NEW YORK, Oct 4 — Zoom Video Communications Inc’s aborted US$14.7 billion acquisition of call centre software firm Five9 Inc has spotlighted issues that will weigh on the virtual meeting giant’s next attempt to expand through dealmaking, analysts and investment bankers said.
“Zoom has to figure out how to keep some of the customers that signed up as individual subscribers that may not need Zoom when they return to more physical lives,” said Alex Zukin, an analyst at Wolfe Research.Another hurdle that could give the next company that will attract Zoom’s acquisition interest pause is its ties to China.
“The US government is likely to give increased scrutiny to transactions involving companies with engineering talent or other operations in China,” said Sujit Raman, a former US Associate Deputy Attorney General who is now partner at law firm Sidley Austin LLP specialising in government investigations.
Examples of companies that attracted the wrath of investors after botching an acquisition attempt abound. Hedge fund TCI Fund Management, one of the biggest investors in Canadian National Railway Co, is calling on the railroad’s CEO to resign following its failed US$29 billion acquisition bid for Kansas City Southern.
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