A service company (i.e., a law firm) being acquired would almost exclusively depend on goodwill for the accounting of the transaction. There are few fixed asse

A service company (i.e., a law firm) being acquired would almost exclusively depend on goodwill for the accounting of the transaction. There are few fixed assets beyond desks and chairs and possibly a property lease to include as assets. Accounts receivable and cash would of course play a role, but that is likely a fraction of the overall value paid. The difference between book value and the price paid is accounted for through book value. Even in a steady-state in which Snapchat is earning serious money, were it to be acquired, the acquirer would likely need to account for it predominantly through goodwill. What tangible assets does snapchat have? Data center/infrastructure is likely the only area where a company like snapchat could invest in a way that would increase its book value... but snapchat is more likely to stay on the cloud... The typical tech startup has few tangible assets, hence the necessity to account through book value.