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Not to nitpick, but the other reason acquisitions sometimes make sense is that a bigger "parent" might open doors that it would take a smaller company a long time to get to, particularly in terms of scaling. In a sense, getting bought by a big parent can (in some cases!) be equivalent to taking VC - funding, yes, but also advice and connections (traded for a measure of control!)

Now, the benefits are often illusory (see: pretty much anything Conde Nast has acquired). But sometimes it's actually true - particularly when there are economies of scale or actual (I hate this word) synergies.

This is pretty much the Google promise, isn't it? "Get bought by Google, get access to infrastructure you could never afford on your own!" This makes sense for some businesses, not so much for others (FWIW, 37s is probably in the latter category).

Facebook was the former (they could've benefited a lot from Google's infrastructure and knowledge). Google could've also benefited from Microsoft's experience and infrastructure.

Who's the sucker now?

The biggest disadvantage is that big companies that are willing to buy aren't risk takers ... they'll either dilute your idea, or kill your project. Google is my kind of company, but they've killed at least a couple of startups they've bought already.

Of course, I wouldn't place 37signals in the same league. But he does have a point ... if your company can handle the growth without external resources, than why sell?

if your business can't grow without a parent then it's probably charity, not a business.

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