{"id":1881,"date":"2026-10-21T13:00:20","date_gmt":"2026-10-21T13:00:20","guid":{"rendered":"https:\/\/www.lawctopuslawschool.com\/blog\/?p=1881"},"modified":"2026-10-21T13:03:46","modified_gmt":"2026-10-21T13:03:46","slug":"buy-instead-of-build","status":"publish","type":"post","link":"https:\/\/www.lawctopuslawschool.com\/blog\/buy-instead-of-build\/","title":{"rendered":"Why Companies Buy Instead of Build"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Buy instead of build: this is a strategic choice companies face when they want to enter a market, acquire technology or grow faster. In 2012, Facebook paid approximately $1 billion for Instagram, an already popular photo-sharing app. Facebook could have continued developing its own photo features, but acquiring Instagram gave it access to an established product and its users.<\/em><sup data-fn=\"93bfde43-8c01-413b-bf9e-9d7a80ba184e\" class=\"fn\"><a id=\"93bfde43-8c01-413b-bf9e-9d7a80ba184e-link\" href=\"#93bfde43-8c01-413b-bf9e-9d7a80ba184e\">1<\/a><\/sup><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Building is a gamble. You spend years and a lot of money, launch, and then hope people show up. Buying eliminates the need for wishing because the users are already present.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>There&#8217;s also a less cute explanation. Instagram was rapidly expanding, and one tech publication described the acquisition as transforming a &#8220;budding rival&#8221; into an ally. If you invest in a startup that has the potential to beat you, it will be unable to do so. So the rivalry angle makes acquisitions more challenging than a simple shortcut, but it should not be viewed as a reason for every deal.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why Companies Buy Instead of Build: What Are They Paying For?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">It&#8217;s rarely just about the product. Usually, it&#8217;s a package.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Users<\/strong> who show up every day.<\/li>\n\n\n\n<li><strong>A team<\/strong> that has already created something that works.<\/li>\n\n\n\n<li><strong>Time<\/strong>, because a few-year head start is difficult to develop internally.<\/li>\n\n\n\n<li><strong>A method into a market<\/strong> that the buyer has not yet cracked.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large is-resized\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.lawctopuslawschool.com\/blog\/wp-content\/uploads\/2026\/10\/image-12-1024x576.png\" alt=\"\" class=\"wp-image-1883\" style=\"aspect-ratio:1.7778310174093594;width:564px;height:auto\" srcset=\"https:\/\/www.lawctopuslawschool.com\/blog\/wp-content\/uploads\/2026\/10\/image-12-1024x576.png 1024w, https:\/\/www.lawctopuslawschool.com\/blog\/wp-content\/uploads\/2026\/10\/image-12-300x169.png 300w, https:\/\/www.lawctopuslawschool.com\/blog\/wp-content\/uploads\/2026\/10\/image-12-768x432.png 768w, https:\/\/www.lawctopuslawschool.com\/blog\/wp-content\/uploads\/2026\/10\/image-12-1536x864.png 1536w, https:\/\/www.lawctopuslawschool.com\/blog\/wp-content\/uploads\/2026\/10\/image-12.png 1672w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><em>Source: Image generated by author using Perplexity AI<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You could try to cultivate all of that stuff yourself, but it&#8217;s slow and no one guarantees it will catch on. The actual question isn&#8217;t, &#8220;Can we build this?&#8221; The question is, &#8220;can we build it fast enough, and for less than it costs to buy?&#8221;<sup data-fn=\"2cb647b6-f884-4f56-87dd-e1526ba1eabe\" class=\"fn\"><a id=\"2cb647b6-f884-4f56-87dd-e1526ba1eabe-link\" href=\"#2cb647b6-f884-4f56-87dd-e1526ba1eabe\">2<\/a><\/sup><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Buying Instead of Building: The Bhushan Steel Takeover<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Sometimes, a company is for sale because it has problems. In India, that\u2019s under the <a href=\"https:\/\/ibclaw.in\/insolvency-and-bankruptcy-code-2016-ibc-bare-act\/\" target=\"_blank\" rel=\"noreferrer noopener\">Insolvency and Bankruptcy Code, 2016<\/a> <strong>(\u201cIBC\u201d)<\/strong>. If a company can\u2019t pay its debts, buyers can submit a \u201cresolution plan\u201d explaining how they would take over the business and deal with what it owes. The lenders vote on the plans and the winner has to be approved by the <strong><a href=\"https:\/\/nclt.gov.in\/\" target=\"_blank\" rel=\"noreferrer noopener\">National Company Law Tribunal<\/a> (\u201cNCLT\u201d).<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A good example is the takeover of Bhushan Steel by Tata Steel through submitting a resolution plan through the IBC mechanism. In May 2018, the NCLT approved Tata Steel\u2019s plan and a Tata Steel subsidiary ended up with 72.65% stake in the company.<sup data-fn=\"6e6a3429-c0d4-4475-b4ee-0d66f6bfd073\" class=\"fn\"><a id=\"6e6a3429-c0d4-4475-b4ee-0d66f6bfd073-link\" href=\"#6e6a3429-c0d4-4475-b4ee-0d66f6bfd073\">3<\/a><\/sup> To start a steel business that size from scratch would take years. If you buy an established one, you get plants, people and customers already in operation. The decision to buy instead of build can also apply to distressed businesses. Through an insolvency resolution process, an acquirer may obtain an operating business rather than build its infrastructure from scratch.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The legal side is also important. Once a resolution plan is approved under <a href=\"https:\/\/indiankanoon.org\/doc\/174084462\/\" target=\"_blank\" rel=\"noreferrer noopener\">Section 31 of the IBC<\/a>, it binds everyone, including creditors and government agencies who are owed money.<sup data-fn=\"302e6dd4-ff94-4365-9cb8-194d31c95a96\" class=\"fn\"><a id=\"302e6dd4-ff94-4365-9cb8-194d31c95a96-link\" href=\"#302e6dd4-ff94-4365-9cb8-194d31c95a96\">4<\/a><\/sup> Claims not provided for in the plan are extinguished under the \u201cclean slate\u201d theory discussed in <em>Ghanashyam Mishra v. Edelweiss<\/em><sup data-fn=\"f11bf554-a00a-45f8-a77c-000863f9c3a1\" class=\"fn\"><a id=\"f11bf554-a00a-45f8-a77c-000863f9c3a1-link\" href=\"#f11bf554-a00a-45f8-a77c-000863f9c3a1\">5<\/a><\/sup>. That\u2019s a big part of the appeal, giving the buyer a fresh start.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>When Buying Instead of Building Can Go Wrong<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">That&#8217;s not to say buying is always better than building. An acquisition takes a lot of money and requires a dedicated team to make it work post-deal. You can pay a tonne for a business and not make it work. However, buy instead of build is not always the better strategy. Acquisitions involve substantial costs, integration challenges and possible regulatory scrutiny.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">And regulators look closely at big deals, especially if the target could have been a competitor. And that\u2019s the fight Meta found itself in over Instagram. The deal drew regulators&#8217; attention years later. The Federal Trade Commission sued Meta, arguing it had bought Instagram and WhatsApp to neutralise threats instead of competing with them. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In November 2025, Judge James Boasberg ruled for Meta, finding that the FTC hadn&#8217;t proved Meta holds a monopoly today.<sup data-fn=\"4e1d5fa7-b87a-4440-afe4-bb362139fabe\" class=\"fn\"><a href=\"#4e1d5fa7-b87a-4440-afe4-bb362139fabe\" id=\"4e1d5fa7-b87a-4440-afe4-bb362139fabe-link\">6<\/a><\/sup> The FTC&#8217;s appeal is still pending. So the question of why Facebook bought Instagram is still being argued, but the deal has stood for over a decade.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So companies buy when it gets them somewhere faster or cheaper than building, and they don\u2019t when it doesn\u2019t. The real skill is knowing which case you are in.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Buy Instead of Build: How Companies Should Decide<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Facebook could have created its own Instagram. It bought it instead. Got users, a team and a head start on day one. Tata Steel could take years to build new plants. It purchased a steel business that was already operating under terms approved by a tribunal. The buy instead of build strategy can help a company acquire an established product, an existing user base and a head start in a competitive market.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In both cases the buyer paid to save time and get a rival out or grab an asset before someone else did. That&#8217;s what most acquisitions are really all about.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But buying carries its own risks. You pay up front and then you have to make the business work after that. But the deal can also draw the attention of regulators, as Meta learned. Sometimes the cheaper, safer route is to build slowly and own every decision along the way.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So the question isn&#8217;t &#8220;build or buy?&#8221; in a generic way. Ask for three things. How much time do we got? What would it cost us if someone else gets there first? Can we make what we buy? Buy if the price is less than the cost of waiting. Build your own, if not.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ultimately, the buy instead of build decision depends on cost, time, competition and risk. Companies should compare the price of an acquisition with the time and resources required to develop the same capabilities internally.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Want to Understand How M&amp;A Deals Work in Practice?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Acquisitions involve much more than deciding whether to buy a company. Lawyers may need to conduct due diligence, review transaction documents, understand deal structures and identify risks before a transaction is completed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you want to explore this area of corporate law, check out Lawctopus Law School\u2019s <strong><a href=\"https:\/\/www.lawctopuslawschool.com\/courses\/mergersandacquisition\/\" target=\"_blank\" rel=\"noreferrer noopener\">2-month course on Mergers and Acquisitions<\/a><\/strong>. The course covers due diligence, commercial agreements, private equity and venture capital, SEBI regulations and more. It also includes practical assignments, including an M&amp;A term sheet and a due diligence report.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>References<\/strong><\/h2>\n\n\n<ol class=\"wp-block-footnotes\"><li id=\"93bfde43-8c01-413b-bf9e-9d7a80ba184e\"><em>Facebook Buys Instagram For $1 Billion, Turns Budding Rival Into Its Standalone Photo App<\/em>, TechCrunch (Apr. 9, 2012), <a href=\"https:\/\/techcrunch.com\/2012\/04\/09\/facebook-to-acquire-instagram-for-1-billion\/\" target=\"_blank\" rel=\"noopener\"><\/a><a href=\"https:\/\/techcrunch.com\/2012\/04\/09\/facebook-to-acquire-instagram-for-1-billion\/\" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/techcrunch.com\/2012\/04\/09\/facebook-to-acquire-instagram-for-1-billion\/<\/a> <a href=\"#93bfde43-8c01-413b-bf9e-9d7a80ba184e-link\" aria-label=\"Jump to footnote reference 1\">\u21a9\ufe0e<\/a><\/li><li id=\"2cb647b6-f884-4f56-87dd-e1526ba1eabe\">Cohen &amp; Co, <em>Growing Your Business: Pros and Cons of Buy vs. Build<\/em> (July 2, 2019). <a href=\"#2cb647b6-f884-4f56-87dd-e1526ba1eabe-link\" aria-label=\"Jump to footnote reference 2\">\u21a9\ufe0e<\/a><\/li><li id=\"6e6a3429-c0d4-4475-b4ee-0d66f6bfd073\">Press Release, Tata Steel Ltd., Approval of Resolution Plan Submitted by Tata Steel Limited for Acquisition of Bhushan Steel Limited by NCLT, New Delhi (May 15, 2018), <a href=\"https:\/\/www.tatasteel.com\/media\/newsroom\/press-releases\/india\/2018\/approval-of-resolution-plan-submitted-by-tata-steel-limited-for-acquistion-of-bhushan-steel-limited-by-nclt-new-delhi\/\" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/www.tatasteel.com\/media\/newsroom\/press-releases\/india\/2018\/approval-of-resolution-plan-submitted-by-tata-steel-limited-for-acquistion-of-bhushan-steel-limited-by-nclt-new-delhi\/<\/a>.\u00a0<br> <a href=\"#6e6a3429-c0d4-4475-b4ee-0d66f6bfd073-link\" aria-label=\"Jump to footnote reference 3\">\u21a9\ufe0e<\/a><\/li><li id=\"302e6dd4-ff94-4365-9cb8-194d31c95a96\">Insolvency and Bankruptcy Code, 2016, No. 31 of 2016, Section 31 (India). <a href=\"#302e6dd4-ff94-4365-9cb8-194d31c95a96-link\" aria-label=\"Jump to footnote reference 4\">\u21a9\ufe0e<\/a><\/li><li id=\"f11bf554-a00a-45f8-a77c-000863f9c3a1\">Ghanashyam Mishra &amp; Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co., (2021) 9 SCC 657 (India).\u00a0<br> <a href=\"#f11bf554-a00a-45f8-a77c-000863f9c3a1-link\" aria-label=\"Jump to footnote reference 5\">\u21a9\ufe0e<\/a><\/li><li id=\"4e1d5fa7-b87a-4440-afe4-bb362139fabe\">Mem. Op. at 1, FTC v. Meta Platforms, Inc., No. 1:20-cv-03590-JEB, ECF No. 693 (D.D.C. Nov. 18, 2025).\u00a0<br> <a href=\"#4e1d5fa7-b87a-4440-afe4-bb362139fabe-link\" aria-label=\"Jump to footnote reference 6\">\u21a9\ufe0e<\/a><\/li><\/ol>\n\n\n<p class=\"wp-block-paragraph\"><strong>About the Author<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Ms. Soumya Chaturvedi is a Learning Manager at Lawctopus Law School and an ex-Associate at IndusLaw, where she worked in the Capital Markets team. A 2021 graduate of NLU Odisha, she has previously interned with leading law firms including LKS, DSK Legal, and L&amp;L Partners.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Buy instead of build: this is a strategic choice companies face when they want to enter a market, acquire technology or grow faster. In 2012, Facebook paid approximately $1 billion for Instagram, an already popular photo-sharing app. Facebook could have continued developing its own photo features, but acquiring Instagram gave it access to an established [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":1884,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":"[{\"content\":\"<em>Facebook Buys Instagram For $1 Billion, Turns Budding Rival Into Its Standalone Photo App<\/em>, TechCrunch (Apr. 9, 2012), <a href=\\\"https:\/\/techcrunch.com\/2012\/04\/09\/facebook-to-acquire-instagram-for-1-billion\/\\\"><\/a><a href=\\\"https:\/\/techcrunch.com\/2012\/04\/09\/facebook-to-acquire-instagram-for-1-billion\/\\\" target=\\\"_blank\\\" rel=\\\"noreferrer noopener\\\">https:\/\/techcrunch.com\/2012\/04\/09\/facebook-to-acquire-instagram-for-1-billion\/<\/a>\",\"id\":\"93bfde43-8c01-413b-bf9e-9d7a80ba184e\"},{\"content\":\"Cohen &amp; Co, <em>Growing Your Business: Pros and Cons of Buy vs. Build<\/em> (July 2, 2019).\",\"id\":\"2cb647b6-f884-4f56-87dd-e1526ba1eabe\"},{\"content\":\"Press Release, Tata Steel Ltd., Approval of Resolution Plan Submitted by Tata Steel Limited for Acquisition of Bhushan Steel Limited by NCLT, New Delhi (May 15, 2018), <a href=\\\"https:\/\/www.tatasteel.com\/media\/newsroom\/press-releases\/india\/2018\/approval-of-resolution-plan-submitted-by-tata-steel-limited-for-acquistion-of-bhushan-steel-limited-by-nclt-new-delhi\/\\\" target=\\\"_blank\\\" rel=\\\"noreferrer noopener\\\">https:\/\/www.tatasteel.com\/media\/newsroom\/press-releases\/india\/2018\/approval-of-resolution-plan-submitted-by-tata-steel-limited-for-acquistion-of-bhushan-steel-limited-by-nclt-new-delhi\/<\/a>.\u00a0<br>\",\"id\":\"6e6a3429-c0d4-4475-b4ee-0d66f6bfd073\"},{\"content\":\"Insolvency and Bankruptcy Code, 2016, No. 31 of 2016, Section 31 (India).\",\"id\":\"302e6dd4-ff94-4365-9cb8-194d31c95a96\"},{\"content\":\"Ghanashyam Mishra &amp; Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co., (2021) 9 SCC 657 (India).\u00a0<br>\",\"id\":\"f11bf554-a00a-45f8-a77c-000863f9c3a1\"},{\"content\":\"Mem. Op. at 1, FTC v. Meta Platforms, Inc., No. 1:20-cv-03590-JEB, ECF No. 693 (D.D.C. Nov. 18, 2025).\u00a0<br>\",\"id\":\"4e1d5fa7-b87a-4440-afe4-bb362139fabe\"}]"},"categories":[49,85],"tags":[],"class_list":["post-1881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-law","category-lls-magazine"],"_links":{"self":[{"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/posts\/1881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/comments?post=1881"}],"version-history":[{"count":3,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/posts\/1881\/revisions"}],"predecessor-version":[{"id":1886,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/posts\/1881\/revisions\/1886"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/media\/1884"}],"wp:attachment":[{"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/media?parent=1881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/categories?post=1881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lawctopuslawschool.com\/blog\/wp-json\/wp\/v2\/tags?post=1881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}