

Three Types of Acquisitions - stevefink
http://cdixon.org/2011/12/10/three-types-of-acquisitions/

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kinkora
The 3rd type of acquisition (Business) is a lil generic and should be broken
down into a few more parts.

IMHO, in the tech industry, I observed many times that if a company acquires
another purely from a business perspective, it is either:

(a) Customer/Market - The acquired company has a huge and highly desirable
market share,demographics,etc that the bigger company would like to "acquire".
Also sometimes, it is simply to get the "pageviews". I.e. Google acquiring
Blogger/Blogspot (community) or the myriad of blogging companies that AOL has
acquired (market share).

(b) Expanding - The acquirer would like to expand from their core business and
the best way to do this to acquire a company that is the best in the field.
I.e. Apple acquires Quattro (advertising), Google acquires Android (mobile).

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tantalor

      > An important component in this calculation
      > is not just the actual cost to build the
      > technology but the opportunity cost of the
      > time it would take them to do so.
    

I don't think that's what opportunity cost means.

Of course the time to build the technology is part of the actual cost.

The opportunity cost might be the value derived from developing it in-house or
acquiring a competitor.

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jacquesgt
Opportunity cost means exactly what he thinks it means. The idea is that it
might look cheaper to develop technology in-house, but if it takes longer to
build than buy, the company is losing out on sales during the time it's
building. It also could be losing out on early-mover advantages. Those
reductions in revenue are called the opportunity cost (because the size of the
opportunity is smaller).

Factoring in the opportunity cost may make buying a more attractive option.
Keeping opportunity cost in mind can help the seller get a much better price
than they would if they just considered the acquirer's cost to duplicate heir
technology.

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tantalor
Sorry, I was thinking of "time" in terms of salary or wages, which are
obviously costs.

Now I understand that "time" can also mean time-to-market, and I see how that
can turn into an opportunity cost. Thanks!

The former is like "spent time", but the latter is like "lost time".

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notbitter
_Talent ... As a rule of thumb, these acquisitions are priced at approximately
$1M/engineer_

Of which more than 90% will go to the founders and investors. The engineers
being bought for $1M will be lucky to get $100K out of it.

Anybody out there want to justify or at least explain this practice?

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BerislavLopac
If that is the case, wouldn't it be easier and better just to pay that money
(or even half of it) to the engineers themselves to change employers? It seems
more sensical to me that the talent acquisitions make sense primarily when the
acquirer wants the _founders_ themselves.

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rokhayakebe
4) Buy a company working on something you are, shut it down, and not worry
about the potential competition.

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beagle3
Microsoft did this for the Kinect: Two companies (3DVision and PrimeSense)
both had RGB Depth cameras. They signed a deal with PrimeSense, and then
bought 3DV and shut them down.

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gsiener
Irrespective of the Hunch/Ebay acquisition, it's nice to see Chris blogging so
much again.

