![]() That is far higher than a typical private equity return.ĮBay, which owns a minority stake in Skype, said that it made a total return of $1.4 billion on its original investment.ĭurban said that Skype fit at the “intersection of three very powerful macro trends” - social, video and mobile communications. The internal rate of return for the Skype deal - a key measure for private equity investors - was 70 percent to 80 percent, the first source who spoke to Reuters said. Such returns can reap substantial rewards for private equity executives running the funds - which typically take 20 percent of the profit. Private equity firms can make high returns on investments if timed and executed right. But I also believe Microsoft has a real shot at making this business worth three to four times more than even they’ve paid for it.” “We made the biggest investment in our firm’s history and had the courage to invest. “It took a lot of conviction to invest in the summer of 2009,” said Egon Durban, managing director of Silver Lake. EBay retained about a third of the company. The Silver Lake-led investor group bought a majority stake in Skype from eBay in 2009 - during the credit crisis - for $1.9 billion in cash and a $125 million note. Microsoft said it decided to appeal directly to Skype’s ownership base with Silver Lake taking the lead. They will also be exclusive to the devices. Content will be hidden from chat list notifications. It decided against hiring investment bankers to help them with the deal. Skype Private Conversations offer end-to-end encryption for calls, messages, and file delivery. The world’s largest software maker has been beset by a string of setbacks including the failed acquisition of Yahoo Inc and a halting start in the mobile phone arena now dominated by Google Inc and Apple Inc. “They had time to digest the price, they had time to understand the parameters of the contract and then ultimately figure out the final pieces.”įor Microsoft, the stakes were high. “It’s not like the deal came together in five days, it came together over the course of the last few weeks,” said one source familiar with the deal. Microsoft decided to make an unsolicited offer with the final price by April 18, it said. That could explain the six weeks it took for Microsoft and Skype to reach a deal. ![]() One concern Skype and its owners may have had was whether they were missing out on getting substantially more, giving escalating valuations put on companies such as Facebook and Groupon.
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