Acquisitions by companies are a simple way to understand not just what a company is valued at, but also a sense of how much revenue it might generate in the future, in a sense how "big" a part of the economy it currently is.
I tend to be interested in, and get excited by, tech and media stuff, and tend to focus on reading about these sectors. I've always known at the back of my head that I'm ignoring other sectors that may in fact be much larger, and today was a stark reminder of that.
So I've been thinking for the last couple of days: "Google acquired DoubleClick for $3.1 billion. Wow! That has to be huge"
Well sure....for a tech deal it is. But looking at the deals being talked about just today, on one randomly picked day, in the Journal, that completely dwarf the size of this deal, I realize just how relatively small what I think of as the tech sector, still is when compared to the entire economy.
Just today, the deals being talked about:
- KKR-led consortium is offering $21.2 billion for Alliance Boots (never heard of em until today)
- Interpool (??) is buying Fortress Investment funds (ok..) for $2.4 billion.
- Japan Tobacco bought Gallaher Group (which makes the Benson & Hedges cigarettes) for wait for it....$15 billion (apparently not everyone agrees that smoking is hazardous yet)