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August 22, 2006
Microsoft Pays Up, But VCs Stay Down
It is interesting that despite the slide in value for software companies the average per-deal price Microsoft is paying for acquisitions
is trending upward. Last fiscal year the company did 9 deals totalling
$207m, while this fiscal year the company did 23 deals totalling $649m.
Doing the math, it works out to $23m per company last year, and $28m
per company this fiscal year. While these figures are small enough to be easily skewed by one big deal, it's still an interesting stat for venture investors. Selling to Microsoft is fine, but you better be darn capital efficient if you're hoping to make much money from a $28m trade sale. It's nigh impossible to do a 5x on these kind of valuations without a post-money of $5.6m or so, which ain't gonna happen.
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If ever Massive got the rumored $200M for their acquisition, you are talking substantially less than $28M per co.