Since Friday’s staggering announcement of Microsoft’s $6 billion acquisition of aQuantive a number of people have remarked and written that the price tag was way too high. While as a basic matter we can probably all agree to that general statement, Microsoft CFO Christopher Liddell indicated that Microsoft had won in competitive bidding vs. undisclosed others.
That’s certainly one reason the price got to that level; the overheated M&A environment more generally is another. But I started thinking another explanation for the behavior is that Microsoft is a bit like the frustrated home buyer in a seller’s market.
When my wife and I were trying to buy our house in the SF Bay Area in 2002, the market was very overheated. Time after time we were outbid and it was incredibly frustrating. You get to a place of despair and rage . . .
We didn’t have the money to simply outbid others on a given property. Though persistence and help from the Almighty, him/her/itself, we got our house. But Microsoft clearly has the balance sheet to outbid others. And like the frustrated home buyer with deep pockets, the word from on high may have been: “Damnit, we’re not going to lose another one; pay whatever it takes!”
Related: Robert Scoble assesses the deal and gives it a thumbs up (or more accurately the Internet in general vs. other media).