Why large company buys a small company?

Vinny Carpenter’s blog: "Every time a large company buys a small company, I almost always flashback to a meeting I had in July 2000 with Paul Butterworth, who was then the CTO of Sun’s tools division. Paul had joined Sun as part of Sun’s acquisition of Forte Software. Paul Butterworth was the founder of Forte Software and spent a few months at Sun before moving on and starting AmberPoint, which is doing some really cool things. Not sure how many remember Forte Software, but Forte was the maker of a 4GL programming language called TOOL with a pretty cool n-tier architecture. Instead of using anything that Forte had, Sun decided to buy NetBeans and just use the name Forte for its tools. What a joke – billions of shareholder dollars wasted but that’s history now.
Any rate, a group of us got to spend an afternoon with Paul as part of a client visit. As we were quizzing him on why Sun bought Forte, he said something that’s still with me and rings true in most acquisitions. He theorized that large companies are always amazed at all the innovation coming from small companies and so they buy these small companies in hopes of bringing the small company magic into the larger company - and that almost never works as the small companies were innovative because they weren’t constrained by all the big company process, policies and red-tape. The minute the small company joins the large company, innovation stops as people that could have been creative and really stretched were now constrained by all the big company bureaucracy."