What does it mean to be in acquisition “talks”?

My twitter feed feels like a trading floor rumor mill.  Rumors of Big Switch Networks, Plurabis Networks, Square all to be acquired.  Yet an unrumored (at least from my twitter feed) acquisition happened: Cloudscaling acquired by EMC. The constant stream of acquisition rumors is starting to out pace the rumors of hacks.

Let’s be clear about something: If an executive at one company talks to someone in business development at another company, merger or acquisition is assumed (normally acquisition). Realistically, M&A talks are always happening, and for good reason: companies need to focus on success and ruling out M&A is a bad idea.  As companies grow, there may be a need for a cash infusion (box and dropbox are good examples).  The money can come from VCs, Strategic Investments, IPO or Acquisition by a company with access to funds (Apple, Google, etc).

There are great success stories in M&A and there are companies that are built by acquiring other companies for their technology and people (Cisco, EMC to name a few).  There are also horror stories of companies being acquired just to be shut down (Meebo is an example) and companies being acquired for their parts due to running out of runway (I have a few of these in my past).

While it is fun to feel involved in the behind the scenes, secret world of mergers and acquisitions, the reality is: if there are synergies between two companies, there have probably been, or are acquisition talks or at least internal discussions regarding them.  We are all correct, but as seen with the recent Twitch acquisition, the outcome will probably be totally different.

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