PayPal, for readers who don’t know, is an e-commerce business which allows customers to make secure payments through the Internet. PayPal is well known for processing payments to online vendors, particularly its partner company eBay. Readers may or may not have heard that PayPal recently announced that it would be ending its partnership with eBay. The plan is specifically for eBay to spin off PayPal into a separate publicly traded company. The change is expected to be complete by the second half of 2015.  

The strategy behind the separation is that, as a separate entity, PayPal is more likely to attract potential customers from Amazon.com, one of eBay’s major competitors, as well as Apple Pay, a new mobile pay competitor. Mobile payment, in particular, is a growing industry and PayPal hopes to find itself in a better position to compete as a separate entity. 

There has been some speculation that PayPal could be a possible target for acquisition, particularly by Google or Visa. For Google, acquiring the company could be a strategy to help enhance its Wallet and Checkout offerings. Whatever takes place, PayPal is set to expand its opportunities by separating from eBay. We’ll have to wait to see what the future holds.

For companies like PayPal, acquisition by another company may or may not be a good business strategy. It depends on the company’s goals, as well as the way the acquisition is structured. It is important for businesses entering into these transactions to make sure everything is done correctly and in accord with their interests. For this reason, it is critical to work with an experienced attorney before going entering into such an agreement.

Source: Kentucky.com, “Could a merger follow the PayPal-eBay split?,” Mae Anderson, October 1, 2014.