Internet stocks are once again the talk of Wall Street, with multiples not seen since the pre-dot-com bust of the early 2000’s. Groupon and Pandora are some of the first out of the gate with IPOs, but some aren’t quite buying the hype.
Many investors and columnists seem to be saying that it is OK to love a product and not love the stock. This notion can be true for lower-middle market M&A as well. There have been many times where a key decision maker becomes enamored with a prospect’s capabilities or products – clouding their objectivity.
In a strategic acquisition, the fit and capabilities are often at the forefront of the discussion, and there is nothing wrong with that. However, while attractive markets, capabilities and customers are all crucial in deciding on which prospects deserve further evaluation, the prospect must also lie within the financial goals and framework set by the buyer.