Calling it quits

 Calling it quits

In business, just as in life, walking away from something can be hard. You open yourself up to criticism from all sides and have to face internal questions about time wasted and progress lost.

In recent weeks we’ve seen a couple of examples of companies that have decided to call it quits. First, Vodafone and Virgin Media’s owners Liberty Global decided to end talks over a potential asset swap. Then Microsoft and Google announced that they had agreed to end all their patent legal disputes. Both decisions provide an insight into the strategic approach of the businesses involved and the state of the business.

The pressure on Vodafone will now intensify as it once again becomes the only major UK operator not in the merger and acquisition process. However, it was questionable whether a deal with Liberty Global was ever the best option. Asset swaps are also notoriously hard to agree because valuations over different units are so varying and complex. So, while it might seem like a waste of time now, in the future it may prove a very wise choice.

Looking quite cynically at the sudden outbreak of peace between courtroom adversaries Google and Microsoft, timing seems to be a very obvious factor. Most patents last for seven years, and with the Google and Microsoft battle now clocking up five years, it certainly makes sense for both companies to call off the lawyers from intellectual property that only has value for another two years.

Google’s step back from the mobile handset market has no doubt also been a factor. Either way, the courtroom shenanigans between these two players have now come to a close.

With so many big deals in motion, there may well be a few more big decisions made to walk away. It’s only with the benefit of time and hindsight that we are able to judge whether the choice was the right one or not.    


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