Will Microsoft + Yahoo Chill Tech M&A?
On the way to the airport this morning I twittered "Dell bought messageone (not sure i get that one) and someone bought bebo. Another m&a day." Fred Wilson immediately responded with "@bfeld but the yahoo-msft deal is going to put a dent in M&A, right? i don’t think so."
I completely agree with Fred. There was a lot of noise last week – especially from the VC community – that a Microsoft / Yahoo deal would be bad for tech M&A, especially in Silicon Valley. Baloney.
Yesterday Microsoft bought Danger and Yahoo bought Maven Networks. Today Dell bought MessageOne and it is rumored (again) that Bebo has been acquired.
Yahoo – bless their heart – has been at best an erratic acquirer. In the late 1990’s they were rapacious. They had a long dry spell post bubble. Things picked up again in 2004, but many of the deals were small ones (sub $50m) – while fun and great for many of the entrepreneurs involved, it didn’t have much impact on VC returns. In the last year they’ve done some bigger deals – like Right Media and Zimbra – but not that many.
Microsoft – on the other hand, has been a very consistent acquirer post bubble. In addition, their deals have been increasing in size. Google has also been an aggressive and consistent acquirer. But it’s not really about Microsoft, Google, and Yahoo. The number of acquirers in tech / Internet / software is very robust and most of the large cap tech companies have very deliberate M&A strategies.
We are in a world where M&A has been and will continue to be the primary exit for most tech companies. The old cliche that companies are bought rather than sold continues to be true – if you focus on creating something great that generates cash over the long term the exit will eventually find you.