A Look into Google’s Dynamic Start-Up Acquisition Strategy
Google (NASDAQ:GOOG) has already signed over a dozen acquisitions this year, following a year in which 48 deals were made. While all these acquisitions would naturally increase antitrust scrutiny, Google has managed to avoid legal hurdles by going after smaller companies.
From the hundreds of Silicon Valley start-ups, Google (NASDAQ:GOOG) selects those that most directly align with their long-term strategies. Google has $36 billion in cash on hand, yet they are nonetheless discerning when it comes to potential acquisitions. Each candidate is evaluated on the basis of whether an in-house team could develop a similar product more efficiently and affordably. Companies are then valued and an offer determined based on the utility that could be derived within a year.
While Google has focused mainly on smaller acquisitions in recent years, they haven’t entirely neglected more substantial deals in the billion-dollar realm. Talks between Hulu (NASDAQ:CMCSA) (NYSE:DIS) (NASDAQ:NWSA) and Google are allegedly underway and just last month, Google agreed to acquire AdMeld — a deal valued in the hundreds of millions of dollars.
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It will be interesting to see how these major deals influence Google’s (NASDAQ:GOOG) start-up acquisitions moving forward.