In a former life, I dreamt of being an M&A guy. So indulge me a bit please. Google intends on raising $2.1 billion this year, that’s $2.1 billion additional dollars, on top of its initial and secondary public offerings, add on the free cash flow it generates, the company has well over $10 billion of cash to play with. And, note that despite its lofty share price, many entrepreneurs would still consider accepting equity in potential deals.
I took a few minutes and listed potential fits, note that these are the respective market values of the firms, and not the enterprise values (cash on balance sheet, debt, etc). So technically, removing the cash on the books of some of these firms and throwing in equity in some deals, Google could technically gobble up some or all of these companies.
Note of course that this is strictly for entertainment purposes, I doubt Google would buy even (or consider buying 10% of these firms). Also, so you know, I own shares in most of these firms, I am certainly not encouraging you to buy or sell any of these…
Of course, none of these targets fit the mold; Google generally likes to buy companies that employ 50 or less employees, make a Web-based feature Google doesn’t have and desires to include in its tool box.
But, such acquisitions do not really make a big dent ASAP. Acquiring companies like Valueclick or 24/7 Realmedia would, since it would add tremendous reach for its AdSense program.
Considering Google is finally making inroads into digital music, it could make more sense for it to buy Real Networks or Napster… both? Hey, why not?
It can also, of course, buy a private company like Facebook… but at the $2 billion price tag it seems to be asking for, why not settle for CNET which has been around for 10 years and is worth that much on the Nasdaq? CNET would give Google much of what the 5% stake it bought in AOL gave it… but in a more focused way.
As the list goes on… Websense and Webex are cool interactive tools and softwares that only add to Google’s Microsoftian’s ambitions… Websense lets employers track employees online behavior, Webex is a cool conferencing tool Adding Websense is like adding Urchin… only that Websense seems to violate the Don’t do Evil mantra if you ask some people. Hey, I’m not knocking the company… but…
If Google wants to get serious about online advertising, the branding stuff, not the search keywords business, then aQuantive and or Digitas would be good tippy-toe moves in the space.
It could also play the online advertising space by getting into content and publishing: The Knot, Planetout.com, CNET’s numerous properties will all benefit in years to come from the continued shift of ad dollars to the Web.
Google could consolidate and add market share by gobbling up MIVA, Mamma, Infospace and Answers.com, (the latter whom it already features on its site). Apparently, Google’s year over year market share in search grew from the high 30%’s to the mid 40%s… can you imagine if it acquired those firms? Microsoft, Yahoo! and Barry Diller’s IAC - who now own Ask.com - would not like that. Of course, Google already gets exposure to most searches on Infospace, Mamma, Answers and Miva because the search industry is one incestuous sector… but alas… it’s not like anything we’re saying here should be taken seriously.
Who’s left on that list in this exercise in insanity?
Oh yeah, TIVO. As you can imagine, it’s not like Google isn’t doing enough to rattle people’s nerves in TV-land, so why not buy TIVO and totally become the pariah of the media space?
Ok, enough nonsense.
I think in the end, despite all of the bravado, Google is hoarding all of this cash to come across as ready to compete with Yahoo! and Microsoft in any potential M&A talks, if it moves, and it will, it will probably continue to gobble up small shops that add talent and are accretive to their tech tool arsenal, and not their income statements.
Anyway, back to work.
Tags: Internet & Web|
Posted By: Ashkan Karbasfrooshan | Mar 30th
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April 11th, 2006 at 3:55 pm
[…] Here is what I had suggested as a shopping list… though not a very likely one. Enjoy. […]