Expensive acquisitions

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Here are some insights on expensive acquisitions based on expert discussions:

  1. Tech Industry Acquisitions: Jason Calacanis and Alex Wilhelm discuss Google's $23 billion acquisition of Wiz, comparing it to Facebook's acquisition of Instagram and WhatsApp. Wilhelm emphasizes that while such acquisitions might limit competition in specific areas like cybersecurity, they can enhance overall competition in broader markets like cloud services. They note that acquiring cybersecurity companies comes at a high price, comparing current valuations with historical data 1.

  2. Luxury Brands: Christian Billinger and Zach Fuss analyze LVMH's acquisition strategy, highlighting the controversial €4 billion purchase of Bulgari, a brand generating less than €100 million in EBIT at the time. Despite initial skepticism about overpaying, such strategic purchases aimed at expanding brand portfolios and leveraging resources have characterized LVMH’s approach, setting a standard for luxury brand acquisitions 2.

  3. Historical Evaluations: David Rosenthal and Ben Gilbert from the Acquired podcast emphasize that to adequately assess acquisitions, sufficient time must pass to determine their outcomes. They reflect on historical deals like Facebook's acquisition of Instagram and YouTube's acquisition by Google, which have significantly shaped their respective markets. Such deals underline the importance of strategic timing and long-term vision in acquisitions 3.

    Tech Acquisition Insights

    Jason and Alex discuss the impact of tech acquisitions on competition, emphasizing the importance of price points in the cybersecurity market. They delve into the nuances of acquisitions and their implications for industry competitiveness.
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  4. Acquisitions in Corporate Context: Jeffrey Sine and Bill Gurley discuss the broader market context affecting mergers and acquisitions (M&A). They highlight that corporate boards are often cautious due to economic uncertainties and international market instability, which impacts decision-making regarding major acquisitions. Successful acquisitions, particularly in tech, often fill specific product or market gaps rather than being purely transformative deals 4.

These insights illustrate various factors influencing expensive acquisitions, from strategic fit and market conditions to the intrinsic value of the brands or companies being acquired.

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