Google Acquisitions Through the Years

Year 2007 is already Google's most acquisitive year ever, and it is only the July 4th holiday week. They are on pace to do over 20 acquisitions this year. The size of their deals are also growing, starting with last year's $1.65 billion buyout of YouTube, and this year's $3.1 billion price for DoubleClick. It is reminiscent of Cisco's use of acquisition to fuel their massive growth in the late 90s. Similar to Cisco, Google has shown the ability to quickly absorb, resource, and grow their acquired targets.

Looking at the acquistion by year chart provides some interesting patterns in Google's acquisition strategy. As to be expected, Google grew organically for the formative years of the company. As the dot-com bust hit Silicon Valley in 2001, the availability of talent was high. Google being one of the few bright tech stars during this time was able to attract the best and brightest engineers. As well, the market for acquisitions was dead as technology companies were out of favor and previously sky-high valuations for speculative dot-com companies were crashing.

Largely due to Google's IPO, Silicon Valley was on the long path to recovery in 2004. The fact that Google had only 5 acquisitions in 2004 versus the 6 in 2003 may be attributed to the preparation and time required for their much anticipated, and complex IPO. Once the IPO was done, and Google's stock and earnings took off, the acquisition spree started kicking into high gear.

Now that Google has tons of cash, a $100 Billion plus market valuation, and huge earning expectations from Wall Street, it is likely that Google will continue to count on acquisitions to augment their growth and allow them to quickly enter new markets. The recent run up in the Nasdaq has created a new Web 2.0-fueled technology boom. Competition for exciting new companies and talented engineers is getting fierce. Even with Google's stock steadly increasing, some techies are joining start-ups to seek their fortunes rather than taking a Google, Yahoo! or eBay position. Many of these fortunes are coming by way of Google take outs.