Strategic purchase prices - example: Dell/HP and 3Par 2.9.2010:The bidding war between Dell and HP for the company 3Par shows how a seller can use a (supposed) unique selling proposition as well as competition in the sale of a company to achieve a company valuation that is not rationally comprehensible using any valuation methods. 3Par is active as a provider in the field of data storage and benefits from the current hype around the topic of "cloud computing".
Neither a discounted cash flow valuation nor valuations from comparable M&A transactions can be used to justify the purchase price for 3Par: USD 2.4 billion for a company with annual sales of USD 194 million that does not generate profits!
Company valuations - strategic company valuations
These are company valuations, as in the days of the Neuer Markt, when even the smallest small business was valued in the billions. Other takeovers at such high valuations, which are no longer comprehensible through valuation procedures, have often been a bad investment in the past. One could list many examples here - one of them is the takeover of Skype by Ebay.Buyers should be aware of the fact that at the time of a takeover it may look as if this acquisition is the only/last possibility to enter a market. Technologies and markets change very quickly and a few years later the situation looks completely different and new, and often better, opportunities have appeared on the horizon.