Skip to navigationSkip to content
WALKING THE PLANK

Yahoo found the perfect small business to offload on its Alibaba spin-off

AP Photo/Michel Euler
Looking for something about this big.
By Adam Pasick
Published Last updated This article is more than 2 years old.

One can only imagine the brainstorm session that resulted in its decision to spin off Yahoo Small Business along with the company’s minority stake in Alibaba: “Guys, we need to find an inconsequential yet functioning small business for tax reasons: Any ideas?”

Yahoo had already announced that it would include a “legacy, ancillary” unit in its Alibaba spin-off, provisionally named “SpinCo.” In order to reap the tax savings that were the entire reason for spin-off deal, SpinCo had to include an “active trade business,” not just $40 billion worth of Alibaba shares, and in the words of the Wall Street Journal, Yahoo Small Business drew the short straw (paywall).

The unit, which helps small businesses set up their websites, has about 100 employees and brings in roughly $50 million in annual earnings before interest, taxes, depreciation, and amortization. The unit’s boss, Amer Akhtar, said the move will provide an opportunity “to invest even more in our platform and chart our own course.”

Choosing to make Yahoo Small Business part of SpinCo, although it seems a bit arbitrary, could actually make sense if the company ever ends up being purchased by Alibaba (though executives at the Chinese e-commerce firm are denying any interest in doing so). Alibaba inked a deal yesterday with peer-to-peer finance firm Lending Club to set up financing for US small businesses, and has a huge roster of small business clients in China.

📬 Kick off each morning with coffee and the Daily Brief (BYO coffee).

By providing your email, you agree to the Quartz Privacy Policy.