Google's Rules of Acquisition 115
waderoush writes "For many startup entrepreneurs, getting acquired by Google is the dream exit. But these days Google is getting a lot more discriminating about what kinds of companies it buys — and a lot more careful about how it integrates newly acquired teams. This article offers an in-depth look at how Google achieves a two-thirds success rate with acquisitions, and why things still occasionally go south. 'The return on our acquisition dollars has been extraordinary,' says vice president of business development David Lawee, Google's M&A czar. But Google insiders say it still takes a lot of work to make sure acquired startups go the way of Android (the mobile operating system, acquired in 2005) and not Aardvark (the social search site, acquired in 2010 and shut down in 2011)."
Amazing given the statistics. (Score:5, Informative)
The fact that Google achieves a 66.66% success rate in acquisitions is amazing. Most M&A's have a success rate of 17%.
According to a quote from the Wharton School of Business:
"Various studies have shown that mergers have failure rates of more than 50 percent. One recent study found that 83 percent of all mergers fail to create value and half actually destroy value. This is an abysmal record. What is particularly amazing is that in polling the boards of the companies involved in those same mergers, over 80 percent of the board members thought their acquisitions had created value.
— Robert W. Holthausen, The Nomura Securities Company Professor, Professor of Accounting and Finance and Management
http://executiveeducation.wharton.upenn.edu/open-enrollment/finance-programs/mergers-acquisitions-program.cfm [upenn.edu]
Re:Aardvark the extension (Score:5, Informative)
Correction: Google's main business is ads. They just happen to go very well with search.
Re:Aardvark the extension (Score:4, Informative)
I see a lot of nice little things come out of google. While they aren't large projects, they produce a lot of useful tools for developers like Guava [google.com] and PlayN [google.com].
For bigger projects their Mapping tools are pretty amazing and seem to be getting better with time. Their street-view is also really nice. If they pull off self-driving cars it will also be amazing.
Fluff article (Score:5, Informative)
I read TFA. Yes, I know - I must be new here, etc.
Let me save you time. It's the usual self-congratulating corporatespeak. Basically, they discovered it's a good idea to have a good fit between Google and the acquired startup, and a bunch of other common sense "rules" anyone with half a brain could come up with.
Re:Aardvark the extension (Score:4, Informative)
Let me put this another way:
Ninety-nine percent of Google's revenue is derived from its advertising programs. [wikipedia.org]
How can you possibly argue that they're not in the advertising business?
Their main business is advertising. It's a fact. And that's all I said. They get (virtually) no revenue from anything else they're doing. That doesn't mean they're not doing anything else, just that their main business is in advertising.