A bit of teenage angst is cropping up in speculation about acquisitions of open source software companies. With the $500 million buy of XenSource by Citrix Systems Inc. and previous buys by RedHat Inc. and Oracle Corp. last year, open source software providers have become viable targets despite worries about lack of sales and compromised code that could lead to legal disputes. But the youthful idealism that prompted the formation of these firms is facing something of a test.

Mike Asay, an executive at open source firm Alfresco and a member of News.com's blogging network, lays out the potential buyers of today's open source startups in a post that includes just about everyone in the software industry. He's convinced the ethos of the open source movement will trump the profit motive when it comes to deal making.

While it's not exactly news that RedHat and Sun Microsystems Inc. will acquire open source companies, Asay's more interesting and more controversial point is his insistence that the culture of the acquiring company can be the most important determinant in a deal. He argues that open source companies are more egalitarian. To acquire one, the buyer has to be the sort of company the software developers want to wake up next to on the morning after the deal. "In any company where developers have a voice, cash is not necessarily king. Principles are," he opines.

His list focuses not just on companies with money, but those companies he believes open source developers want to work for. It's a nice way of generating a list, but it's a naive way of looking at deal making. Keeping developers happy is certainly a smart move when acquiring an open source company, since its most valuable assets are the people and the goodwill of the open source community, but as The Deal has pointed out, buying an open source company isn't always about creating new code. Sometimes it's about controlling a rival to a proprietary software business. Few principled open source CEOs would sell their firms based on that premise for anything — except of course the highest price. As that happens, open source deal making will do the inevitable and grow up. —Stacey Higginbotham

See Aug. 15 story from TheDeal.com
See Sept. 4  post from News.com
See April 2006 story from TheDeal.com
See April 2006 story from TheDeal.com
See March 2006 story from TheDeal.com