Google closed 40 Acquistions this year, 37 of which under $17M on average | Hacker News Reader

Google closed 40 Acquistions this year, 37 of which under $17M on average

mediamemo.allthingsd.com

48 pointsrexreed14 comments

"During the nine months ended September 30, 2010, we also completed 37 other acquisitions for a total cash consideration of approximately $626 million. These acquisitions were not material individually or in aggregate."

Mind-boggling. Well over half a billion dollars in non-material acquisitions! Only Google.

Most here could easily identify the company from that single 10-Q line alone.

The massive cash reserves of Google, Apple, and Microsoft are good news for startups.

Good news for some startups. Not any that are looking for investors. At that average acquisition price, most investors would be disappointed.

Not really. For VC's perhaps that is the case, but for angels: $1 MM raised at a $3 MM pre, 2.5 years of work, and a (let's say) $12 MM median sale price? I think everyone is decently happy.

This model fits with the ever-shrinking capital requirements to launch a tech company. Conversely, portfolio strategies that rely on huge exits (and huge investments) are increasingly threatened.

But if $12 MM is the median sale price, then the risk no longer makes it worth it, especially with so many >= $5m valuations at the moment.

$1M at a $3M pre with a $12M acquisition means I'm getting a 3X return on my investment. Now that's certainly better than losing it altogether, but I think almost all angels would admit they'd be pretty disappointed in that outcome.

When Cisco started to do this many acquisitions their competitors begin to bid against them, increasing the price and lowering Cisco's ability to buy products and talent below market. That does not seem to be happening yet.

From what I'm hearing, Google isn't getting talent at below market prices. What's not immediately clear in the acquisition price is the ridiculous retention bonuses Google's paying to keep these people on board. In fact, I think they're paying through the roof for talent already... no need to for competitors to bid up the price.

Competitors can bid, not with the intent of winning, but with the intent of driving up Google's price. This certainly happened to Cisco. The retention bonuses are a way of making a side payment to the entrepreneurs that bypasses the investors. Competitors could also offer retention bonuses.

How can you bid without risk that you will have to pay?

You can't, but there is a value in the underlying team and product: winning and overpaying from time to time still resets the market when a competitor is making many acquisitions. It also gives you more access to the deal flow, because now you are seen as an active bidder, which in turn offers market intelligence from being able to interact with all of these early technology firms.

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