Of course there are reasons, too many to count. I'm very close to one of the acquisitions on the list (as an early employee I made a modest profit). It comes do

Of course there are reasons, too many to count. I'm very close to one of the acquisitions on the list (as an early employee I made a modest profit). It comes down to a combination of: - Team: the acquirer likes the people and believes they will add value if convinced to stay on board. - Product: they like what they see, and they believe they can incorporate it into something they have in a relatively painless way. They think about what it would take to build it and it's mostly a time thing. They can spend the money but generating the momentum to build it would take too long. - Traction: this basically determines the price, because a company like Yahoo believes they can plug something they like into their properties and get traction. Having traction already is proof that the product is great, and it commands a premium. - Keeping it out of the wrong hands: yes, it's scary to imagine what would happen if a one-of-a-kind company fell into the hands of your competitor and they executed perfectly with it. - Need to spend M/A budget: if you are the M/A person at a big company, your job is to buy what you can't build or hire. You can't say "there's nothing out there worth buying" because other people are buying companies (herd mentality if you will). There are more factors, and there isn't a single one that determines a decision. A lot of people need to feel good about it and agree on the perceived risk and reward of the investment.