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Acquisitions 101

To all those Web 2.0 companies looking to get acquired by Microsoft, Google, Yahoo! or eBay, Don Dodge has handily compiled a list of tips. Don works on the Microsoft Emerging Business Team.

In his latest post he starts by noting Microsoft’s “rich tradition of acquisitions”. He points to a list of Microsoft investments and acquisitions over the past 10 years, dating back to the purchase of SOFTIMAGE on June 28, 1994.

Here’s some background information:

“Microsoft has acquired an average of 10 companies per year over the past 10 years. Many of them are smaller (less than $50M) acquisitions that go unnoticed by the press. These smaller acquisitions usually provide a great team of people, and a few key features in a much larger existing Microsoft product.”

Some of the things that Microsoft looks for in an acquisition include:

– People, “the most important factor in any acquisition”

– Technology and IP that can add value to an existing Microsoft product

– Stand alone products for existing customers – e.g. Visio, Hotmail, Vermeer

– Entering whole new markets – e.g. Great Plains, PlaceWare

Don’s also got some great information on why Microsoft may choose to acquire rather than build internally: “Technology is not the issue here. It is all about marketing channels, sales expertise, and market leadership in segments where Microsoft is not strong.”

Very interesting post and I’m sure similar principles apply at the other big Internet companies.

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