What is “blue sky”

In 1911, as a result of Dolley's lobbying efforts, Kansas became the first state to enact a "comprehensive" securities law requiring registration of both securities and their salesmen. Dolley used the term “Blue Sky” in connection with promoting passage of the statute, and the term was used by those reporting on it. See “Joe Dolley Is After the Blue Sky Merchants”, Topeka Capital-Journal, December 22, 1910. Dolley had complained about the ”enormous amount of money the Kansas people are being swindled out of by these fakers and 'blue-sky' merchants.' ": Letter from J. N. Dolley Dec. 16, 1910

Do you mean "blue ocean"? That is more applicable to startups.

Here's the Wikipedia link: http://en.wikipedia.org/wiki/Blue_Ocean_Strategy

The term blue sky in securities has come to define securities fraud. Specifically the term was used to describe the speculative and broad language used in certain sham investments.

Below is a better explanation.

Hope this helps,

Jason

This is from wikipedia:

The origin of the term blue sky as applied to securities fraud requires further research. Its earliest cited use by the United States Supreme Court was in an opinion by U.S. Supreme Court Justice Joseph McKenna in Hall v. Geiger-Jones Co., 242 U.S. 539 (1917), a case that addressed the constitutionality of state securities laws. Oddly, McKenna is frequently (and erroneously) given credit for inventing the term, even though J. N. Dolley used the term when pushing for passage of the Kansas statute in 1910, and McKenna's own opinion in Hall itself attributes the term to an unnamed, earlier source:

The name that is given to the law indicates the evil at which it is aimed, that is, to use the language of a cited case, "speculative schemes which have no more basis than so many feet of 'blue sky'"; or, as stated by counsel in another case, "to stop the sale of stock in fly-by-night concerns, visionary oil wells, distant gold mines and other like fraudulent exploitations." Even if the descriptions be regarded as rhetorical, the existence of evil is indicated, and a belief of its detriment; and we shall not pause to do more than state that the prevention of deception is within the competency of government and that the appreciation of the consequences of it is not open for our review.

Kansas banking commissioner Dolley, railing against "blue sky merchants" when pushing for passage of the Kansas statute in 1910, observed that certain fraudulent investments were backed by nothing but the blue skies of Kansas. The Oxford English Dictionary has a cited use dating to 1906. Also, The New York Times (and other national newspapers) frequently reported on the blue sky laws as various states began to enact them between 1911 and 1916. The newspapers expressly used the term blue sky to describe the laws.

1. ^ Simon, AER 1989, "The Effect of the 1933 Securities Act"

It's a management cliche that means something like "thinking outside the box" or long-term thinking focused on original ideas and questioning assumptions. Instead of saying, "Let's build a better web site for banks" a blue sky approach might start with "What if every human being were their own bank" or "What if banks owned their own movie studios and newspapers, instead of web sites?"

Search for blue sky thinking for more examples.

In acquisitions, I would guess that it means either a long shot, or a very foward-looking long-term plan.

@mbrubeck

I don't believe your answer is correct given this context because even I have heard people say "$400k of blue".

What you are describing might be applicable for a different setting.

But "blue sky" definitely have a financial context, which is what the original poster is asking about.

I think the short answer in connection with company acquisition is "promise of further growth" which makes buyers excited and willing to offer a higher price than the current profits justify.