The 3rd type of acquisition (Business) is a lil generic and should be broken down into a few more parts.<p>IMHO, in the tech industry, I observed many times that if a company acquires another purely from a business perspective, it is either:<p>(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).<p>(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).
<p><pre><code> > 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.
</code></pre>
I don't think that's what opportunity cost means.<p>Of course the time to build the technology is part of the actual cost.<p>The opportunity cost might be the value derived from developing it in-house or acquiring a competitor.
<i>Talent ... As a rule of thumb, these acquisitions are priced at approximately $1M/engineer</i><p>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.<p>Anybody out there want to justify or at least explain this practice?