsapp. Essentially they have the same investors (I believe Sequoia to be one) and this was a way to get money out of facebook without crashing it’s stock price.

… [Trackback]

[…] Info to that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] Find More on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] There you will find 71344 more Info to that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-si…

… [Trackback]

[…] Read More to that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] Read More Info here to that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/…

… [Trackback]

[…] Information on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] Here you will find 76640 additional Info on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-bo…

… [Trackback]

[…] Read More Information here to that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-th…

… [Trackback]

[…] Read More on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] Find More here on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ [……

… [Trackback]

[…] Information to that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] Find More on on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/ […]

… [Trackback]

[…] Here you can find 62536 additional Information on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players…

… [Trackback]

[…] Read More Info here on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-the-deal/…

… [Trackback]

[…] Here you can find 72280 additional Information on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players…

… [Trackback]

[…] Find More Information here on that Topic: startupsanonymous.com/confession/conspiracy-theory-every-massively-overvalued-acquisition-of-technology-companies-is-a-tax-shelter-play-follow-the-money-and-youll-find-the-same-players-on-both-sides-of-th…