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Yahoo's purchase of Summly could give rise to new business tactic

When a business goes about acquiring another company; another piece of property; or another asset, there are many steps that need to be followed to ensure the deal is compliant with local and federal laws. There are also complex negotiations that need to take place, which can collapse if both parties do not respect the intrinsic nature of these deals. In both regards, an experienced business law attorney can help a business get past these hurdles and enjoy a brighter future.

Once the company or asset is acquired, the assuming company will inevitably need to answer some questions about how their new entity will integrate into the organization. For example, will employees associated with the asset be retained? Will certain aspects of the assumed asset be cut? What about the trade secrets the company or asset possessed?

If a recent tech acquisition is any indication of future trends in the industry, the answer is to buy the trade secret, keep the talent and dump the product.

Yahoo has made waves recently by shaking up their company, and part of this realignment is to take a more mobile-minded approach to their business. As such, they purchased a news-aggregating app called Summly for $30 million.

Part of the notoriety of the story is that Summly was invented by a 17-year-old from England; but the other part that makes the story interesting is what Yahoo did once they acquired Summly: they got rid of Summly. It is no longer available, nor will it ever. Instead, Yahoo brought the 17-year-old on board and will use the algorithm that made Summly tick to create something new just for Yahoo.

It is an interesting approach, one that could be adopted by many companies down the line. The acquisition could be used as a vessel to bring in young talent and to earn the exclusive right to use "the math" behind the purchased product, as opposed to using the product itself.

Source: NPR, "After Yahoo Acquires Summly, Is Buying Math The Next Tech Bubble?," Steve Mullis, March 26, 2013

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