In writing this article I am assuming that most or all of you that are reading this have a Facebook page. Most likely you’re shaking your head yes, since there are over 900 million people that use Facebook and log in at least once a month. Facebook is the world’s most definitive social network and is a Delaware Corporation.
TheFacebook, Inc. was incorporated here in Delaware on July 29, 2004 with 10,000,000 authorized shares of stock @ 0.0001 par value. It was founded by Mark Zuckerberg in his messy Harvard University dorm room. The site was created to help Harvard University students and later other college students connect with one another online.
When I was first introduced to Facebook I honestly did not care for it nor did I think it was a company that was going to survive. However, I was completely wrong and last year alone their revenue was $3.7 Billion and in the first quarter of 2012 it was more than $1 Billion. In a USA Today article it said, “At 28, Zuckerberg is exactly half the age of the average S&P 500 CEO, according to executive search firm Spencer Stuart.”
Zuckerberg is a very smart entrepreneur and over the years as his site grew rapidly and caught the eye of big media and rival internet companies, he has consistently rebuffed mouth-watering buyout offers, including those from Google Inc. and Yahoo! Inc. also both Delaware Corporations.
Simply put: we don’t build services to make money; we make money to build better services, “Zuckerberg wrote in his letter to prospective shareholders. “And we think this a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”
Facebook, Inc. as it is now known since it filed a Name Amendment in September 2005 has filed 11 Stock Amendments since being incorporated in Delaware. What is interesting about this is as you probably know Facebook is making its IPO (Initial Public Offering) on May 18th and is expected to be valued at nearly $100 billion, making it worth more than Disney, Ford and Kraft Foods also all Delaware Corporations.
Now, you are probably wondering since they are selling stock, doesn’t that mean Zuckerberg is giving up his position as the majority Shareholder in the company. Actually, Facebook did one of the smartest things I have seen and in fact I did not know you could do this, but they have two classes of Common Stock, both class A and B have 4, 141,000,000 authorized shares of stock at a .000006 par value.
Along with Common Stock, they have 569,001,400 authorized Preferred Shares of stock at a .000006 par value. So even though Zuckerberg is offering 30.2 million shares he still is going to be the majority stockholder in the company. The USA Today reported that Facebook is expecting to sell their stock between $34 and $38 per share. If you have a Delaware Corporation you know that you can sell your shares for whatever the market will bear.
While Facebook’s public offering is going be the largest and perhaps the most highly anticipated internet deal in history. Many people believe Facebook is staring down some potentially unnerving obstacles when it comes to key areas of monetization and growth: public distrust and display advertising apathy. We shall see how it all plays out.
Here are some great articles on Facebook leading up to its IPO date:
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.