Private equity firms Blackstone Group and Bain Capital are reportedly teaming up with unnamed Asian partners to prepare a $25bn bid for Yahoo. Previous bid rumours have priced the company at a slightly lower $20bn. But are any of these valuations realistic for a company that is arguably ill-defined in the modern internet age?
To answer this question, you have to ask another: what does Yahoo do? It’s a search engine, and an advertising network, and a mail service, and it has various other areas of operation. But does it really dominate in any of these areas? It seems to me that Yahoo populates areas of the web that other companies have already marked out. Yahoo certainly has potential. But is potential worth $25bn?
So that leaves the brand. Most people have heard of Yahoo. But most people have also heard of bubonic plague. Is a brand name worth $25bn? Especially one that would possibly have to be rehabilitated in the eyes of the public, having been overtaken by the likes of Google and Facebook. I’d argue that for many people, Yahoo is a relic; I know that when I stumble upon Yahoo, my reaction is usually along the lines of ‘Oh, are they still going?’, and I don’t think I’m the only one.
What Yahoo lacks is a USP. There’s not one thing that is distinctively Yahoo about Yahoo. Even its advertising network is replicable by another company. For $25bn, you could buy Yahoo, or you could set up a new, streamlined company with a big launch and a new, energetic brand name. I guess if you need emotional crutches, you might opt to buy the established brand. But why not spend the money creating something new instead?