Acquisitions are up from the same time last year, mostly because the economy had everybody holding their collective breath while they figured out how and where the failure of the economic system would kick them and how hard. The exhalation started sometime in Spring and is about to accelerate--it's a perfect time for companies with cash reserves to pick up strategic targets. A friend on the West Coast has advised a few recent acquisitions, and his update got me thinking about it. Note: These views are from an industry observer--I might have some of this wrong, but this is my take. The M&A experts will likely want to pipe in with adjustments and other perspectives. So what makes an acquisition strategic? Typically, a company is acquired by a complementary company for its team, its products, the revenue from those products, and its profitability (EBITDA). Profitability is an obvious reason; take a company’s price/earnings ratio, add profit to it, and the stock price will likely
Charlie Crystle writes about startups, startup ecosystems, tech, food systems, and random things.