The inside story behind AOL's $4.4 billion sale begins the week this photo was taken …
Getty / Scott Olson This is a picture of Tim Armstrong the week he started selling AOL for $4.4 billion
Last July, AOL CEO Tim Armstrong and Verizon CEO Lowell McAdam were both attendees at investment bank Allen & Co's annual executive retreat in Sun Valley, Idaho.
They got together for some lunch and started talking about "the way the world was going," says Armstrong.
Over the fall, conversations between the two grew in frequency.
Then, a couple months ago, teams of executives from both companies began traveling between AOL's headquarters on Ninth Street in Manhattan and Verizon's headquarters in Basking Ridge, New Jersey.
Finally, early Tuesday morning, AOL announced it was selling to Verizon for $4.4 billion.
This wasn't the plan.
Tim Armstrong has been the CEO of AOL since before Time Warner spun it off on December 8, 2009.
Back then, he didn't envision selling AOL back into another large company.
"I thought over the long period of time we would build a differentiated company at scale," Armstrong told us over the phone Tuesday morning.
What changed his mind?
Armstrong told us he began to believe AOL might be better off owned by Verizon when he began to grasp Verizon's scale. He notes that Verizon touches 1.5 billion devices and 70% of all Internet traffic.
Then, earlier this year, Verizon began to invest in new ways of delivering traditional cable TV over the Internet and to mobile devices. It bought Intel's internet TV division. It launched a "skinny bundle" for consumers that allows people to get a select group of channels at a lower price.
Armstrong began to see how Verizon's scale could turbocharge AOL's ad tech and mobile video businesses. He saw that AOL's ad tech and mobile video businesses could boost Verizon's video investments.
He decided that AOL didn't need to be a standalone company anymore.
It didn't hurt that Verizon's final offer, $50 per share, locked in a ~150% return to AOL shareholders over Armstrong's five years the public company. During the same period, the S&P increased 91%.
The deal goes a long way toward cementing Armstrong's reputation as a successful public company CEO - and an evermore wealthy one.
According to a February 13 regulatory filing, Armstrong holds 1.48 million shares of AOL, which is now worth $74 million. Plus, Armstrong gets more through options, and whatever sweeteners he has in his contract for selling the company.