The merger between Facebook and Instagram drastically reshaped the social media landscape and redefined how we use social media platforms. In this article, we’ll explore three valuable M&A lessons that startups can learn from Facebook’s acquisition of the startup Instagram.
Lesson 1: Identify Which Company Complements Your Startup
Instagram’s success story is truly extraordinary. Instagram not only gained millions of users within a short span of time, but its emphasis on visual content and user engagement perfectly aligned with Facebook’s existing services. Both companies’ services are congruent which created a synergistic relationship that made Zuckerberg heavily interested in the acquisition.
Lesson 2: Set Aside Differences and Integrate Strengths
The challenges of integrating two distinct companies, particularly in terms of culture, operations, and internal structures, cannot be underestimated. According to a Financial Times Article, Facebook leaned towards “hard data” i.e. giving users what they want based on data, meanwhile, Instagram’s focus was on “good vibes” and finding ways for their users to be creative with their photos.
Despite these differences, both companies managed to set aside their different philosophies and found ways to complement each other’s strengths. Facebook offered a robust infrastructure that enabled Instagram to scale exponentially. The two companies recognized the importance of integrating their strengths to forge synergies.
Lesson 3: The Power of Synergy
Instagram’s user base skyrocketed from 30 million users in April 2012 (according to a case study on Facebook’s acquisition of Instagram) to an impressive 1 billion monthly active users by June 2018 (according to a 2023 article on Instagram Revenue and Usage Statistics). One of the drivers behind this was Facebook’s acquisition of Instagram, illustrating the potential for amplified growth through combined resources. The merger resulted in an expanded user base, enhanced engagement, and enhanced the overall user experience. Both companies achieved results beyond what they could have accomplished individually, underscoring the impact of synergy.
The Facebook-Instagram merger provides us with three M&A lessons that can guide startups in navigating M&A transactions: identifying which company complements your startup; setting aside differences and integrating strengths; and the power of synergy.
Feel free to contact TKA Law Firm at 844-2-TKALAWFIRM (844-285-2529) or team@tkalawfirm.com to discuss how we can assist with the M&A process.
This information is presented for general informational purposes only, is not for the purpose of providing legal advice, and is not intended to represent a full or complete list of all possible issues. This information should not be construed as legal advice and does not create an attorney-client relationship. You should seek the advice of an attorney regarding your particular situation.