So it would appear that Microsoft - largely a stranger to mega-sized M&A transactions - is ready to knuckle down for a fight.

In a slowly unfolding drama, Yahoo has spruned Microsoft's takeover offer and is now in discussions with Rupert Murdock's Newscorp regarding "strategic options."  Many deal makers think that Murdoch nearly overextended himself on the Dow Jones takover- even at 10x smaller than Yahoo.  So it would seem that, especially in today's financing climate, a buyout is out of the question. 

This leaves Yahoo dancing, with a pack of hungry wolves looking to make a meal of it.

And waiting in the wings is Microsoft, which has really but together a great set of circumnstances.  By putting Yahoo in play they have forced their hand-Yahoo needs to make a move.  And adding more tension is the fact the Microsoft is making all kinds of noise about proceeding with a hostile bid for the company.

This is great.  With all the hemming and hawing about the economy these days a huge M&A deal pitting the giants against one another serves to shake things up and bring people out of their doldrums.  The deal doesn't have any direct impact on the mid-market (other than potentially removing a great strategic buyer in Yahoo and slimming the pool of "usual suspect").  Nonetheless,  watching a deal like this unfold is great drama and will absolutely spur more M&A activity.