April 17, 2014
Marc Andreessen on Valuation
Posted by Gordon Smith

Dealbook has reprinted a series of tweets by Marc Andreessen explaining the sometimes lofty valuations of acquisitions in the tech sector. The key idea is "attach rate," which Andreessen describes as follows: "acquirer Y can attach company X's product to Y's sales engine."

We used to have another word for this idea: synergy.

Just because it's not new doesn't mean it's not real. But Andreessen rightly cautions: "Of course, for the deal to be good, I have to deliver that attach rate. But when it works, and it often does, it's magical & worth doing."

I am probably more skeptical -- "often" should probably be "sometimes" -- but I generally agree with the thrust of the tweets. Thanks to Matt Jennejohn for the pointer.

 

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