

The HR Acquisition - nathanh
http://www.avc.com/a_vc/2009/12/the-hr-acquisition.html

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geoffc
For the acquired company you have traded in illiquid stock you have a lot of
control over for illiquid stock you don't have control of. Only worth doing if
you really, really believe in the acquiring company or can cash out a
significant percentage of the stock.

~~~
tptacek
Or, illiquid stock in a company with no market traction and cash flows for
illiquid stock in a company with large traction and cash flows. It's a trade
of control for reduced risk.

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cwan
A supplementary article that the returns of acquisitions through portfolio
companies (known as bolt on acquisitions) can create better value than
investments in new firms (from the perspective of an investor) -
[http://seekingalpha.com/article/175698-the-economics-of-
bolt...](http://seekingalpha.com/article/175698-the-economics-of-bolt-on-
acquisitions)

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dpritchett
Friendfeed's acquisition by Facebook was widely viewed as a talent grab. It
seems to be working out well enough for FB so far.

[http://blog.louisgray.com/2009/08/friendfeeds-not-dead-
while...](http://blog.louisgray.com/2009/08/friendfeeds-not-dead-while-not-
clear.html)

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gvb
A _major_ example of this was Apple's purchase of PA Semi:

[http://www.appleinsider.com/articles/08/04/23/apples_pa_semi...](http://www.appleinsider.com/articles/08/04/23/apples_pa_semi_buyout_motivated_by_assets_not_products.html)

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mikebo
I think Fred's post is more about startups acquiring smaller startups based on
talent, not about large companies acquiring for IP.

~~~
gvb
From the link in the OP: "Despite speculation that Apple's acquisition of PA
Semiconductor was motivated by the chip maker's specific products, a new
report reveals that the iPhone designer is interested more in the buyout for
its promises of intellectual property and _development expertise_ \-- and may
be causing a crisis for the US Department of Defense in the process." (my
emphasis).

While Apple isn't a startup, PA Semi _was_ a startup. More importantly, and
exactly on topic, Apple acquired PA Semi for the _people_ , not for their
technology. PA Semi was making a PowerPC architecture CPU that was low power
and fast. When Apple bought the company they stopped development on their
PowerPC architecture CPUs, dead-pooling their CPU technology (the physical
representation of their IP). Apple actually tried to stop building the CPUs,
but the government (military is a heavy user of the PowerPC architecture)
stepped in and "persuaded" them to continue to manufacture their CPUs.

What Apple bought was a team consisting of some of the brightest minds in the
low power, fast, CPU (and more?) hardware design field. I assume that Apple
has them working on new, fast, low power (probably ARM-based) CPUs for their
iPhone/iPod (and laptop?) product line.

~~~
mikebo
Fred's post isn't about big companies doing talent acquisitions. It's about
both why a successful startup would want to do this, and how to structure a
deal correctly so both startups are pleased with the deal.

I'm not disputing anything in your link, I just don't think it's very relevant
to the discussion of Fred's post.

