Google Cranks Up M&A Machine
Undaunted by Valuations, Deals Chief Says Will Continue to Pursue Start-Ups — Google Inc. doesn't seem daunted about acquisitions in the wake of its failure last year to land online coupon site Groupon Inc. Indeed, the Internet giant's deals chief plans to be very active …
Context & Ripple Effects
This is the continuation of a buying spree the corpus has tracked for two years: Google's $1.6 billion 2010 M&A bill made clear that tuck-in deals were becoming core strategy, not opportunism, dating back to the 2009 speculation over what Google and its peers were fishing for. The wrinkle is the miss — after turning its local eyes to Groupon in November 2010, Google walked away empty-handed.
First-order effects
- Google's deals chief is signaling publicly that high start-up valuations will not price the company out, which tells founders and their investors the checkbook stays open even after the Groupon failure.
- Start-ups in categories Google missed on, such as the Groupon wannabes it was reportedly shopping for in December, become immediate bid targets now that the deals chief has committed to staying active.
Second-order effects
- Rival acquirers named in the earlier BoomTown coverage of what Google and others are hunting face pressure to match Google's willingness to pay up, inflating valuations across the categories both sides target.
- Venture-backed companies gain a stronger exit path through sale to platforms like Google, shifting founder incentives away from long independent runs toward early liquidity.
Third-order effects
- If the post-Groupon posture holds, platform M&A consolidates around a handful of deep-pocketed buyers absorbing category leaders rather than building competing products, with the eventual open question of whether regulators scrutinize that accumulation.
The trend: Big-platform acquisition strategy is decoupling from valuation discipline, with Google's post-Groupon stance showing buyers treating frothy start-up prices as a cost of keeping pace rather than a stop sign.