One aspect of gabe's otherwise excellent post that went unmentioned is the cultural issue associated with an acquisition of this sort. For the acquired company

One aspect of gabe's otherwise excellent post that went unmentioned is the cultural issue associated with an acquisition of this sort. For the acquired company to make a difference, it is going to need to be put in control of a large number of business processes. And for it to produce productivity gains, it will likely automate away many of the existing jobs at the acquiring company. Finally, if the acquired company is in fact a failing startup (as gabe postulates), it won't have a large team, or much revenue, or have proven itself against the acquirer in the marketplace. These things will combine to produce intense and arguably justified political resistance at the acquiring company. The old guard there will see a bunch of young whippersnappers, who just became millionaires, without any revenue, who are coming in and expecting to tell them what to do when they are the ones who've been producing profit for this company for 20 odd years. In this view, the only way this works is if it's a Mint/Intuit-type deal, where Mint crushed Intuit's online offering to such an extent that it gained respect within Intuit.