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 pointsrexreed15 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.

Deleted comment

Too bad the SEC disagrees with you.

Seriously, these terms have distinct, specific, and legally understood meanings. If you don't know what they are, then please don't pollute HN comments with your "pithy" thoughts.

We could all benefit from an explanation of these terms. Why not explain it to us instead of insulting the guy?

Materiality comes from the effect of the acquired company on the purchaser's assets or income (I forget if it's pretax or net). Google has so many assets and so much in income that over half a billion dollars doesn't cross the threshold.

When you do a material acquisition, you have to file financial statements for the acquired company. If it's 40% or more, you have to file pro forma financials, restating historical numbers for the go-forward entity as if it was one company for the past year (maybe two - again, I forget the specific details). The non-materiality is why we don't have financials for AdMob, even though Google paid $750MM for it.

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.

$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.

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.

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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