Facebook Tells Of Goldman Sachs Deal

January 24th, 2011 at 11:07 am

It has recently been one of the most talked about news concerning the current social network leader Facebook. The news involved investment bank Goldman Sachs holding a private investment offering meant to raise funds for the widely popular social network. But things were previously being mired in secrecy as Facebook hasn’t aired its side on the issue. But the planned transaction suddenly gathered such media attention once Goldman Sach’s intention to invest in Facebook.

But Facebook has already sent out a press release recently to report that it has received US$1 billion from Goldman Sachs along with an additional US$500 million in direct investment with Facebook in Class A common stock at the value of US$50 billion by Goldman Sachs along with Digital Sky Technologies. But not everyone seems to be happy with the new transaction.

With Facebook being a very popular social network with over 600 million subscribers, it will truly become quite a catch to own shares invested in the company. But the problem is that Facebook is a privately held company. The only way for people to get shares of the company is if Facebook holds an IPO. The transaction with Goldman Sachs is considered as a private offering eyed for the rich private investors willing to stake a share with Facebook. Of course, considering the explosive popularity of Facebook, people would certainly want to have a share in such a highly regarded company being valued at US$50 billion currently. With shares only available to a selected few and with the demand for the shares very high, there is bound to be quite a few envious people.

But the problem does not just end there. It seems that Goldman Sachs is only offering this opportunity to investors outside of the US. With the investment bank fearing inquiries from the SEC, it has offered the opportunity to investors outside the US. This may have gotten the ire of the bigger US investors most especially.

Unlike other tech companies before them, Facebook is not too keen on putting up the company up for an IPO. Going public may put Facebook under closer scrutiny from government regulators in the US, something that it may be trying to avoid. The question remains whether the company is worth its current value as estimated by Goldman Sachs. This is something that may prove tricky since that value may just be based on perspective and not really on some concrete basis. But it is something that the business world in general works on. Depending on how one looks at it, investing in Facebook can either mean a big opportunity or a big risk.


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