Google is an impressively large company, yet it was only founded 15 years ago in 1998. So how did this tech giant grow into what it is today in such a relatively short period of time? Well, a fairy large amount of growth came from organic growth due to the usefulness of it technology, another part came from the enormous amount of acquisitions the company is continually making. So what are a few lessons we can learn from Google and its strategic acquisition growth?
Three Point to Learn From Google’s Acquisition Strategy?
- Strong Strategic Fit: one of the first things Google looks for in an acquisition is whether or not it will be a good fit for what the company is trying to accomplish. In other words, Google knows what direction it is trying to pursue and as such, it knows whether a company will fit with that model or not. It may even have a few different directions to pursue and is just waiting for a company to come along that will fit with that direction.
- A Good Team Fit: I once spoke to a Google employee who told me that most of what Google looks for is the entrepreneur. They want someone who will fit well with the Google team and will truly add value to the company after the acquisition is completed. Google is essentially trying to buy companies that even if the company itself does not add a tremendous amount of value, the new employees will.
- Accepting Risk: Nearly one of every three companies Google acquires doesn’t work out the way the company originally intended. Even with this high of a, what could be called, failure rate the company continues to make the acquisitions. Google recognizes that it loses in some circumstances but accepts it as a necessary risk. Essentially the company accepts that there are some exogenous factors that cause a deal to head down hill, but it still does what it can as it manages its risk and increases its value.
A few different companies that are looking to expand through acquisition have approached Deal Capital. One of these was unwilling to accept the risk and engage Deal Capital to find the type of company that would fit its strategic growth plans. While the company would take on additional risk it also takes control of it acquisition growth strategies, it is only passively looking for acquisition growth. Another client engaged our services and received a myriad of companies that were interested in exploring the acquisition opportunity. This client was essentially taking control of it growth rather than passively waiting for the right company to come along.
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC, a middle-marketing M&A and capital advisory firm. Nate works with corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He holds Series 79, 82 & 63 FINRA licenses and has facilitated numerous successful engagements across various verticals. Four Points Capital Partners, LLC a member of FINRA and SIPC. Nate resides in Seattle, Washington. Check the background of this Broker-Dealer and its registered investment professionals on FINRA's BrokerCheck
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