Story this morning in the FT that Facebook reportedly valued Twitter at $500m in its own FB stock. The leak is speculated (by the FT?) to be a negotiation tactic by Twitter to get "other bidders to the table". Ah deal-drama, my favorite.

From FB's point of view it makes a lot of sense to get twitter in their social network. Far more people use FB than use Twitter. And as a side note FB does monetize its viewers. For the younger generation FB offers pictures of you and your friends. For the older generation a way to stay in touch. Many of my friends use twitter and seem to like it. The FT article mentions "trend spotting" as an emergent property of twitter. But they make money and have 26 employees.

And then I put myself in the shoes of Biz Stone, the co-founder of two and half years old Twitter. In this environment the VC mantra is "if you can sell, sell", as Sequoia recommended to its flock. So the guy would be advised to sell.

Then there is the small point of the fact that the transaction is in FB stock. FB was valued by MSFT at $15Bn, a valuation that prompted many observers to raise both eye-brows. Based on that historical value, FB is free to value anything at astronomical values anyway. That is why, even in this current environment, a $500m offer FROM FB may be actually worth much less. If you believe that FB would fetch 10B in a sale today, that still leaves 500x10/15=333 which is a nice possible future.

Whether FB is overvalued or undervalued is second to it being paper money anyway. The founders of twitter are being paid in paper that is far from liquid. In fact, it is plain illiquid and I would recommend the investors and founders to twitter get a cash component to the deal. Obviously if other bidders did appear at the table it would make their case stronger. How much cash does FB have anyway?

From Twitter's standpoint it also means getting a higher chance of a liquidity event. If someone is going to get something, it is probably FB. FB is a household name and has revenue. Then twitter guys will get something through FB. Even if the MSFT FB valuation doesn't pan out, it would need to go all the way to 3B instead of 15B for twitters to make $100m. Still not bad for a no revenue company.

And then a side of me wonders at the Silicon valley way of doing business, there is something inherently optimistic about the logic. In the middle of the most severe downturn in modern history, we get fed this kind of deal making drama. It is like a good soap-opera. I start remembering ...

• Business Agility as an Emergent Property of SOA