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Algorithm buyouts may be the next mass pipe-dream in tech

Following news of Yahoo's purchase of the news app Summly, some tech industry experts are wondering whether the sudden interest in paying big money for mathematical algorithms is such a good idea. TED speakers and authors acknowledge the fact that algorithms and similar problem-solving solutions are going to play even bigger roles than they already do, but they caution that the way businesses acquire such tools may lead to a new tech bubble. They point out that placing too much trust in specific algorithms that are deficient can lead to major financial losses, such as 2010's Flash Crash.

Other tech analysts, on the other hand, point out that market bubbles are only likely when investors throw caution to the wind. They say that even though recent mergers and acquisitions like Yahoo's have similarities to the dot-com bubble, most of the companies involved in larger deals have the fiscal foundation and market footing to back them up.

It is important to make the distinction, especially for smaller firms that purchase technology and algorithms that have no monetization strategies with the intent of profiting from them in the future. Without viable long-term corporate plans, companies will lose major sums similar to the way past industry booms have played out.

Many of the purchases that small businesses and corporations make pose equal risks for profit and loss. Tech acquisitions and mergers can be complex, and the revenues that such deals generate are not always guaranteed. As such, many CEOs seek legal assistance. In Virginia, business attorneys may help them evaluate transactions in advance as well as structure them for maximum viability.

Source: NPR, " After Yahoo acquires Summly, is buying math the next tech bubble?," Steve Mullis, March 26, 2013