Public Offering of shares in Yahoo!

by yudaica2013 ·

By 1996 Yahoo! enters what will be recognized by its founders, one of the most critical instances in the history of the company. This was the possibility of actions for the first time in the public market, known as NASDAQ, so as to achieve three main goals that encourage the consolidation of Yahoo! as a company generating its own resources, outside of a model of net new territory in the exploration of the Internet.
In the first instance, the business of search engines, which had been involved Excite, Lycos and Infoseek, began to clear symptoms of a conversion in this direction, so the date to discuss the release public (IPO: Initial Public Offering), was already known from these experiences and background have confirmed that the listing of these companies had made them gain recognition “among users and investors, and finally this promotion and consolidation economic ventures as’ real ‘them allowed users to increase traffic and make important strategic alliances.
By stemming the entry of the sector in a new stage of increased competition, needed capital to fund strategic areas to ensure differential advantages: better search engines, new products that would generate revenue beyond advertising and sufficient capital to enhancing marketing activities to build brand value to facilitate the identification of sailors with a particular search engine (so to attract and keep users).
A second goal at this time of the decision was made to be sufficient liquidity to make a qualitative leap in relations with a strategic partner that had already proven to be critical in directing the flow of Internet users: Netscape. In this regard, and in 1995 had made an alliance with Netscape (who held the undisputed leading application network access) so that the button ‘Internet Directory’ is redirected to the page of Yahoo !.
However, as the negotiations seeking to place Yahoo! as the default home page in Netscape, the address of the company acknowledged the lack of sufficient capital to close this deal.
Finally, given that until this year, Yahoo! was not a business that generates profits, saw the need to organize a new business model to ensure the long-term sustainability and to generate barriers to entry to other technology companies and consolidated (Microsoft, among others) that it would soon to enter as competitors. This will need to recruit new highly qualified executives, and funds from the IPO should be sufficient in this regard.
But while recognizing the benefits that would bring the opening of the company also anticipated the need to bolster the image of Yahoo! Prior to the IPO in order to achieve a more attractive draw for investors and improve the initial placement of securities.
Under this premise, two previous rounds of private financing (implemented as direct sale of shares to other companies) to compromise and alter the corporate structure of the Yahoo!.
Under these conditions, in a first round of capitalization in November 1995, Sequoia Capital, one of the oldest and most consortia in Silicon Valley (which had funded companies like Oracle, Cisco and Apple) provides a concerto by U S 1 million that opened the way to gain a shareholding of 25 .
Of the remaining shares representing a 5 was acquired by SoftBank Japanese investment in non-controlling character, while 2.5 of Yahoo! was bought by Reuters, who had been closed alliances year earlier in October to provide Yahoo! content in exchange for using the portal as a platform for entry to the Internet news agency.
The remaining shares (5 of Yahoo!) Were purchased by other organizations, leading to an open packet of controlling 63 stake held by internal Yahoo! and the inclusion of Sequoia Capital as major player in the future decisions of the company. In late 1995, the capital of Yahoo! U S was 40 million.
After a preliminary selection of potential sources of financing for the second round of capitalization in January 1996, the Sofbank Japan emerged as one of the players involved and more solid.
The partnership with Softbank, headed by Masayoshi Son visionary, Bill Gates as the Japanese, would give Yahoo! not only sufficient funds to support an attractive price and convenient in the IPO, but also give the company a vast network of contacts and alliances in the East, which would allow Yahoo! consolidated as the main portal asiatico.
However, the proposed They turned out to be aggressive, as for participating in the company to pre-agreed the sale of a 30 stake in Yahoo!, Which although not achieve full control of it, if positions it as a partner to consult necessarily to drive the business of the firm (in the negotiations and how to maintain control of Yahoo! by their founders and Sequoia, it was decided that Yang , Filo as Moritz ‘manager-Sequoia involve controlling part of its capital stock in the IPO to be each with a 17 share of Quadrant Asset Management the estate).

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