HomeAway Initially Oversold Its Performance To Expedia

As Expedia Inc. closes on its $3.9 billion acquisition of vacation-rental leader HomeAway today, it is worth noting that Expedia is buying a company that is likely to be considerably less profitable over the next few years than what Expedia was initially led to believe in talks with HomeAway officials. Specifically, an estimated $86 million less profitable in 2018, for example. In documents Expedia filed with the U.S. Securities and Exchange Commission December 11 and November 16, 2015, HomeAway revealed that its board of directors found fault with HomeAway management's draft financial forecasts for 2016 to 2018 that were given on October 5 to Expedia and two other unidentified companies that were participating in HomeAway's sales process. The board determined that HomeAway's October 5 draft financial projections, which the board reviewed but did not formally approve, underestimated the business-model risks that HomeAway and an acquirer would have to deal with as HomeAway tran