[tantalor]

  > An important component in this calculation
  > is not just the actual cost to build the
  > technology but the opportunity cost of the
  > time it would take them to do so.

I don't think that's what opportunity cost means.

Of course the time to build the technology is part of the actual cost.

The opportunity cost might be the value derived from developing it in-house or acquiring a competitor.

[jacquesgt]

Opportunity cost means exactly what he thinks it means. The idea is that it might look cheaper to develop technology in-house, but if it takes longer to build than buy, the company is losing out on sales during the time it's building. It also could be losing out on early-mover advantages. Those reductions in revenue are called the opportunity cost (because the size of the opportunity is smaller).

Factoring in the opportunity cost may make buying a more attractive option. Keeping opportunity cost in mind can help the seller get a much better price than they would if they just considered the acquirer's cost to duplicate heir technology.

[tantalor]

Sorry, I was thinking of "time" in terms of salary or wages, which are obviously costs.

Now I understand that "time" can also mean time-to-market, and I see how that can turn into an opportunity cost. Thanks!

The former is like "spent time", but the latter is like "lost time".