Opening up of M & A in Open Source space

It is interesting to analyze M & A activity for open source products. Conventional approach of business valuation will not work. Why? Even for the most popular open source products do we know the customer individually. Well it is very limited view. How do we evaluate the brand value? How to measure the worth of the intellectual property? Many such aspects can not be adequately answered.

One solution to the problem is to treat it like stock market. You do not know where the stock price will head tomorrow. You can only speculate. So we fix the margin we want to make and then evaluate if the stock is worth it or not. Apply the same principle. Rather that trying to find the worth of the product it is easier to fix the target. So question which should be asked is how much money we want to make from the acquisition and does the intrinsic value of the product matches that.

But irrespective of how you define the rules of game, lot of traction may be seen this year.

Is this really the time for Open Source?

Lot is correlation is being established between Open Source and current economic conditions. Most common argument is rise of Open Source as an alternative for cutting costs in 2009. Now the question is whether the benefit of lower cost is compelling enough for corporates to switch products or not.

In theory, economically it definitely makes sense but one important consideration is the cost of migration. When companies are hard pressed for money, does it makes sense for them to invest further to move the existing setup. So the possibility of higher acceptance can be expected for new projects and cases where open source can integrate itself seemlessly into the mainstream business.

More about open source trends