Will point to the mature enterprise Zynga change the takeover strategy

Foreign media said as a result of the battle between Paula and other startups, and in order to adapt to the wave of industry development and acquire a well-established team, Zynga has improved its acquisition strategy, and has dug up many executives from EA to help with its own takeover battle, even CEO Mark Ping Cass (Mark Pincus) Are personally battle, and are complemented by a hefty takeover offer.

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Active acquisition

Zynga will take a very aggressive takeover plan, and its head of mergers and acquisitions, Barry Cauter Barry Cottle, plans to step up acquisitions and spend hundreds of millions of of dollars looking for a sensational new game comparable to the FarmVille and CityVille.

The world's largest social-gaming company spent $180 million on Omgpop last month, and in 2010 and 2011, it bought 22 companies for only $147.2 million. CEO Mark Ping Cass in media interviews predicted that the next 35 years will also launch a number of omgpop size, or even larger transactions.

"We want to find good and successful teams, and we want them to have a common mission and vision," says Ping-Cass, "and we will fight for it if we find opportunities to dramatically speed up the development of Zynga's social games." ”

In the first year after the IPO, Zynga has begun to expand its mergers and acquisitions strategy to more areas, as well as new areas such as mobile gaming. Under the leadership of Cauter, a former EA executive, Zynga restructured its mergers and acquisitions team, then began to speed up the pace of trading, not only by daring to scramble for target companies at high prices, but by better retaining the talent that has been recruited through mergers and acquisitions. Their goal is to include more of the high-growth games such as "You Draw my guess" (Draw something) into Zynga's territory. The game was acquired through Omgpop acquisitions.

"We have a very good position," Cauter said in an interview. "We have a lot of cash and no debt." But if necessary, we are fully capable of borrowing heavily. ”

Zynga has 1.81 billion of dollars in cash and short-term investments.

Bigger goal

Nabel Haite (Nabeel Hyatt) sold his conduit labs to Zynga in 2010 and later joined Spark Capital as a venture capitalist. He believes that the pursuit of mature companies with ready-made users and incomes marks a shift in the Zynga takeover model, which has previously been more willing to buy smaller, less-high-profile teams.

"Cauter's goal is not only to acquire a team, but also to include products with market impact." "This is a new effort by Zynga and requires different skills," says the Hatter. We will wait and see for their performance. ”

Prior to this, Zynga failed to retain many of the top talent acquired through acquisitions. At least 6 start-up companies have left Zynga, including the one who quit earlier this year. After his company was acquired by Zynga in 2008, Roger Dicky (Roger Dickey) made the company a popular game like "Mafia wars", but he quit last year.

"Zynga's culture is not for everyone," says Hatter, "and you have a lot of responsibility in that culture." ”

But he said most of the founders were still in Zynga, including deals that were not publicly disclosed.

Zynga dug up Cauter from EA last year with a 25 million dollar salary portfolio, and he has extensive experience in the digital gaming industry. For the past 5 years, he has helped EA become the leader in mobile gaming, and has made it the second largest social gaming company through a 2009 acquisition of $400 million playfish.

Cauter's job-hopping is the latest portrayal of the conflicting escalation of the two games developers. Zynga has dug up several executives from EA, including John Chapeute, COO's boss, John Schappert. EA has invested heavily in social games such as Sims, and last year beat Zynga to buy a 1.3 billion-dollar "plant vs. Zombie" developer.

Improve the process

Both Zynga and EA have free social games on Facebook, and then rely on virtual goods in the game to generate revenue, such as the guns in the Mafia wars or the tractors in "FarmVille." Zynga, which earns 90% of its revenue from Facebook, now wants to step away from its reliance on Facebook to develop games for google++ and mobile devices.

Since joining Zynga, Courtney has improved the trading process. Only a handful of business development managers had shared a table containing more than 400 goals. Now, the company will allow human resources executives to meet with potential acquisitions, let technicians identify potential technical hurdles, and arrange for Cass to convince the founders of the startups that Zynga is an entrepreneur-friendly company.

"We are proud to be able to develop so quickly," Cauter said, "not because of our thoughtfulness, but because we have a rigorous set of rules for mergers and acquisitions." ”

But Zynga's meticulous and thoughtful last month was a reflection. At that time, Omgpop CEO Dan Potter (Dan Porter) hosted Zynga's merger director Gouroux Gulapan (Guru gowrappan) in New York to remove the friction from the merger process. Gulapan's nickname is "the Wrecker", and he helped Porter find answers to many questions, from Cobra Health insurance to the Android phone used to test software. "He knows all of Zynga's divisions and has arranged everything for us." Potter said.

Zynga says it will try to retain a tradition that is significant to both individuals and teams after acquiring start-ups. For example, the Newtoy, which was acquired by Zynga in 2010, has so far retained a policy of not meeting in Wednesday, and conduit Labs is still able to enjoy the weekly stand-up comedy show.

"We have talked to a lot of people to listen and understand their devotion to the organization," Cauter said. "It's important to not change these secret weapons after being bought by Zynga." ”

Stock Rewards

To retain entrepreneurs, Zynga will also offer a two-year or longer-span stock reward. Unlike many Silicon Valley acquirers, the company usually does not set the terms of the deal around performance, the so-called "profitability payment plan". This plan usually provides additional cash and stock to the acquired product after it reaches a certain user, revenue, or other business target.

"I don't like the payoff plan," says Zynga's chief personnel officer, Colin McGrelly Colleen McCreary, "which encourages individualism." It is a better way to spread equity awards over a few years and slowly pay. "This can encourage entrepreneurs to work in concert with other parts of the company."

McGrelly revealed that Zynga has a total of 2,846 employees, of whom about 17% are acquired through acquisitions, a share that has largely not changed in the past three years.

Secret weapon

As Zynga expands its goals, it is increasingly competitive. People familiar with the matter said that in order to acquire Omgpop, it has defeated EA, Disney, Gree and Dena's takeover offer.

Omgpop's acquisition was completed in just two weeks, and in order to achieve this, he used his secret weapon: Ping Cass. The Zynga founder and CEO met Porter in San Francisco and persuaded him that Zynga would allow it to freely develop the games they liked.

"I feel that if I have to choose from one of these companies, I will choose Zynga." Potter said.

Zynga's ability to respond quickly, partly thanks to a unique equity structure, has helped the Cass gain 36% of the vote and thus exert a greater influence on decision-making.

"We can avoid the tedious steps that other listed companies are going through," says Ping-Cass, "so we can move quickly." ”

EA, Disney, Gree and Dena declined to comment.

Price issues

Because Zynga is willing to spend money, it is also a big reason to persuade Omgpop. Although the "you draw I guess" application can earn 250,000 dollars a day, according to people familiar with the matter, analysts believe that its future revenue potential is hard to support the acquisition price.

"I have a problem with the price they pay," Avender Bahatiya, a Sterne Agee & Leach analyst at the US investment bank, said, "If you spend 200 million of dollars each time you hit a leading developer, how long will it last?" ”

According to people familiar with the matter, Zynga's new acquisition model was launched after the bid for PO and at least three other companies. In 2010, after negotiations with Zynga broke up, the developer of the Rolando game was ngmoco by Japan's Dena and, more recently, Zynga tried to buy game Closure, a HTML5 start-up, but also drubbing.

Next target

People close to the situation said Zynga had offered more than 2 billion dollars to buy Rovio, a developer of the Angry Bird (Weibo). But a Rovio spokesman declined to comment.

Michael Pachter, an analyst at US brokerage Wedbush Nomura, said Zynga's next target could be mobile game developers because Apple iOS and Google (Weibo) Android mobile apps are increasingly capturing more gamers ' attention and user spending.

"They are not competitive in the mobile sector, but they have to make up for it." This is the way many people surf the Internet. Pacht said he gave Zynga a outperform share rating for "outperform the market".

A Zynga spokeswoman declined to comment on the potential takeover target.

Pacht that ZeptoLab's mobile game, cut the Rope, has been among the best-selling list of iOS games, and is expected to become Zynga's takeover target.

But he says he has set a precedent for paying the highest price, no matter which company Cauter to buy. "There are a lot of developers who are desperately developing and hopefully Zynga will spend 200 million of dollars to buy them." "he said. (Ding Macro)