Silicon Alley Insider is reporting that a Private Equity firm (or two) were drafting the papers to issue a buyout offer for Yahoo! when Microsoft unveiled its bombshell unsolicited offer this morning.

I have long argued that a PE deal is the most logical route for Yahoo!  Not what the company wants but next to other options, probably what the doctor ordered.

The problem, frankly, is that this MSFT offer means a PE would have to come in at $45B or more, which is not impossible, but it makes all other options moot.  What shareholders will want is instant relief, and technically a PE firm or MSFT can offer that, but a PE firm means all upside would go to the acquirers whereas a MSFT cash/stock deal would allow existing shareholders to benefit from the synergies (yikes, there’s that word) and upside of a combined entity.

Interesting to see the storyline that will emanate next week.

Other options I’ve analyzed include:

- status quo (a $100B market cap by 2010?)
- merger with eBay
- merger with Viacom
- merger with CBS
- acquisition by/merger with Microsoft
- taken private
- sale to AT&T
- can Google buy Yahoo!?
- Spin off ad network unit

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