Am a voracious consumer of business news… find that I learn all kinds of things from following how other businesses operate, make deals, etc.
So I was appalled to discover, over the last couple of days, how Yahoo (mis-)handled disclosing being hacking while conducting its sale auction.
To catch you up:
- In 2014, hackers apparently compromised approximately 50% of Yahoo’s email passwords
- Yahoo claims not to have discovered the breach until this past summer
- Yahoo did not disclose the hacking to Verizon before striking a deal for Verizon to acquire Yahoo for $5B
- A very large portion of the value of Yahoo to Verizon is the “sticky” audience created /maintained by Yahoo’s email system (people hate changing email addresses)
- Some large number of Yahoo email users are likely to switch as a result of the hacking and mishandling of disclosure
In our business, when we sell an asset, we are 100% transparent with buyers. Why?
First, and most importantly, it’s the right thing to do. You don’t mislead someone about the flaws of what you’re selling. It’s just dishonest, shitty behavior.
Second, reputation is everything in our business. We want people to feel comfortable making deals with us. If we get a reputation for misbehavior, they won’t, and our business will suffer. We’re greedy, but we’re long-term greedy.
Third, it’s downright stupid to hide things from a buyer, because it leaves you vulnerable to lawsuits for fraud after the fact.
For all of these reasons, I can’t believe Yahoo behaved the way it (apparently) did. Everyone involved, from the board to the CEO to the investment bankers involved in the deal ought to be ashamed of themselves.