March 5, 2007

Learn how (NOT) to get acquired

When YouTube acquired Google for $1.65 billion,it seemed Acquisition has become a buzz word.After this global acquisition, there has been a no of acquisitions in the Indian circuit as well namely Tata Steel takes over Corus,Mittal Steel takes over Arcelor.Well,these were not in the IT space but when I was just a post on Guy Kawasaki's blog he had mentioned "When you create a company,it should make a meaning and should make a difference".

Guy Kawasaki also mentioned that "Many times Entrepreneurs feel that it is somewhat easy to get acquired by the big giants like Microsoft,Oracle,Google etc. ,if their company does not go public within a specified period of time" but this it is not true.Red Herring provides a good insight into the whole M&A scenario(taking the example of Microsoft and Google) and what should be the focus of upcoming companies.

A small excerpt from the article:
It’s tempting for entrepreneurs and venture capitalists to design a company today with a notion of who will want to buy it tomorrow. But that irritates deep-pocketed acquirers, who would prefer companies simply innovate, and let buyers worry about what’s worth spending money on.
Google bought roughly thirty companies in the past three years. Microsoft buys between 15-20 companies per year.As per Bruce Jaffe, vice-president of corporate development at Microsoft:"Companies should do what they do best, and innovate".
Factors deciding acquisitions:
Microsoft : Mr Jaffe - "There is a preference over management teams who are looking beyond get acquired."
Google : Mr Ullah - "Software can be coded at any part of the world and hence location is not an issue.The only important thing is that the product being developed should fit into Google's architecture"

You can read the complete article here

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